1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
Commission
For the Quarterly Period Ended June 30, 1998 File Number 1-1063
------------- ------
Dana Corporation
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Virginia 34-4361040
- ---------------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
4500 Dorr Street, Toledo, Ohio 43615
- ---------------------------------------- ---------------------------------
(Address of Principal Executive Offices) (Zip Code)
(419) 535-4500
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1998
-------------------------- ----------------------------
Common stock, $1 par value 105,840,154
2
DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
Page Number
-----------
Cover 1
Index 2
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheet
December 31, 1997 and
June 30, 1998 3
Statement of Income
Three Months and Six Months Ended
June 30, 1997 and 1998 4
Condensed Statement of Cash Flows
Six Months Ended
June 30, 1997 and 1998 5
Notes to Condensed Financial Statements 6-8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9-16
Part II. Other Information
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 6. Exhibits and Reports on Form 8-K 17
Signature 18
Exhibit Index 19
2
3
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. DANA CORPORATION
- -------
CONDENSED BALANCE SHEET (Unaudited)
(in Millions)
Assets December 31, 1997 June 30, 1998
- ------ ----------------- -------------
Cash and Cash Equivalents $ 394.3 $ 145.9
Accounts Receivable
Trade 1,030.6 1,297.0
Other 132.3 187.2
Inventories
Raw Materials 252.9 302.8
Work in Process and Finished Goods 656.9 749.5
Lease Financing 1,330.1 1,455.9
Investments and Other Assets 1,276.8 1,344.0
Property, Plant and Equipment 3,911.3 4,081.7
Less: Accumulated Depreciation 1,866.5 1,814.8
---------- ----------
Total Assets $ 7,118.7 $ 7,749.2
========== ==========
Liabilities and Shareholders' Equity
- ------------------------------------
Accounts Payable and Other Liabilities $ 1,518.4 $ 1,801.3
Short-Term Debt 504.2 636.9
Long-Term Debt 2,178.3 2,244.6
Deferred Employee Benefits 1,062.5 1,062.0
Minority Interest 154.1 151.4
Shareholders' Equity 1,701.2 1,853.0
---------- ----------
Total Liabilities and
Shareholders' Equity $ 7,118.7 $ 7,749.2
========== ==========
3
4
ITEM 1. (Continued)
- -------------------
DANA CORPORATION
STATEMENT OF INCOME (Unaudited)
(in Millions Except Per Share Amounts)
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
1997 1998 1997 1998
---- ---- ---- ----
Net Sales $ 2,140.8 $ 2,340.3 $ 4,256.1 $ 4,690.5
Revenue from Lease Financing
and Other Income 75.5 64.5 211.4 128.7
----------- ----------- ----------- -----------
2,216.3 2,404.8 4,467.5 4,819.2
----------- ----------- ----------- -----------
Costs and Expenses
Cost of Sales 1,816.2 1,970.3 3,611.5 3,955.3
Selling, General and
Administrative Expenses 187.6 196.8 380.6 395.9
Restructuring and Rationalization
Charges 8.9 -- 34.9 --
Interest Expense 49.7 56.2 97.9 113.8
----------- ----------- ----------- -----------
2,062.4 2,223.3 4,124.9 4,465.0
----------- ----------- ----------- -----------
Income Before Income Taxes 153.9 181.5 342.6 354.2
Estimated Taxes on Income (60.7) (70.6) (157.3) (142.0)
Minority Interest (6.2) (6.0) (11.8) (9.3)
Equity in Earnings of Affiliates 6.8 11.1 12.9 20.7
----------- ----------- ----------- -----------
Net Income $ 93.8 $ 116.0 $ 186.4 $ 223.6
=========== =========== =========== ===========
Net Income Per Common Share -
Basic $ .90 $ 1.10 $ 1.80 $ 2.12
=========== =========== =========== ===========
Diluted $ .89 $ 1.08 $ 1.78 $ 2.08
=========== =========== =========== ===========
Dividends Declared and Paid per
Common Share $ .25 $ .29 $ .50 $ .56
Average Number of Shares Outstanding -
For Basic 103.8 105.6 103.8 105.6
For Diluted 104.9 107.4 104.9 107.4
4
5
ITEM 1. (Continued)
- -------------------
DANA CORPORATION
CONDENSED STATEMENT OF CASH FLOWS (Unaudited)
(in Millions)
Six Months Ended June 30
------------------------
1997 1998
---- ----
Net Income $ 186.4 $ 223.6
Depreciation and Amortization 168.7 181.8
Gain on Sale of Dana Distribution Europe (45.0) --
Working Capital Change and Other (45.5) (99.5)
-------- --------
Net Cash Flows from Operating Activities 264.6 305.9
-------- --------
Purchases of Property, Plant and Equipment (169.4) (232.0)
Purchases of Assets to be Leased (236.7) (317.7)
Payments Received on Leases and Loans 158.0 162.8
