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EXHIBIT 10-J(1)
EMPLOYMENT AGREEMENT
BETWEEN
DANA CORPORATION
AND
SOUTHWOOD J. MORCOTT
DATED DECEMBER 8, 1997
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TABLE OF CONTENTS
SECTION PAGE
Recitals....................................................................................................1
1. EMPLOYMENT AND TERM................................................................................1
2. POSITION AND DUTIES OF THE EXECUTIVE...............................................................2
(A)POSITION...............................................................................2
(B)DUTIES.................................................................................3
(C)LOCATION OF OFFICE.....................................................................3
3. COMPENSATION.......................................................................................4
(A)SALARY.................................................................................4
(B)ADDITIONAL COMPENSATION................................................................4
(C)INCENTIVE, STOCK AND SAVINGS PLANS.....................................................5
(D)RETIREMENT AND WELFARE BENEFIT PLANS...................................................5
(E)EXPENSES...............................................................................6
(F)FRINGE BENEFITS........................................................................6
(G)OFFICE AND SUPPORT STAFF...............................................................6
(H)VACATION AND OTHER ABSENCES............................................................6
(i)Benefits Shall Not Be Reduced Under Certain
Circumstances............................................................................7
(J)SUPPLEMENTAL RETIREMENT ANNUITY........................................................8
4. TERMINATION OF EMPLOYMENT.........................................................................11
(A)DEATH OR DISABILITY...................................................................11
(B)CAUSE.................................................................................12
(C)GOOD REASON...........................................................................13
(D)NOTICE OF TERMINATION.................................................................15
(E)DATE OF TERMINATION...................................................................15
5A OBLIGATIONS OF THE CORPORATION UPON TERMINATION...................................................15
(A)TERMINATION OTHER THAN FOR CAUSE......................................................15
(b)Termination On or After Change of Control.............................................18
(C)CAUSE; OTHER THAN FOR GOOD REASON.....................................................18
(D)DEATH OR DISABILITY...................................................................19
(E)RESOLUTION OF DISPUTES................................................................20
(i)Right of Election by Executive to Arbitrate or Sue...........................20
(II) THIRD-PARTY STAKEHOLDER....................................................20
(f) Benefits are in Addition to Supplemental
Retirement Annuity.......................................................................21
6A NON-EXCLUSIVITY OF RIGHTS.........................................................................21
7A FULL SETTLEMENT...................................................................................22
8A GOLDEN PARACHUTE TAX PAYMENTS.....................................................................22
9A CONFIDENTIAL INFORMATION..........................................................................24
10A COMPETITION.......................................................................................24
11A SUCCESSORS........................................................................................26
12A CERTAIN DEFINITIONS...............................................................................27
(A)BENEFICIARY...........................................................................27
(B)CHANGE OF CONTROL.....................................................................27
(C)CHANGE OF CONTROL DATE................................................................29
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(D)CHANGE OF CONTROL PERIOD..............................................................29
13A AMENDMENT OR MODIFICATION; WAIVER................................................................29
14A MISCELLANEOUS.....................................................................................29
Exhibit A..................................................................................................34
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DEFINED TERMS
-------------
DEFINED TERMS* SECTION PAGE
- -------------- ------- ----
Accounting Firm 8(b) 23
Accrued Obligation 5(a)(i)(3) 16
ACP 3(b) 5
Affiliate 2(a) 3
Affiliated Company 3(a) 4
Agreement Introduction 1
Annual Base Salary 3(a) 4
Annual Bonus 3(b) 4
Beneficiary 12(a) 28
Board 3(a) 4
Cause 4(b) 12
Change of Control 12(b) 28
Change of Control Date 12(c) 30
Change of Control Period 12(d) 30
Code 5(a)(ii) 17
Competition 10(c) 26
Corporation Introduction 1
11(b) 27
14(e) 31
Date of Termination 4(e) 16
Disability 4(a)(ii) 12
Disability Effective Date 4(a)(ii) 12
Employment Period 1(a) 1
Excise Tax 8(a) 23
Executive Introduction 1
Gross-Up Payment 8(a) 23
- --------
*Each listed term is intended to include both the singular and
plural form of the term.
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DEFINED TERMS
-------------
DEFINED TERMS* SECTION PAGE
- -------------- ------- ----
Highest Average Monthly Compensation 3(j)(v) 11
Notice of Termination 4(d) 15
Other Benefits 5(a)(v) 19
Payment 8(a) 23
Pension and Retirement Program of the Corporation 3(j)(vi) 11
Renewal Date 1(c) 2
Service 3(j)(vii) 11
Subsidiary 2(a) 3
Target Annual Bonus 3(b) 5
Terminal Date 1(b) 1
Termination 5(a) 16
Termination Period 5(a)(ii) 17
Welfare Benefit Continuation 5(a)(iii) 18
- --------
*Each listed term is intended to include both the singular and
plural form of the term. *Each listed term is intended to include both
the singular and plural form of the term.
*Each listed term is intended to include both the singular and
plural form of the term.
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AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
made and entered into as of this 8th day of December, 1997, by and between DANA
CORPORATION, a Virginia corporation whose principal place of business is located
at 4500 Dorr Street, Toledo, Ohio (the "Corporation"), and Southwood J.
Morcott (the "Executive");
WHEREAS, the Executive is a principal executive officer of the
Corporation and an integral part of its management; and
WHEREAS, the Corporation wishes to assure itself of the
continuing services of the Executive and to assure the Executive of continued
employment during the period of employment hereunder; and
WHEREAS, the Executive is willing to commit himself to remain
in the employ of the Corporation during such period on terms and conditions
substantially similar to those on which other senior executive officers of the
Corporation are employed, and to forego opportunities elsewhere during such
period; and
WHEREAS, the parties have entered into an Agreement dated
December 14, 1992, as amended from time to time thereafter (the "Prior
Agreement"); and
WHEREAS, the parties wish to amend and restate the Prior
Agreement in its entirety;
NOW, THEREFORE, IN CONSIDERATION of the mutual promises,
covenants and agreements set forth below, it is hereby agreed as follows:
1. EMPLOYMENT AND TERM.
(a) The Corporation agrees to continue the employment of the
Executive, and the Executive agrees to remain in the employ of the Corporation,
in accordance with the terms and provisions of this Agreement, for the period
set forth below (the "Employment Period").
(b) The Employment Period under this Agreement shall commence
as of December 8, 1997, and, subject only to the provisions of Section 4 below
relating to termination of employment, shall continue until (i) the close of
business on December 31, 2000 or (ii) such later date as shall result from the
operation of subparagraph (c) below (the "Terminal Date").
(c) Commencing on December 31, 1998, and on each anniversary
of such date (such date and each such annual anniversary thereof, the "Renewal
Date") the Terminal Date set forth in subparagraph (b) above shall be extended
so as to occur
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three (3) years from the Renewal Date unless either party shall have given
notice to the other party that the Terminal Date is not to be extended or
further extended.
