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Exhibit 10-J(2)
EMPLOYMENT AGREEMENT
BETWEEN
DANA CORPORATION
AND
JOE M. MAGLIOCHETTI
DATED DECEMBER 8, 1997
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TABLE OF CONTENTS
SECTION PAGE
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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.............................................................................................3
(a) SALARY..............................................................................................3
(b) ADDITIONAL COMPENSATION.............................................................................4
(c) INCENTIVE, STOCK AND SAVINGS PLANS..................................................................4
(d) RETIREMENT AND WELFARE BENEFIT PLANS................................................................5
(e) EXPENSES............................................................................................5
(f) FRINGE BENEFITS.....................................................................................5
(g) OFFICE AND SUPPORT STAFF............................................................................6
(h) VACATION AND OTHER ABSENCES.........................................................................6
(i) BENEFITS SHALL NOT BE REDUCED UNDER CERTAIN CIRCUMSTANCES...........................................6
(j) SUPPLEMENTAL RETIREMENT ANNUITY.....................................................................7
4. TERMINATION OF EMPLOYMENT...............................................................................10
(a) DEATH OR DISABILITY................................................................................10
(b) CAUSE..............................................................................................11
(c) GOOD REASON........................................................................................12
(d) NOTICE OF TERMINATION..............................................................................14
(e) DATE OF TERMINATION................................................................................14
5 OBLIGATIONS OF THE CORPORATION UPON TERMINATION.........................................................14
(a) TERMINATION OTHER THAN FOR CAUSE...................................................................14
(b) TERMINATION ON OR AFTER CHANGE OF CONTROL..........................................................17
(c) CAUSE; OTHER THAN FOR GOOD REASON..................................................................17
(d) DEATH OR DISABILITY................................................................................18
(e) RESOLUTION OF DISPUTES.............................................................................18
(i) RIGHT OF ELECTION BY EXECUTIVE TO ARBITRATE OR SUE........................................18
(ii) THIRD-PARTY STAKEHOLDER..................................................................19
(f) BENEFITS ARE IN ADDITION TO SUPPLEMENTAL RETIREMENT ANNUITY........................................20
6 NON-EXCLUSIVITY OF RIGHTS...............................................................................20
7 FULL SETTLEMENT.........................................................................................20
8 GOLDEN PARACHUTE TAX PAYMENTS...........................................................................21
9 CONFIDENTIAL INFORMATION................................................................................22
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10 COMPETITION.............................................................................................23
11 SUCCESSORS..............................................................................................24
12 CERTAIN DEFINITIONS.....................................................................................25
(a) BENEFICIARY........................................................................................25
(b) CHANGE OF CONTROL..................................................................................25
(c) CHANGE OF CONTROL DATE.............................................................................27
(d) CHANGE OF CONTROL PERIOD...........................................................................27
13 AMENDMENT OR MODIFICATION; WAIVER......................................................................27
14 MISCELLANEOUS...........................................................................................27
Exhibit A........................................................................................................31
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DEFINED TERMS
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DEFINED TERMS* SECTION PAGE
- -------------- ------- ----
Accounting Firm 8(b) 24
Accrued Obligation 5(a)(i)(3) 17
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) 29
Board 3(a) 4
Cause 4(b) 12
Change of Control 12(b) 29
Change of Control Date 12(c) 31
Change of Control Period 12(d) 31
Code 5(a)(ii) 18
Competition 10(c) 27
Corporation Introduction 1
11(b) 29
14(e) 32
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) 24
Executive Introduction 1
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*Each listed term is intended to include both the singular and plural form
of the term.
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DEFINED TERMS
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DEFINED TERMS* SECTION PAGE
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Gross-Up Payment 8(a) 24
Highest Average Monthly Compensation 3(j)(v) 11
Notice of Termination 4(d) 16
Other Benefits 5(a)(v) 20
Payment 8(a) 24
Pension and Retirement Program of the 3(j)(vi) 11
Corporation
Renewal Date 1(c) 2
Service 3(j)(vii) 12
Subsidiary 2(a) 3
Target Annual Bonus 3(b) 5
Terminal Date 1(b) 1
Termination 5(a) 17
Termination Period 5(a)(ii) 18
Welfare Benefit Continuation 5(a)(iii) 19
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*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 Joe M. Magliochetti
(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 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.
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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.
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
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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.
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 $43,333.33 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
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"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 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
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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 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
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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 December 10, 1990, the date of the original
agreement between the parties (except that, in converting a monthly retirement
benefit, which is payable under any plan that is a component of the Pension and
Retirement Program of the Corporation, into a lump sum payment, the lump sum
conversion basis to be used shall be the basis that is described in Section
3(j)(iii) below, regardless of whether such basis is more favorable or less
favorable than the one in effect on December 10, 1990), and except as provided
in the 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
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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, 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 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
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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
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.
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(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; 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 life annuity
under the Dana Corporation Retirement Plan at the time
the calculation is made.
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
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under the Dana Corporation Retirement Plan as then in effect) 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 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
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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 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
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(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 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:
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(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.
(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.
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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).
(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"):
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(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 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
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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 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
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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
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 Corpora-
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tion. 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 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
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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 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
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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) 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.
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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 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
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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 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
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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 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.
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(c) The word "Competition" for the purposes of this Agreement shall
mean
(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.
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(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
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
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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) 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.
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(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 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:
If to the Executive: Copy to:
- -------------------- --------
Mr. Joe M. Magliochetti Mr. Joe M. Magliochetti
c/o Dana Corporation 3846 Sulphur Springs Road
4500 Dorr Street Toledo, Ohio 43606
Toledo, Ohio 43615
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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 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.
(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.
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(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.
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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.
DANA CORPORATION
By: /s/ Southwood J. Morcott
-------------------------
Name: Southwood J. Morcott
Title: Chairman of the Board
By: /s/ Southwood J. Morcott
-------------------------
Chairman of the
Compensation Committee
Attest:
Assistant Secretary
Martin J. Strobel
/s/ Joe M. Magliochetti
-----------------------
Executive
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Exhibit AExhibit A to Agreement made as of December 8, 1997
between Dana Corporation and Joe M. Magliochetti
------------------------------------------------
As of December 8, 1997, for purposes of Section 2(a),
the office(s) and title(s) of the Executive are President and Chief
Operating Officer of the Corporation;
the reporting responsibility of the Executive is to report
directly to the Chairman of the Board of Directors of the Corporation; and the
duties and responsibilities of the Executive are:
Through the chairmanship of the World Operating Committee, provides direction
for the Corporation's worldwide operations. Major activities include planning
and review of operating results for, and organizational development to insure
profitability of, worldwide operations. The World Operating Committee executes
and monitors the corporate style, marketing strategies, policies and goals that
the Corporation's various strategic business units and various world regions are
responsible for in their performance. Serves as a member of the Policy Committee
which sets the corporate style, strategies, policies and goals that business
operations of the Corporation are responsible for in their performance. Performs
such other duties as may be prescribed by the Chairman and Chief Executive
Officer of the Corporation.