Acquisitions (475.8) (353.7)
Divestitures 152.0 58.5
Other (0.1) (14.0)
-------- --------
Net Cash Flows-Investing Activities (572.0) (696.1)
-------- --------
Net Change in Short-Term Debt (95.9) 51.0
Proceeds from Long-Term Debt 700.3 388.7
Payments on Long-Term Debt (300.2) (250.7)
Dividends Paid (51.9) (59.2)
Other 7.1 12.0
-------- --------
Net Cash Flows-Financing Activities 259.4 141.8
-------- --------
Net Change in Cash and Cash Equivalents (48.0) (248.4)
Cash and Cash Equivalents-beginning of period 227.8 394.3
-------- --------
Cash and Cash Equivalents-end of period $ 179.8 $ 145.9
======== ========
5
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ITEM 1. (Continued)
- -------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS
(in Millions Except Per Share Amounts)
1. In the opinion of management, all normal recurring adjustments
necessary to a fair presentation of results for the unaudited interim
periods have been included.
2. In February 1997, Dana acquired the assets of Clark-Hurth Components, a
worldwide manufacturer of off-highway vehicle and equipment components,
and the Sealed Power worldwide piston ring and cylinder liner
operations and assets of SPX Corporation. In January 1998, the
acquisition of the heavy axle and brake business of Eaton Corporation
was completed. In April 1998, the Company acquired 98 percent of the
share capital of Nakata S.A. Industria e Comercio of Sao Paulo, Brazil.
These acquisitions have been accounted for as purchases and their
results of operations have been included since the dates of
acquisition. Goodwill relating to the acquisitions is included in
Investments and Other Assets.
3. In March 1997, Dana completed the sale of its warehouse distribution
operations in the U.K., the Netherlands and Portugal to U.K.-based
Partco Group plc for L 103 (U.S. $164) resulting in an after-tax
gain of $45 (44 cents per share). In February 1998, Dana completed the
sale of its hydraulic brake hose facilities in Columbia City, Ind., and
Garching, Germany, to CF Gomma, S.p.A., of Passirano, Italy. In May
1998, Dana completed the sale of its hydraulic cylinder business to
Hyco International, Inc. of Atlanta, Ga.
4. The Company initiated a rationalization plan at its Perfect Circle
Europe operations resulting in a charge of $36 (35 cents per share) in
the first quarter of 1997.
5. Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
Per Share," is effective for periods ending after December 15, 1997.
Accordingly, basic and diluted income per share have been computed in
accordance with this statement. Following is a reconciliation of
average shares for purposes of calculating basic and diluted net income
per share.
Three and Six Months Ended June 30
----------------------------------
1997 1998
---- ----
Weighted average common shares outstanding 103.8 105.6
Plus: Incremental shares from
assumed conversion of -
Deferred compensation units .4 .5
Stock options .7 1.3
-------- --------
Total potentially dilutive securities 1.1 1.8
-------- --------
Adjusted average common shares outstanding 104.9 107.4
======== ========
6
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ITEM 1. (Continued)
- -------------------
Notes to Consolidated Financial Statements
- ------------------------------------------
(in Millions)
6. SFAS No. 130, "Reporting Comprehensive Income," is effective for fiscal
years beginning after December 15, 1997. The statement requires, among
other things, the reporting of total comprehensive income in condensed
financial statements of interim periods. Comprehensive income includes
net income and components of other comprehensive income, such as
foreign currency translation adjustments and minimum pension liability
adjustments. Dana's total comprehensive earnings were as follows:
Three Months Ended Six Months Ended
-------------------- ------------------
June 30 June 30
1997 1998 1997 1998
---- ---- ---- ----
Net Income $ 93.8 $ 116.0 $ 186.4 $ 223.6
Other Comprehensive Income/(Loss)
Deferred translation gain/(loss) (16.1) (11.9) (16.4) (24.5)
-------- --------- --------- --------
Total comprehensive income $ 77.7 $ 104.1 $ 170.0 $ 199.1
======== ========= ========= ========
7. In the first quarter of 1998, Dana sold $350 of new senior unsecured
notes consisting of $150 of 6.5% notes due March 15, 2008 and $200 of
7.0% notes due March 15, 2028. Proceeds from the issues were used to
pay down existing short- and medium-term debt.