2. POSITION AND DUTIES OF THE EXECUTIVE.
(a) POSITION. It is contemplated that during the Change of
Control Period (as defined in Section 12(d), below), the Executive will continue
to serve as a principal officer of the Corporation and as a member of its Board
of Directors if serving as a member of the Board of Directors immediately prior
to the Change of Control Date, with the office(s) and title(s), reporting
responsibility, and duties and responsibilities of the Executive immediately
prior to the Change of Control Date. The Executive hereby agrees that at any
time prior to the Change of Control Date, the Board of Directors of the
Corporation (or the individual to whom the Executive reports) may, without the
Executive's consent, change the Executive's office(s), title(s), reporting
responsibility, and duties or responsibilities.
The office(s), title(s), reporting responsibility, duties and
responsibilities of the Executive on the date of this Agreement, as the same may
be changed from time to time after the date of this Agreement in accordance with
the provisions of the previous paragraph, shall be summarized in Exhibit A to
this Agreement, it being understood and agreed that if, as and when the
office(s), title(s), reporting responsibility, duties or responsibilities of the
Executive shall be so changed after the date of this Agreement, Exhibit A shall
be deemed to be, and shall be updated by the parties to reflect such change;
PROVIDED, HOWEVER, that Exhibit A is intended only as a memorandum for the
convenience of the parties and shall be disregarded if, and to the extent that,
Exhibit A shall fail to reflect accurately the office(s), title(s), reporting
responsibility, duties or responsibilities of the Executive as so changed after
the date of this Agreement because the parties shall have failed to update
Exhibit A as aforesaid.
At all times during the Change of Control Period, the
Executive shall hold a position of responsibility and importance and a position
of scope, with the functions, duties and responsibilities attached thereto, at
least equal in responsibility and importance and in scope to and commensurate
with his position described in general terms above in this Section 2(a) and
intended to be summarized in Exhibit A to this Agreement.
During the Employment Period the Executive shall, without
compensation other than that herein provided, also serve and continue to serve,
if and when elected and re-elected, as an officer or director, or both, of any
United States Subsidiary, division or Affiliate of the Corporation.
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For all purposes of this Agreement, (i) a Subsidiary shall
mean a corporation or other entity, of which 50% or more of the voting
securities or other equity interests is owned directly, or indirectly through
one or more intermediaries, by the Corporation, and (ii) an Affiliate shall mean
a corporation or other entity which is not a Subsidiary and which directly, or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Corporation. 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 corporation or other entity, whether through
the ownership of voting securities, by contract, or otherwise.
(b) DUTIES. Throughout the Employment Period the Executive
shall devote his full time and undivided attention during normal business hours
to the business and affairs of the Corporation except for reasonable vacations
and except for illness or incapacity, but nothing in this Agreement shall
preclude the Executive from devoting reasonable periods required for:
(i) serving as a director or member of a committee or any
organization involving no conflict of interest with the interests of
the Corporation;
(ii) delivering lectures, fulfilling speaking engagements,
teaching at educational institutions;
(iii) engaging in charitable and community activities; and
(iv)..managing his personal investments;
provided that such activities do not materially interfere with the regular
performance of his duties and responsibilities under this Agreement.
(c) LOCATION OF OFFICE. During the Change of Control Period,
the office of the Executive shall be located at the principal offices of the
Corporation, within the greater Toledo, Ohio area, and the Executive shall not
be required to locate his office elsewhere without his prior written consent,
nor shall he be required to be absent therefrom on travel status or otherwise
more than thirty (30%) of the working days in any calendar year nor for more
than ten (10) consecutive days at any one time.
3. COMPENSATION.
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The Executive shall receive the following compensation for his
services:
(a) SALARY. So long as the Executive is employed by the
Corporation, he shall be paid an annual base salary, payable not less often than
monthly, at the rate of not less than $82,916.66 per month with such increases
as shall be awarded from time to time in accordance with the Corporation's
regular administrative practices of other salary increases applicable to
executives of the Corporation, subject to any and all required withholdings and
deductions for Social Security, income taxes and the like (the "Annual Base
Salary"). The Board of Directors of the Corporation (the "Board") may from time
to time direct such upward adjustments to Annual Base Salary as the Board deems
to be necessary or desirable; PROVIDED, HOWEVER, that during the Change of
Control Period (as defined in Section 12(d) below), the Annual Base Salary shall
be reviewed at least annually and shall be increased at any time and from time
to time but not less often than annually and shall be substantially consistent
with increases in base salary generally awarded in the ordinary course of
business to other senior executives of the Corporation and its Affiliated
Companies (a term which, as used in this Agreement, shall mean a Subsidiary or
Affiliate of the Corporation) and, in addition, shall be adjusted effective as
of January lst of each calendar year commencing in the Change of Control Period
to reflect increases in the cost of living during the preceding calendar year.
Annual Base Salary shall not be reduced after any increase thereof pursuant to
this Section 3(a). Any increase in Annual Base Salary shall not serve to limit
or reduce any other obligation of the Corporation under this Agreement.
(b) ADDITIONAL COMPENSATION. So long as the Executive is
employed by the Corporation, he shall be eligible to receive annual short-term
incentive awards or bonuses (such award or bonus is hereinafter referred to as
"Short-Term Award" or "Annual Bonus") from the Dana Corporation Additional
Compensation Plan, and from any successor or replacement plan (the Dana
Corporation Additional Compensation Plan and such successor or replacement plans
being referred to herein collectively as the "ACP"), in accordance with the
terms thereof; PROVIDED, HOWEVER, that, with respect to each fiscal year of the
Corporation ending during the Change of Control Period, the Executive shall be
awarded (whether under the terms of the ACP or otherwise) an Annual Bonus in an
amount that shall not be less than fifty percent (50%) of his Annual Base Salary
rate in effect on the last day of such fiscal year (which amount shall be
prorated if such fiscal year shall be less than 12 months) (the "Target Annual
Bonus"). Each Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the Annual
Bonus is
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awarded, unless the receipt of such Annual Bonus is deferred in accordance with
the terms of the ACP.
(c) INCENTIVE, STOCK AND SAVINGS PLANS. So long as the
Executive is employed by the Corporation, he shall be and continue to be a full
participant in the Dana Corporation 1997 Stock Option Plan, the ACP (providing
for Short-Term Awards) and in any and all other incentive, stock, savings or
retirement plans, practices or policies in which executives of the Corporation
participate that are in effect on the date hereof and that may hereafter be
adopted, including, without limitation, any stock option, stock purchase or
stock appreciation plans, or any successor plans that may be adopted by the
Corporation with, except in the case of the ACP after the commencement of the
Change of Control Period, at least the same reward opportunities, if any, that
have heretofore been provided to the Executive. Nothing in this Agreement shall
preclude improvement of reward opportunities in such plans or other plans in
accordance with the practice of the Corporation on or after the date of this
Agreement. Any provision of the ACP or of this Agreement to the contrary
notwithstanding, any Short-Term Awards made to the Executive during the Change
of Control Period (whether for services rendered prior to or after the Change of
Control Date) shall be paid wholly in cash as soon as practicable after the
awards are made.