8. Restructuring and rationalization charges of $162 were recorded in
1997. An accrued liability of $123 remained at December 31, 1997.
During the first six months of 1998, $31 was charged against the
liability, consisting of cash payments of $14 ($12 related to severance
pay and benefits and $2 related to closed facilities) and non-cash
charges of $17 ($3 related to writing down inventory at closed
facilities and $14 related to impaired assets and investment in
operations that were closed or sold). The remaining estimated cash
outlays of $74 ($42 in 1998, $16 in 1999, and $16 thereafter)
generally represent employee separation costs for the approximately
630 workers affected by these activities. The balance of the accrual
is non-cash and will be utilized to write down the affected assets.
Dana's liquidity and cash flows will not be materially impacted by
these actions. Dana's operations over the long term are expected to
benefit from these realignment strategies.
7
8
ITEM 1. (Continued)
- -------------------
Notes to Consolidated Financial Statements
- ------------------------------------------
(in Millions)
9. In July 1998, the Company completed its acquisition of Echlin Inc., a
global producer of parts for the automotive aftermarket. Dana is
exchanging 0.9293 shares of its common stock for each share of Echlin
common stock outstanding on the effective date of the merger. The
following is unaudited pro forma combined financial information as of
December 31, 1997 and June 30, 1997 and for the three-month and
six-month periods ended June 30, 1998. There were no material
intercompany transactions.
December 31, 1997 June 30, 1998
----------------- -------------
Total Assets $ 9,479.6 $ 10,065.0
=========== ============
Total Liabilities $ 6,834.3 $ 7,227.8
Total Equity 2,645.3 2,837.2
----------- ------------
Total Liabilities and Equity $ 9,479.6 $ 10,065.0
=========== ============
Three Months Ended Six Months Ended
------------------ ----------------
June 30 June 30
------- -------
1997 1998 1997 1998
---- ---- ---- ----
Net Sales $ 3,089.7 $ 3,236.6 $ 6,085.9 $ 6,469.4
=========== =========== =========== =========
Net Income $ 127.1 $ 160.2 $ 249.0 $ 300.7
=========== =========== =========== =========
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources
- -------------------------------
(in Millions)
Net cash provided by operating activities amounted to $306 for the six
months ended June 30, 1998, compared with $265 in 1997. The increase was
attributable to higher operating net income and depreciation and amortization
expenses in 1998, partially offset by increased working capital requirements.
- ------------------------------------------------------------
CASH FLOWS FROM OPERATIONS
FOR SIX MONTHS ENDED JUNE 30
- ------------------------------ -----------------------------
1996 $ 287
- ------------------------------ -----------------------------
1997 265
- ------------------------------ -----------------------------
1998 306
- ------------------------------ -----------------------------
Net cash flows used for investing activities were $696 through six
months of 1998 primarily due to acquisitions and net capital expenditures. In
1998 Dana acquired Eaton Corporation's heavy axle and brake business, the
remaining 40% interest in Simesc, its Brazilian structural components
manufacturing company, and 98% of the share capital of Brazilian suspension
components producer Nakata. Dana also divested the Weatherhead brake hose
operations and the hydraulic cylinder business. In the first six months of 1997,
Dana acquired the assets of Clark-Hurth Components and the piston ring and
cylinder liner operations of SPX Corporation. The Company sold its European
warehouse distribution operations in March 1997.
- ------------------------------------------------------------
CAPITAL EXPENDITURES
- ------------ --------------------- -------------------------
SIX MONTHS YEAR ENDED
ENDED JUNE 30 DECEMBER 31
- ------------ --------------------- -------------------------
1996 $161 $ 357
- ------------ --------------------- -------------------------
1997 169 426
- ------------ --------------------- -------------------------
1998 232 430 *
- ------------------------------------------------------------
*Projected
- ------------------------------------------------------------
Capital expenditures were $63 higher than in the first six months of
1997 to support the Company's growth initiatives and continued manufacturing
process improvements. The Company currently anticipates capital spending for the
full year to be slightly above the 1997 level.
Net purchases of leased assets (purchases less principal payments
received on leases and loans) were $155 in the first six months 1998, an
increase of $76 over 1997.
Financing activities provided net cash of $142 in the first six months
of 1998. In the first quarter, Dana sold $350 of new senior unsecured notes
consisting of $150 of 6.5% notes due March 15, 2008 and $200 of 7.0% notes due
March 15, 2028. Proceeds from the issues were used to pay down existing short-
and medium-term debt.
In January, Standard & Poor's Corporation increased Dana's corporate
credit and senior debt ratings to "A-" from "BBB+." The ratings of Dana Credit
Corporation (DCC), Dana's wholly-owned leasing subsidiary, were also raised to
"A-."
Cash dividends paid in the first six months of 1998 were $59 compared
to $52 last year. In the second quarter Dana's Board of Directors approved a 7%
increase in the dividend to an annualized rate of $1.16 per share. The increased
dividend was paid to shareholders on June 15, 1998.
9
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ITEM 2. (Continued)
- -------------------
Liquidity and Capital Resources
- -------------------------------
(in Millions)
Dana utilizes short-term committed and uncommitted bank lines for the
issuance of commercial paper and bank direct borrowings. Dana (excluding DCC)
had committed and uncommitted borrowing lines of credit totaling $1,047 at June
30, 1998, while DCC's lines were $861. Dana's strong cash flows from operations,
together with its worldwide credit facilities, are expected to provide adequate
liquidity to meet the Company's debt service obligations, projected capital
expenditures and working capital requirements for the balance of 1998.
Dana's management and legal counsel have reviewed the legal proceedings
to which the Company and its subsidiaries were parties as of June 30, 1998
(including, among others, those involving product liability claims and alleged
violations of environmental laws) and concluded that neither the liabilities
that may result from these legal proceedings nor the cash flows related to such
liabilities are reasonably likely to have a material adverse effect on the
Company's liquidity, financial condition or results of operations. The Company
estimates its contingent environmental and product liabilities based upon the
most probable method of remediation or outcome considering currently enacted
laws and regulations and existing technology. Measurement of liabilities is made
on an undiscounted basis and excludes the effects of inflation. In those cases
where there is a range of equally probable remediation methods or outcomes, the
Company accrues at the lower end of the range. At June 30, 1998, the Company had
accrued $46 for product liability costs (products) and $52 for environmental
liability costs (environmental), compared to $50 for products and $55 for
environmental at December 31, 1997. The difference between the Company's minimum
and maximum estimates for contingent liabilities, while not considered material,
was $15 for products and $4 for environmental at June 30, 1998, compared to $15
for products and $1 for environmental at December 31, 1997. At June 30, 1998,
the Company had recorded (as assets) probable recoveries from insurance or third
parties in the amounts of $24 for products and $6 for environmental, compared to
$29 for products and $10 for environmental at December 31, 1997.
Restructuring and Rationalization Expenses
- ------------------------------------------
Restructuring and rationalization charges of $162 were recorded in
1997. An accrued liability of $123 remained at December 31, 1997. During the
first six months of 1998, $31 was charged against the liability, consisting of
cash payments of $14 ($12 related to severance pay and benefits and $2 related
to closed facilities) and non-cash charges of $17 ($3 related to writing down
inventory at closed facilities and $14 related to impaired assets and investment
in operations that were closed or sold). The remaining estimated cash outlays of
$74 ($42 in 1998, $16 in 1999, and $16 thereafter) generally represent employee
separation costs for the approximately 630 workers affected by these activities.
The balance of the accrual is non-cash and will be utilized to write down the
affected assets. Dana's liquidity and cash flows will not be materially impacted
by these actions. Dana's operations over the long term are expected to benefit
from these realignment strategies.