(d) RETIREMENT AND WELFARE BENEFIT PLANS. The Executive, his
dependents and Beneficiary, including, without limitation, any beneficiary of a
joint and survivor or other optional method of payment applicable to the payment
of benefits under the Pension and Retirement Program of the Corporation, as
defined in Section 3(j)(vi) below, shall be entitled to all payments and
benefits and service credit for benefits during the Employment Period to which
other senior executives of the Corporation, their dependents and their
beneficiaries are entitled under the terms of employee retirement and welfare
benefit plans and practices of the Corporation, including, without limitation,
the Pension and Retirement Program of the Corporation (as defined in Section
3(j)(vi) below), the Corporation's Savings and Investment Plan, its Stock
Purchase Plan, its Stock Award Plan, its Income Protection Plan for Management
and Certain Other Employees providing layoff and severance benefits, its 1989
Restricted Stock Plan, its Excess Benefits Plan, its Supplemental Benefits Plan,
its death benefit plans (consisting of its Group Insurance Plan for Management
Employees providing life insurance, accidental death and dismemberment
insurance, and travel accident insurance), its disability benefit plans
(consisting of its salary continuation, sickness and accident and long-term
disability benefits programs), its medical, dental and health and welfare plans
and other present or equivalent successor plans and practices of the
Corporation, its Subsidiaries and divisions, for active and
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retired employees, for which officers, their dependents and beneficiaries, are
eligible, and to all payments or other benefits under any such plan or practice
subsequent to the Employment Period as a result of participation in such plan or
practice during the Employment Period.
(e) EXPENSES. So long as the Executive is employed by the
Corporation, he shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the polices,
practices and procedures of the Corporation and its Affiliated Companies from
time to time in effect, commensurate with his position and on a basis at least
comparable to that of other senior executives of the Corporation.
(f) FRINGE BENEFITS. So long as the Executive is employed by
the Corporation, he shall be entitled to fringe benefits, including, without
limitation, the business and personal use of an automobile, and payment or
reimbursement of club initiation fees and dues, in accordance with the plans,
practices, programs and policies of the Corporation and its Affiliated Companies
from time to time in effect, commensurate with his position and at least
comparable to those received by other senior executives of the Corporation.
(g) OFFICE AND SUPPORT STAFF. So long as the Executive is
employed by the Corporation, he shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, commensurate with his position and at least
comparable to those received by other senior executives of the Corporation.
(h) VACATION AND OTHER ABSENCES. So long as the Executive is
employed by the Corporation, he shall be entitled to paid vacation and such
other paid absences whether for holidays, illness, personal time or any similar
purposes, in accordance with the plans, policies, programs and practices of the
Corporation and its Affiliated Companies in effect from time to time,
commensurate with his position and at least comparable to those received by
other senior executives of the Corporation.
(i) BENEFITS SHALL NOT BE REDUCED UNDER CERTAIN CIRCUMSTANCES.
Nothing in this Agreement shall preclude the Corporation from amending or
terminating any employee benefit or welfare plan or practice, but, it being the
intent of the parties that the Executive shall continue to be entitled during
the Employment Period to perquisites as set forth in this Section 3 and to
benefits and service credit for benefits under Section 3(d) above at least equal
to those attached to his position on February 13, 1984, the date of the original
agreement between the parties, and except as provided in the
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last sentence of this Section 3(i), nothing in this Agreement shall operate or
be construed to reduce, or authorize a reduction without the Executive's written
consent in, the level of such perquisites, benefits or service credit for
benefits; in the event of any such reduction, by amendment or termination of any
plan or practice or otherwise, the Executive, his dependents and Beneficiary,
shall continue to be entitled to perquisites, benefits and service credit for
benefits at least equal to the perquisites, benefits and service credit for
benefits under such plans or practices that he or his dependents and Beneficiary
would have received if such reduction had not taken place. If and to the extent
that such perquisites, benefits and service credits are not payable or provided
under any such plans or practices by reason of such amendment or termination
thereof, the Corporation itself shall pay or provide therefor. Notwithstanding
the foregoing provisions of this Section 3(i), the Executive hereby waives the
benefit of the foregoing minimum benefit protection only as it applies to the
Dana Corporation Savings and Investment Plan, and to its medical, dental and
health plans for active and retired employees. The Executive expressly does not
waive the application of the foregoing minimum benefit protection to any of the
other benefit plans, programs or practices enumerated in Section 3 above,
including, without limitation, the Pension and Retirement Program of the
Corporation (including the lump sum discount factor in effect on February 13,
1984), its death benefit plans, its disability benefit plans, and its Income
Protection Plan for Management and Certain Other Employees. The Executive
reserves the right to cancel the above waiver, prospectively, at any future time
by giving written notice to the Corporation of such cancellation. Nothing in
this Section 3(i) shall be construed to prohibit the Corporation from amending
or terminating any employee benefit or welfare plan or practice to reduce
benefits, so long as such reduction applies to all salaried Corporation
employees covered by such plan or practice equally and such reduction is adopted
prior to the commencement of the Change of Control Period.
(j) SUPPLEMENTAL RETIREMENT ANNUITY.
(i) If the Service of the Executive, including, without
limitation, the period set forth in Section 5(a)(iv)(2) below, relating
to the period between the Date of Termination and the end of the
Termination Period, shall terminate other than for death or Cause as
defined in Section 4(b) below, and if the Executive shall have a total
of not less than fifteen (15) years of Service, as defined in
subparagraph (vii) of this Section 3(j), whether or not consecutive,
the Executive, subject to compliance with the provisions of Sections 9
and 10 below, relating to confidential information and Competition,
respectively, shall be entitled to the supplemental retirement annuity
provided by this Section 3(j) in addition to all other
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benefits to which the Executive may be entitled including, without
limitation, benefits under the Pension and Retirement Program of the
Corporation. Notwithstanding the foregoing provisions of this
paragraph, the Executive shall not be entitled to receive the
supplemental retirement annuity provided by this Section 3(j) if his
Service shall terminate prior to his attainment of age 55 and prior to
the Change of Control Date.
Such supplemental retirement annuity shall be payable by the
Corporation on a straight life annuity basis commencing on the first day of the
month coinciding with or next following the latest of
(1) termination of Service;
(2) attainment by the Executive of age 55; and
(3) if the Executive had not previously retired with 15
years or more of Service, the expiration of the
Employment Period;
and continuing on the first day of each month thereafter during his lifetime.
(ii) The monthly payment provided for in Section 3(j)(i) above
shall be equal to fifty percent (50%) (or if higher, the percentage
which is the product of 1.6% multiplied by the Executive's Credited
Service at retirement, as such Credited Service is determined by
application of the definition of Credited Service under the Dana
Corporation Retirement Plan), of the Executive's Highest Average
Monthly Compensation, as defined in Section 3(j)(v), less the sum of
(1) commencing at the earliest date that it could be
payable on or after termination of Service, the
aggregate monthly retirement benefit payable to the
Executive for life on a straight life annuity basis
under the Pension and Retirement Program of the
Corporation to the extent attributable to
contributions of the Corporation, its Subsidiaries
and Affiliates;
(2) commencing at the earliest date that it could be
payable on or after termination of Service, the
aggregate monthly retirement or disability benefit
payable to the Executive for life on a straight life
annuity basis following his retirement from
employment by the Corporation, its Subsidiaries and
Affiliates, to the extent attributable to
contributions other than by the
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Executive under pension or retirement plans of all
corporations, organizations or entities other than
the Corporation, its Subsidiaries and Affiliates;
(3) commencing at the earliest date payable on or after
termination of Service, 50% of the monthly primary
Social Security benefit that would be or would have
been payable to the Executive in the absence of any
compensation that may at the time be or have been
earned by him; and
(4) commencing at the earliest date payable on or after
termination of Service and continuing until no longer
payable, the aggregate monthly disability benefit
payable to the Executive under disability benefit
plans and pension plans of the Corporation, its
Subsidiaries and Affiliates to the extent
attributable to contributions of the Corporation, its
Subsidiaries and Affiliates.