10
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ITEM 2. (Continued)
- -------------------
Liquidity and Capital Resources
- -------------------------------
(in Million)
- ------------
Impact of the Year 2000
- -----------------------
Dana, including those operations that were acquired as a result of the
merger of Echlin with a Dana subsidiary in July 1998, has implemented a program
for reviewing its products and its critical information technology (IT) and
non-IT systems (including those which interface with major customers, suppliers
and other third parties) to identify and develop remediation plans for those
products and systems with elements which may not function properly when
processing dates or data for the Year 2000. The program is under the leadership
of the Company's Global Year 2000 Readiness Team, which includes Year 2000
Project Managers for each of Dana's Strategic Business Units and geographic
regions. PricewaterhouseCoopers LLP is assisting the Company in this review.
While Dana's various operations are at different stages of Year 2000
readiness, the Company expects to complete a review of its products during the
third quarter of 1998. Upon completion of this review, product remediation,
testing and contingency plans will be developed, if appropriate.
Dana has also substantially completed a company-wide inventory and
assessment of its IT and non-IT systems (including business, operating and
factory floor systems) and is now working on remediation plans for its internal
systems. Those plans are expected to be finalized by the end of the third
quarter of 1998. They will include repair, replacement, upgrading, and
retirement of specific systems and components. Priorities will be based on the
Company's business risk assessment. Dana expects to complete the systems
remediation activities by the end of the first quarter of 1999 and the
post-remediation testing by the end of the second quarter and to develop
contingency plans (if needed) before the end of the year.
In addition, Dana is presently reviewing its production and
non-production supplier base to identify critical suppliers and assess their
Year 2000 readiness and is developing a process to assess the readiness of its
major customers and other third parties with whom it does business. It expects
to complete both assessments during the first half of 1999 and to finalize any
necessary contingency plans before the end of the year.
Dana (excluding Echlin) has spent approximately $13 on its Year 2000
activities to date, of which $10 has been charged to expense and $3 has been
capitalized. Based on the work performed to date and on current information and
plans, Dana (excluding Echlin) anticipates that it will incur additional future
costs of $41 in addressing Year 2000 issues, of which $29 will be charged to
expense and $12 will be capitalized. While not included in Dana's results of
operations through June 30, 1998, Echlin has spent $18 on Year 2000 activities,
with $4 charged to expense and $14 capitalized, and anticipates future costs of
$47, with $34 to be charged to expense and $13 to be capitalized.
11
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ITEM 2. (Continued)
- -------------------
Liquidity and Capital Resources
- -------------------------------
(in Million)
- ------------
Impact of the Year 2000
- -----------------------
Since the Company is still in the assessment phase of its Year 2000
program and since the outcome of the program is subject to a number of risks and
uncertainties (some of which, such as the availability of qualified computer
personnel and the Year 2000 responses of third parties, are beyond Dana's
control), there can be no assurances that Dana will not incur material
remediation costs beyond the above anticipated future costs, or that Dana's
business, financial condition, or results of operations will not be
significantly impacted if Year 2000 problems with its products or systems, or
those of other parties with whom it does business, are not resolved in a timely
manner.
12
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ITEM 2. (Continued)
- -------------------
Results of Operations (Second Quarter 1998 vs Second Quarter 1997)
- ------------------------------------------------------------------
(in Millions)
Worldwide sales for the second quarter of $2,340 exceeded 1997 second
quarter sales by $199 or 9%. Sales of companies acquired, net of divestitures,
amounted to $79 of the increase. On a comparable basis sales increased $120 or
6% during the quarter with price changes having a minimal effect. Dana's U.S.
sales increased $157 or 10% over 1997 ($110 or 7% excluding the effect of
acquisitions and divestitures). U.S. sales in the second quarter were adversely
affected by work stoppages at General Motors (GM) in 1998 and at both GM and
Chrysler in 1997. Sales from Dana's international operations increased $42 or 7%
over 1997, with the impact of acquisitions, net of divestitures, equaling $32 or
5%. Changes in foreign currency exchange rates since the second quarter of 1997
served to reduce second quarter 1998 sales by approximately $35.
- -------------------------------------------------------------
SECOND QUARTER SALES
- -------------------- ----------- ------------ ---------------
%
1997 1998 CHANGE
- -------------------- ----------- ------------ ---------------
U.S. $1,538 $1,695 10
- -------------------- ----------- ------------ ---------------
International 603 645 7
- -------------------- ----------- ------------ ---------------
Total $2,141 $2,340 9
- -------------------- ----------- ------------ ---------------
U.S. sales of light truck components to original equipment (OE)
manufacturers increased 9% over 1997, with acquisitions having little impact.