(iii) The Executive may elect to receive payment of the
supplemental retirement annuity provided by this Section 3(j), under a
joint and survivor or any other optional method of payment available
under the Dana Corporation Retirement Plan, including, without
limitation, any deferment in the time of payment thereof. The amount of
the benefit payable pursuant to any form of payment under this Section
3(j) shall be determined by applying the mortality assumptions,
interest rates, and other factors contained in the Dana Corporation
Retirement Plan that would be applicable to the form of payment elected
by the Executive (subject, however, to any actuarial factor that may
apply as a result of the operation of Section 3(i)); PROVIDED THAT, if
a lump sum distribution is made hereunder, the amount of the lump sum
distribution shall be actuarially equivalent to the monthly benefit
prescribed by Section 3(j)(ii), calculated using the basis described in
subparagraph (1) or (2), below, whichever produces the larger lump sum
amount:
(1) the lump sum amount calculated on the basis of the
"applicable interest rate" (as in effect for the
November preceding the calendar year in which the
calculation is made) and the "applicable mortality
table," both as defined in Section 417(e) of the
Internal Revenue Code; or
(2) the lump sum amount calculated on the basis of the
actuarial equivalent factor used to convert the
Executive's Earned Benefit Account into a
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life annuity under the Dana Corporation Retirement
Plan at the time the calculation is made, subject to
any lump sum discount factor that might apply as a
result of the operation of Section 3(i) of this
Agreement.
If it is determined that the Executive is subject to federal income
taxation on an amount in respect of the supplemental retirement annuity
prior to the distribution of all of such amount to him, the Corporation
shall forthwith pay to the Executive all (or the balance) of such
amount as is includable in the Executive's federal gross income and
correspondingly reduce future payments, if any, of the supplemental
retirement annuity.
(iv) In the event that the Corporation defaults in payment of
all or any part of the supplemental retirement annuity provided above
in this Section 3(j) and fails to remedy such default within thirty
days after having received notice from the Executive or his
Beneficiary, the Corporation shall thereupon pay to the Executive or
his Beneficiary, as the case may be, in full discharge of its
obligations under this Section 3(j), (1) a lump sum amount actuarially
equivalent (based on the same assumptions and discount factors as would
be applicable under the Dana Corporation Retirement Plan) to the future
payments otherwise payable under this Section 3(j), and (2) an amount
equal to any and all past due payments under this Section 3(j).
(v) The term "Highest Average Monthly Compensation" shall mean
the sum of (1) one-twelfth (1/12) of the Annual Base Salary provided in
Section 3(a) at the rate being paid at the time the Executive's
termination of employment occurred, and (2) one-twelfth (1/12) of the
average of the highest Annual Bonuses payable to the Executive for any
three (3) consecutive full or partial fiscal years during his
employment by the Corporation, PROVIDED, HOWEVER, that with respect to
1994 and subsequent years' Annual Bonuses, only that portion of the
Employee's Annual Bonus as does not exceed 125% of his Annual Base
Salary will be considered.
(vi) The term "Pension and Retirement Program of the
Corporation" shall mean the Dana Corporation Retirement Plan, the Dana
Corporation Excess Benefits Plan, the Dana Corporation Supplemental
Benefits Plan, and any other supplemental, early retirement and similar
plan or plans of the Corporation, its Subsidiaries and Affiliates,
providing for pension or retirement benefits that may be applicable to
the Executive and that are in effect on the date hereof or may
hereafter be adopted or substituted for
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any such plan, but exclusive of the Dana Corporation Savings and
Investment Plan and any similar plan or plans.
(vii) The term "Service" shall mean employment as an employee
by the Corporation, any Subsidiary or Affiliate thereof or any
corporation the capital stock or assets of which have been acquired by,
or which has been merged into or consolidated with the Corporation or
any Subsidiary or Affiliate thereof.
4. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY.
(i) The Executive's employment shall terminate automatically
upon the Executive's death during the Employment Period.
(ii) If the Corporation determines in good faith that the
Disability (as defined below) of the Executive has occurred during the
Employment Period, it may give to the Executive written notice in
accordance with Section 14(b) below of its intention to terminate the
Executive's employment. In such event, the Employment Period shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), PROVIDED, that within the
30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from
the Executive's duties with the Corporation 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 permanent by a
physician selected by the Corporation or its insurers and acceptable to
the Executive or the Executive's legal representative (such agreement
as to acceptability not to be withheld unreasonably).
(b) CAUSE. The Corporation may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, the termination of the Executive's employment shall be deemed to have
been for "Cause" only
(i) if termination of his employment shall have been the
result of his conviction of, or plea of guilty or nolo contendere to,
the charge of having committed a felony (whether or not such conviction
is later reversed for any reason), or
(ii) if there has been a breach by the Executive during the
Employment Period of the provisions of
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Section 2(b), relating to the time to be devoted to the affairs of the
Corporation, or of Section 9, relating to confidential information, and
such breach results in demonstrably material injury to the Corporation,
and, with respect to any alleged breach of Section 2(b) hereof, the
Executive shall have either failed to remedy such alleged breach within
thirty days from his receipt of written notice from the Secretary of
the Corporation pursuant to resolution duly adopted by the Board of
Directors of the Corporation after notice to the Executive and an
opportunity to be heard demanding that he remedy such alleged breach,
or shall have failed to take all reasonable steps to that end during
such thirty-day period and thereafter; PROVIDED, that there shall have
been delivered to the Executive a certified copy of a resolution of the
Board of Directors of the Corporation adopted by the affirmative vote
of not less than three-fourths of the entire membership of the Board of
Directors called and held for that purpose and at which the Executive
was given an opportunity to be heard, finding that the Executive was
guilty of conduct set forth in subparagraph (i) or (ii) above,
specifying the particulars thereof in detail.
Anything in this Section 4(b) or elsewhere in this Agreement
to the contrary notwithstanding, the employment of the Executive shall in no
event be considered to have been terminated by the Corporation for Cause if
termination of his employment took place
(1) as the result of bad judgment or negligence on the
part of the Executive, or
(2) because of an act or omission believed by the
Executive in good faith to have been in or not
opposed to the interests of the Corporation, or
(3) for any act or omission in respect of which a
determination could properly be made that the
Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or
payment of expenses under (A) the Bylaws of the
Corporation, or (B) the laws of the State of
Virginia, or (C) the directors' and officers'
liability insurance of the Corporation, in each case
either as in effect at the time of this Agreement or
in effect at the time of such act or omission, or
(4) as the result of an act or omission which occurred
more than twelve calendar months prior to the
Executive's having been given notice of the
termination of his employment for such act or
18
omission unless the commission of such act or such
omission could not at the time of such commission or
omission have been known to a member of the Board of
Directors of the Corporation (other than the
Executive, if he is then a member of the Board of
Directors), in which case more than twelve calendar
months from the date that the commission of such act
or such omission was or could reasonably have been so
known, or
(5) as the result of a continuing course of action which
commenced and was or could reasonably have been known
to a member of the Board of Directors of the
Corporation (other than the Executive, if he is then
a member of the Board of Directors) more than twelve
calendar months prior to notice having been given to
the Executive of the termination of his employment.
(c) GOOD REASON. Following a Change of Control (as defined in
Section 12(b) below), the Executive may terminate his employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean the occurrence
after the Change of Control Date of any of the following events:
(i) Failure to elect or reelect the Executive to the Board of
Directors of the Corporation, if the Executive shall have been a member
of the Board of Directors on the date of this Agreement or at any time
thereafter during the Employment Period, or failure to elect or reelect
the Executive to, or removal of the Executive from, the office(s)
described in Section 2(a) above and intended to be summarized in
Exhibit A to this Agreement.
(ii) A significant change in the nature or scope of the
authorities, powers, functions or duties attached to the position
described in Section 2 above and intended to be summarized in Exhibit A
to this Agreement, or a reduction in compensation, which is not
remedied within 30 days after receipt by the Corporation of written
notice from the Executive.
(iii) A determination by the Executive made in good faith that
as a result of a Change of Control, and a change in circumstances
thereafter and since the date of this Agreement significantly affecting
his position, he is unable to carry out the authorities, powers,
functions or duties attached to his position and contemplated by
Section 2 of this Agreement and the situation is not remedied within 30
days after receipt by the Corporation of written notice from the
Executive of such determination.
19
(iv) A breach by the Corporation of any provision of this
Agreement not embraced within the foregoing clauses (i), (ii) and (iii)
of this Section 4(c) which is not remedied within 30 days after receipt
by the Corporation of written notice from the Executive.
(v) The liquidation, dissolution, consolidation or merger of
the Corporation or transfer of all or a significant portion of its
assets unless a successor or successors (by merger, consolidation or
otherwise) to which all or a significant portion of its assets have
been transferred shall have assumed all duties and obligations of the
Corporation under this Agreement but without releasing the corporation
that is the original party to this Agreement;
PROVIDED, that in any event set forth in this Section 4(c), the Executive shall
have elected to terminate his employment under this Agreement, upon not less
than ten and not more than ninety days' advance written notice to the
Corporation, attention of the Secretary, given, except in the case of a
continuing breach, within three calendar months after (A) failure to be so
elected or reelected, or removal, (B) expiration of the thirty-day cure period
with respect to such event, or (C) the closing date of such liquidation,
dissolution, consolidation, merger or transfer of assets, as the case may be.
An election by the Executive to terminate his employment given
under the provisions of this Section 4(c) shall not be deemed a voluntary
termination of employment by the Executive for the purpose of this Agreement or
any plan or practice of the Corporation.
(d) NOTICE OF TERMINATION. Any termination by the Corporation
for Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section 14(b)
below. For purposes of this Agreement, a "Notice of Termination" means a written
notice which
(i) indicates the specific termination provision in this
Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so indicated and
(iii) if the Date of Termination (as defined in Section 4(e)
below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than fifteen days after
the giving of such notice).
20
(e) DATE OF TERMINATION. "Date of Termination" means
(i) if the Executive's employment is terminated by the
Corporation for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified
therein, as the case may be,
(ii) if the Executive's employment is terminated by the
Corporation other than for Cause or Disability, the Date of Termination
shall be the date on which the Corporation notifies the Executive of
such termination and
(iii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the
date of death of the Executive or the Disability Effective Date, as the
case may be.
5 OBLIGATIONS OF THE CORPORATION UPON TERMINATION.
(a) TERMINATION OTHER THAN FOR CAUSE. If, during the
Employment Period, the Corporation shall terminate the Executive's employment
other than for Cause or the Executive shall terminate his employment following a
Change of Control for Good Reason (termination in any such case referred to as
"Termination"):
(i) the Corporation shall pay the Executive in a lump sum in
cash within 30 days after the Date of Termination the sum of
(1) the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid,
(2) the product of (x) the Target Annual Bonus and (y) a
fraction, the numerator of which is the number of
days in the current fiscal year through the Date of
Termination, and the denominator of which is 365, and
(3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall
be hereinafter referred to as the "Accrued
Obligations"); and
(ii) at the end of the month next following the
Termination, and at the end of each month thereafter until the earliest
of the end of the Employment Period, three
21
years following the Date of Termination, or until the Executive shall
attain the age of 65 years, but in no event beyond the end of the month
in which the death of the Executive shall have occurred or the end of
the sixth month following the Disability Effective Date (such period to
be called the "Termination Period"), the Corporation shall pay to the
Executive an amount equal to the Highest Average Monthly Compensation;
PROVIDED, HOWEVER, that such amount shall be reduced by any other
amounts payable to the Executive in respect of salary or bonus
continuation to be received by the Executive under any severance plan,
policy or arrangement of the Corporation; and, PROVIDED, FURTHER, that
if the Date of Termination occurs on or after the occurrence of a
Change of Control, such amount shall be paid as a lump-sum within 30
days following the Date of Termination, such lump-sum calculated based
upon the present value (within the meaning of Section 28OG(d)(4) of the
Internal Revenue Code of 1986 as amended (the "Code")) of the payments
which would be made absent the Change of Control; and
(iii) During the Termination Period, or such longer period as
any plan, program, practice or policy may provide, the Corporation
shall continue benefits to the Executive and/or the Executive's family
at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described
in Section 3(d) above if the Executive's employment had not been
terminated in accordance with the most favorable plans, practices,
programs or policies of the Corporation and its Affiliated Companies as
in effect and applicable generally to other senior executives of the
Corporation and its Affiliated Companies and their families during the
90-day period immediately preceding the Date of Termination or, if more
favorable to the Executive, as in effect at any time thereafter or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other senior executives of the Corporation
and its Affiliated Companies and their families, PROVIDED, HOWEVER,
that if the Executive becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other
plan during such applicable period of eligibility (such continuation of
such benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until the end
of the Termination Period and to have retired on the date of the
22
end of the Termination Period. To the extent that any benefits referred
to in this Section 5(a)(iii) shall not be payable or provided under any
such plan by reason of the Executive's no longer being an employee of
the Corporation as the result of Termination, the Corporation shall
itself pay, or provide for payment of, such benefits and the service
credit for benefits provided for in Section 5(a)(iv) below, to the
Executive, his dependents and Beneficiary; and
(iv) The period from the Date of Termination until the end of
the Termination Period shall be considered:
(1) Service with the Corporation for the purpose of
continued credits under the employee benefit plans
referred to in Section 3(d) above and all other
benefit plans of the Corporation applicable to the
Executive or his Beneficiary as in effect immediately
prior to Termination but prior to any reduction of
benefits thereunder as the result of amendment or
termination during the Employment Period;
(2) Service within the meaning of Section 3(j) (vii)
above for purposes of Section 3(j) above; and
(3) Employment with the Corporation for purposes of
determining payments and other rights in respect of
awards made or accrued and award opportunities
granted prior to Termination under the executive
incentive plans referred to in Section 3(c) above and
all other incentive plans of the Corporation in which
the Executive was a participant prior to Termination;
and
(v) to the extent not theretofore paid or provided, the
Corporation shall timely pay or provide to the Executive and/or the
Executive's family any other amounts or benefits required to be paid or
provided or which the Executive and/or the Executive's family is
eligible to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the Corporation
and its Affiliated Companies as in effect and applicable generally to
other senior executives of the Corporation and its Affiliated Companies
and their families during the 90-day period immediately preceding the
Date of Termination or, if more favorable to the Executive, as in
effect generally thereafter with respect to other senior executives of
the Corporation and its Affiliated Companies and their families (such
other
23
amounts and benefits shall be referred to below as the "Other
Benefits").
(b) TERMINATION ON OR AFTER CHANGE OF CONTROL. If Termination
shall have occurred coincidental with a Change of Control or during the Change
of Control Period, any provision of Section 5(a)(iv) above or of the ACP to the
contrary notwithstanding, upon such Termination, the Corporation shall pay or
distribute to the Executive on an accelerated basis, to the extent, if any, not
theretofore accelerated, any and all outstanding Short-Term Awards, or
installments thereof, under the ACP that shall have been awarded to the
Executive prior to Termination and deferred for payment subsequent to
termination of employment, with any such accelerated payment based on the value,
determined in accordance with such plan (or successor plan), of such awards or
installments (and any increments thereon) on the Termination Date, and such
accelerated payment or distribution shall constitute a complete discharge of the
Corporation's obligation in respect of the Short-Term Awards so paid or
distributed.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period, the
Corporation shall have no further obligations to the Executive under this
Agreement other than the obligation to pay the Executive's Annual Base Salary,
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon), and accrued vacation pay through the
Date of Termination, in each case to the extent not theretofore paid, and any
other amounts or benefits to which the Executive and/or the Executive's family
is otherwise entitled under the terms of any employee benefit or incentive plan
of the Corporation. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason following a Change
of Control, the Corporation shall have no further obligations to the Executive,
other than to pay the Executive's Annual Base Salary, any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon), and accrued vacation pay through the termination date, in
each case to the extent not theretofore paid, any other benefits to which the
Executive and/or the Executive's family is otherwise entitled under the terms
of any employee benefit or incentive plan of the Corporation, and, if the
Executive is otherwise eligible under the provisions of Section 3(j) of this
Agreement, he shall also be entitled to receive the supplemental retirement
annuity described in such Section 3(j).
(d) DEATH OR DISABILITY.
(i) In the event of the death of the Executive during the
Employment Period, the legal representative of
24
the Executive shall be entitled to the compensation provided for in
Sections 3(a) and 3(b) above for the month in which death shall have
taken place, at the rate being paid at the time of death, and the
Employment Period shall be deemed to have ended as of the close of
business on the last day of the month in which death shall have
occurred but without prejudice to any payments due in respect of the
Executive's death.
(ii) In the event of the Disability of the Executive during
the Employment Period, the Executive shall be entitled to the
compensation provided for in Sections 3(a) and 3(b) above, at the rate
being paid on the Disability Effective Date, for the period of such
Disability but not in excess of six months. The amount of any payments
due under this Section 5(d)(ii) shall be reduced by any payments to
which the Executive may be entitled for the same period because of
disability under any disability or pension plan of the Corporation or
of any Subsidiary or Affiliate thereof.
(e) RESOLUTION OF DISPUTES.
(i) RIGHT OF ELECTION BY EXECUTIVE TO ARBITRATE OR SUE. In the
event that the Executive's employment shall be terminated by the
Corporation during the Employment Period and such termination is
alleged to be for Cause, or the Executive's right to terminate his
employment under Section 4(c) above shall be questioned by the
Corporation, or the Corporation shall withhold payments or provision of
benefits for any other reason, the Executive shall have the right, in
addition to all other rights and remedies provided by law, at his
election either to seek arbitration within the Toledo, Ohio area under
the rules of the American Arbitration Association by serving a notice
to arbitrate upon the Corporation or to institute a judicial
proceeding, in either case within ninety days after having received
notice of termination of his employment or notice in any form that the
termination of his employment under Section 4(b) above is subject to
question or that the Corporation is withholding or proposes to withhold
payments or provision of benefits.
(ii) THIRD-PARTY STAKEHOLDER. In the event that the
Corporation defaults on any obligation set forth in Section 5(a) above,
relating to Termination, and shall have failed to remedy such default
within thirty (30) days after having received written notice of such
default from the Executive, in addition to all other rights and
remedies that the Executive may have as a result of such default, the
Executive may demand and the Corporation shall thereupon be required to
deposit, with the third-party
25
stakeholder hereinafter described, an amount equal to the undiscounted
value of any and all undischarged, future obligations of the
Corporation under Section 5(a) above and such amount shall thereafter
be held, paid, applied or distributed by such third-party stakeholder
for the purpose of satisfying such undischarged, future obligations of
the Corporation when and to the extent that they become due and
payable. Any interest or other income on such amount shall be retained
by the third-party stakeholder and applied, if necessary, by it to
satisfy such obligations, PROVIDED, HOWEVER, that any interest or other
income that is earned on such undischarged, future obligations after
the date that the third-party stakeholder determines, in its sole
discretion, that such obligations are due and owing to the Executive,
shall be paid to the Executive as earned. To the extent not theretofore
expended, such amount (including any remaining unexpended interest or
other income) shall be repaid to the Corporation at such time as the
third-party stakeholder, in its sole discretion, reasonably exercised,
determines, upon the advice of counsel and after consultation with the
Corporation and the Executive or, in the event of his death, his
Beneficiary, that all obligations of the Corporation under Section 5(a)
above have been substantially satisfied.
Such amount shall, in the event of any question, be determined
jointly by the firm of certified public accountants regularly employed
by the Corporation and a firm of certified public accountants selected
by the Executive, in each case upon the advice of actuaries to the
extent the certified public accountants consider necessary, and, in the
event such two firms of accountants are unable to agree on a resolution
of the question, such amount shall be determined by an independent firm
of certified public accountants selected jointly by both firms of
accountants.
The third-party stakeholder, the fees and expenses of which
shall be paid by the Corporation, shall be a national or state bank or
trust company having a combined capital, surplus and undivided profits
and reserves of not less than Ten Million Dollars ($10,000,000) which
is duly authorized and qualified to do business in the state in which
the Executive resides at the time of such default.
(f) BENEFITS ARE IN ADDITION TO SUPPLEMENTAL RETIREMENT
ANNUITY. Any provision of this Agreement to the contrary notwithstanding, the
payments, benefits, service credit for benefits and other matters provided by
this Section 5, including without limitation Section 5(a) above, in the event of
a Termination, are in addition to any payments, benefits, service credit for
benefits and other matters provided by Section 3(j)
26
above relating to a supplemental retirement annuity that may apply in such
event.
6 NON-EXCLUSIVITY OF RIGHTS.
Except as provided in Sections 5(a)(ii), 5(b) and 5(c) above,
nothing in this Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice provided by the
Corporation or any of its Affiliated Companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement entered into after the date
hereof with the Corporation or any of its Affiliated Companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of, or any contract or agreement
entered into after the date hereof with, the Corporation or any of its
Affiliated Companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
7 FULL SETTLEMENT.
The Corporation's obligation to make the payments provided for
in this Agreement 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 Corporation may have against the Executive or others.
In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and, except as provided in Section
5(a)(iii) above, such amounts shall not be reduced whether or not the Executive
obtains other employment.
8 GOLDEN PARACHUTE TAX PAYMENTS.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution involving a change of control of the Corporation, by the
Corporation or any other person or entity, to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 8) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code (or any successor
provision) or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive
27
an additional payment (a "Gross-Up Payment") from the Corporation in an amount
such that, after payment by the Executive of all taxes (including 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 Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) All calculations and determinations required to be made
under this Section 8, including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Price Waterhouse (or any
successor thereto by merger or operation of law) (the "Accounting Firm"). In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change of control, the Executive 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 Corporation. Any Gross-Up Payment, as determined pursuant
to this Section 8, shall be paid by the Corporation to the Executive within five
days of the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that failure to report the Excise Tax on
the Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Corporation and the Executive.
(c) The Executive shall promptly notify the Corporation in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment.
The Corporation shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such claim and shall indemnify and hold the Executive 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 Section 8(c), the Corporation shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or to contest
the claim in any
28
permissible manner, and the Executive 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 Corporation shall
determine; PROVIDED, HOWEVER, that if the Corporation directs the Executive to
pay such claim and sue for a refund, the Corporation shall advance the amount of
such payment to the Executive, on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance. Furthermore, the Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive 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.
9 CONFIDENTIAL INFORMATION.
(a) The Executive agrees not to disclose, either while in the
Corporation's employ or at any time thereafter, to any person not employed by
the Corporation, or not engaged to render services to the Corporation, except
with the prior written consent of an officer authorized to act in the matter by
the Board of Directors of the Corporation, any confidential information obtained
by him while in the employ of the Corporation, including, without limitation,
information relating to any of the Corporation's inventions, processes,
formulae, plans, devices, compilations of information, methods of distribution,
customers, client relationships, marketing strategies or trade secrets;
PROVIDED, HOWEVER, that this provision shall not preclude the Executive from use
or disclosure of information known generally to the public or of information not
considered confidential by persons engaged in the business conducted by the
Corporation or from disclosure required by law or Court order. The agreement
herein made in this Section 9(a) shall be in addition to, and not in limitation
or derogation of, any obligations otherwise imposed by law upon the Executive in
respect of confidential information and trade secrets of the Corporation, its
Subsidiaries and Affiliates.
(b) The Executive also agrees that upon leaving the
Corporation's employ he will not take with him, without the prior written
consent of an officer authorized to act in the matter by the Board of Directors
of the Corporation, and he will surrender to the Corporation any record, list,
drawing, blueprint, specification or other document or property of the
Corporation, its Subsidiaries and Affiliates, together with any copy and
reproduction thereof, mechanical or otherwise, which is of a confidential nature
relating to the Corporation, its Subsidiaries and Affiliates, or, without
limitation, relating to
29
its or their methods of distribution, client relationships, marketing strategies
or any description of any formulae or secret processes, or which was obtained by
him or entrusted to him during the course of his employment with the
Corporation.
10 COMPETITION.
(a) Subject to the provisions of Section 5(e) above relating
to resolution of disputes, there shall be no obligation on the part of the
Corporation to make any further payments provided for in Section 3(j) above
relating to payment of a supplemental retirement annuity, if the Executive
shall, during the period that such payments are being made or benefits provided,
engage in Competition with the Corporation as hereinafter defined, provided all
of the following shall have taken place:
(i) the Secretary of the Corporation, pursuant to resolution
of the Board of Directors of the Corporation, shall have given written
notice to the Executive that, in the opinion of the Board of Directors,
the Executive is engaged in such Competition, specifying the details;
(ii) the Executive shall have been given a reasonable
opportunity upon reasonable notice to appear before and to be heard by
the Board of Directors prior to the determination of the Board
evidenced by such resolution;
(iii) the Executive shall neither have ceased to engage in
such Competition within thirty days from his receipt of such notice nor
diligently taken all reasonable steps to that end during such
thirty-day period and thereafter.
Notwithstanding any provision to the contrary contained
herein, in the event of a Termination, as defined in Section 5(a) above, this
Section 10(a) shall not apply following a Change of Control.
(b) The Executive agrees in addition to the provisions
relating to Competition set forth in Section 10(a) above that he will not engage
in Competition at any time (i) during the Employment Period, and (ii) except in
the event of a Termination, during the thirty-six (36) months immediately
following the termination of his employment with the Corporation.
(c) The word "Competition" for the purposes of this Agreement
shall mean
30
(i) 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 Corporation and its Subsidiaries and Affiliates during the last
fiscal year of the Corporation preceding the termination of the
Executive's employment, in any geographical area in which the
Corporation, 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 Corporation within the meaning of this
Section 10,
(ii) soliciting any person who is a customer of the businesses
conducted by the Corporation, or any business in which the Executive
has been engaged on behalf of the Corporation and its Subsidiaries or
Affiliates at any time during the term of this Agreement on behalf of a
business described in clause (i) of this Section 10,
(iii) inducing or attempting to persuade any employee of the
Corporation or any of its Subsidiaries or Affiliates to terminate his
employment relationship in order to enter into employment with a
business described in clause (i) of this Subsection 10(c), or
(iv) making or publishing any statement which is, or may
reasonably be considered to be, disparaging of the Corporation or any
of its Subsidiaries or Affiliates, or directors, officers, employees or
the operations or products of the Corporation or any of its
Subsidiaries or Affiliates, except to the extent the Executive, during
the Employment Period, makes the statement to employees or other
representatives of the Corporation or any of its Subsidiaries or
Affiliates in furtherance of the Corporation's business and the
performance of his services hereunder.
11 SUCCESSORS.
Except as otherwise provided herein,
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Executive, his heirs and legal representatives, and the
Corporation and its successors as provided in this Section 11.
31
(b) This Agreement shall be binding upon and inure to the
benefit of the Corporation and any successor of the Corporation, including,
without limitation, any corporation or corporations acquiring, directly or
indirectly, 50% or more of the outstanding securities of the Corporation, or all
or substantially all of the assets of the Corporation, whether by merger,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
embraced within the term "the Corporation" for the purposes of this Agreement),
but shall not otherwise be assignable by the Corporation.
12 CERTAIN DEFINITIONS.
The following defined terms used in this Agreement shall have
the meanings indicated:
(a) BENEFICIARY. The term "Beneficiary" as used in this
Agreement shall, in the event of the death of the Executive, mean an individual
or individuals and/or an entity or entities, including, without limitation, the
Executive's estate, duly designated on a form filed with the Corporation by the
Executive to receive any amount that may be payable after his death or, if no
such individual, individuals, entity or entities has or have been so designated,
or is at the time in existence or able to receive any such amount, the
Executive's estate.
(b) CHANGE OF CONTROL. A "Change of Control" shall be deemed
to have occurred if the event set forth in any one of the following paragraphs
shall have occurred:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation (not including in the
securities Beneficially Owned by such Person any securities acquired
directly from the Corporation or its Affiliates) representing 20% or
more of the combined voting power of the Corporation's then outstanding
securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (1) of paragraph
(iii) below; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director whose appointment or election by the Board or nomination for
election by the Corporation'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 date hereof or whose
appointment, election or nomination for election was previously so
approved or recommended. For
32
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 Corporation, shall not be
counted; or
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect Subsidiary of the Corporation
with any other corporation, other than (1) a merger or consolidation
which would result in the voting securities of the Corporation
outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent
thereof) at least 50% of the combined voting power of the securities of
the Corporation or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (2) a
merger or consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the
Corporation (not including in the securities Beneficially Owned by such
Person any securities acquired directly from the Corporation or its
Affiliates) representing 20% or more of the combined voting power of
the Corporation's then outstanding securities; or
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or there is
consummated an agreement for the sale or disposition by the Corporation
of all or substantially all of the Corporation's assets, other than a
sale or disposition by the Corporation of all or substantially all of
the Corporation's assets to an entity, at least 50% of the combined
voting power of the voting securities of which are owned by
stockholders of the Corporation in substantially the same proportions
as their ownership of the Corporation immediately prior to such sale.
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"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)
33
thereof, except that such term shall not include (i) the Corporation or any of
its Subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation 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 Corporation in substantially the same proportions as their
ownership of stock of the Corporation.
(c) CHANGE OF CONTROL DATE. The "Change of Control Date" shall
mean the first date on which a Change of Control occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Corporation is terminated or the Executive
ceases to have the position with the Corporation set forth in Section 2(a) above
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination or cessation (i) was at the
request of a third party who has taken steps reasonably calculated to effect the
Change of Control or (ii) otherwise arose in connection with or anticipation of
the Change of Control, then for all purposes of this Agreement the "Change of
Control Date" shall mean the date immediately prior to the date of such
termination or cessation.
(d) CHANGE OF CONTROL PERIOD. The "Change of Control Period"
shall mean the period commencing on the Change of Control Date and ending on the
last day of the Employment Period.
13 AMENDMENT OR MODIFICATION; WAIVER.
No provision of this Agreement may be amended, modified or
waived unless such amendment, modification or waiver shall be authorized by the
Board of Directors of the Corporation or any authorized committee of the Board
of Directors and shall be agreed to in writing, signed by the Executive and by
an officer of the Corporation thereunto duly authorized. Except as otherwise
specifically provided in this Agreement, no waiver by either party hereto of any
breach by the other party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of a subsequent
breach of such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same time or at any prior or subsequent time.
14 MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without reference to principles
of conflict of laws. The captions of
34
this Agreement are not part of the provisions hereof and shall have no force or
effect.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
35
IF TO THE EXECUTIVE: COPY TO:
- -------------------- --------
Mr. Southwood J. Morcott Mr. Southwood J. Morcott
c/o Dana Corporation 29765 Durham Circle
4500 Dorr Street Perrysburg, Ohio 43551
Toledo, Ohio 43615
IF TO THE CORPORATION:
- ----------------------
Dana Corporation
4500 Dorr Street
Toledo, Ohio 43615
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Corporation may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as it determines is
required to be withheld pursuant to any applicable law or regulation.
(e) When used herein in connection with plans, programs and
policies relating to the Executive, employees, compensation, benefits,
perquisites, executive benefits, services and similar words and phrases, the
word "Corporation" shall be deemed to include all wholly-owned Subsidiaries of
the Corporation.
(f) This instrument contains the entire agreement of the
parties concerning the subject matter, and all promises, representations,
understandings, arrangements and prior agreements concerning the subject matter
are merged herein and superseded hereby, including, without limitation, the
agreements between the parties dated February 13, 1984, December 10, 1990 and
December 14, 1992.
(g) No right, benefit or interest hereunder, shall be subject
to anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
36
(h) The Executive shall not have any right, title, or interest
whatsoever in or to any investments which the Corporation may make to aid it in
meeting its obligations under this Agreement.
(i) Subject to the provisions of Section 5(e) above, all
payments to be made under this Agreement shall be paid from the general funds of
the Corporation and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of amounts payable under
this Agreement.
(j) The Corporation and the Executive recognize that each
party will have no adequate remedy at law for breach by the other of any of the
agreements contained in this Agreement and, in the event of any such breach, the
Corporation and the Executive hereby agree and consent that the other shall be
entitled to a decree of specific performance, mandamus or other appropriate
remedy to enforce performance of such agreements.
(k) Subject to the provisions of Section 5(e) above, nothing
contained in this Agreement shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Corporation and the Executive
or any other person.
(l) Subject to the provisions of Section 5(e) above, to the
extent that any person acquires a right to receive payments from the Corporation
under this Agreement, except to the extent provided by law such right shall be
no greater than the right of an unsecured general creditor of the Corporation.
(m) In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his legal representative or,
where appropriate, to his Beneficiary.
(n) If any event provided for in this Agreement is scheduled
to take place on a legal holiday, such event shall take place on the next
succeeding day that is not a legal holiday.
IN WITNESS WHEREOF, the Executive and, pursuant to due
authorization from its Board of Directors, the Corporation have caused this
Agreement to be executed as of the day and year first above written.
37
DANA CORPORATION
By:/s/ Martin J. Strobel
----------------------
Name: Martin J. Strobel
Title: Vice President
General Counsel
By:/s/ Theodore B. Sumner
-----------------------
Chairman of the
Compensation Committee
Attest:
Assistant Secretary
/s/ Sue A. Griffin
/s/ Southwood J. Morcott
------------------------
Executive
38
Exhibit A Exhibit A to Agreement made as of December 8, 1997
between Dana Corporation and Southwood J. Morcott
-------------------------------------------------
As of December 8, 1997, for purposes of Section 2(a),
the office(s) and title(s) of the Executive are Chairman of
the Board of Directors and Chief Executive Officer;
the reporting responsibility of the Executive is to report
directly and only to the Board of Directors of the Corporation; and
the duties and responsibilities of the Executive are:
The Executive shall continue to serve as the principal officer
of the Corporation and as general manager of all operations
and affairs of the Corporation, its subsidiaries, affiliates
and divisions, at all times having the authority, powers and
duties of the person charged with the general management of
the business and affairs of the Corporation, with authority to
manage and direct all operations and affairs of the
Corporation, its subsidiaries, affiliates and divisions, and
to employ and discharge all employees thereof subject to
approval of the Board of Directors of the Corporation with
respect to elected officers of the Corporation. The Executive
shall serve as Chairman of the Policy Committee of the
Corporation. The Executive shall continue to report to and be
responsible only to the Board of Directors of the Corporation,
with all employees of the Corporation, its subsidiaries,
affiliates and divisions reporting directly or indirectly to
him.