U.S. sales of heavy truck OE components rose 59% over last year (16% with
acquisitions, net of divestitures). Worldwide sales to manufacturers of
off-highway vehicles increased 1% (flat excluding acquisitions) and passenger
car OE sales grew 2% (1% excluding acquisitions).
- -------------------------------------------------------------
SECOND QUARTER SALES BY REGION
- -------------------------------------------------------------
%
REGION 1997 1998 CHANGE
- ---------------------- ----------- ------------ -------------
North America $1,630 $1,817 11
- ---------------------- ----------- ------------ -------------
Europe 292 294 1
- ---------------------- ----------- ------------ -------------
South America 168 187 11
- ---------------------- ----------- ------------ -------------
Asia Pacific 51 42 (18)
- ---------------------- ----------- ------------ -------------
North American sales increased 11% in the second quarter, with
acquisitions, net of divestitures, accounting for 3% of the increase. Excluding
the net effect of acquisitions and divestitures, sales in Europe and South
America were flat. Asia Pacific sales were down during the quarter reflecting
continued financial difficulty in the region.
Dana's worldwide distribution business declined 4% in the second
quarter led by an 8% decline in off-highway/industrial distribution sales. U.S.
distribution sales declined 1%; international distribution sales decreased 10%
reflecting the exchange rate impact of a stronger U.S. dollar. Worldwide
automotive distribution sales were down 1%, with no impact from acquisitions and
divestitures. Truck parts distribution sales fell 2%, with a negligible impact
from acquisitions/divestitures.
Revenue from lease financing and other income decreased $11 in the
second quarter of 1998. Lease-related revenue increased $7 or 15% in 1998
corresponding to a 17% increase in average lease financing assets. Other income
recorded in 1997 included $13 from the sale of an investment in a leveraged
lease by DCC and interest income in 1998 was $7 less than in the second quarter
of last year.
Dana's gross margin for the second quarter was 15.8%, compared to 14.7%
in 1997. Gross margin in 1997 was adversely affected by a charge of $9 to cost
of sales related to the Berwick, Pa. plant closing. Excluding the 1997 charge,
Dana's gross margin improved .6% in 1998.
13
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ITEM 2. (Continued)
- -------------------
Results of Operations (Second Quarter 1998 vs Second Quarter 1997)
- ------------------------------------------------------------------
(in Millions)
Selling, general and administrative expenses (SG&A) increased $9 in
1998. The net impact of acquisitions and divestitures increased SG&A by $3 in
the second quarter. DCC generated higher expenses during the quarter due to
start-up and development costs associated with new programs and expansion. The
ratio of SG&A expense to sales improved from 8.8% in 1997 to 8.4% in 1998.
Dana's operating margin for the second quarter of 1998 was 7.4%
compared to 6.0% in 1997. Excluding the Berwick charge to cost of sales recorded
in 1997, Dana's operating margin improved 1.0% in 1998.
Interest expense was $7 higher than in 1997 due to higher average debt
levels related to acquisitions.
Dana's second quarter effective tax rate was 39% in 1998 and 1997.
Equity in earnings of affiliates was higher in 1998 by $4, primarily
due to higher earnings of the Company's affiliates in Mexico and South America.
The Company reported record second quarter earnings of $116, a $22 or
24% increase over 1997. The earnings for 1997 included an after-tax charge of $5
for the Berwick, Pa. plant closing. Earnings in the second quarter of 1998 and
1997 were both negatively impacted by work stoppages.
Results of Operations (Six Months 1998 vs Six Months 1997)
- ----------------------------------------------------------
Dana's worldwide sales of $4,691 in the first six months were $435 or
10% higher than the same period last year. Sales of companies acquired, net of
divestitures, amounted to $175 of the increase. Excluding such activities, sales
increased $260 or 6% with price changes having a minimal effect. Dana's U.S.
sales increased $383 or 12% over 1997 ($241 or 8% excluding the effect of
acquisitions and divestitures). U.S. sales in the second quarter were adversely
affected by work stoppages at GM in 1998 and at both GM and Chrysler in 1997.
Sales from Dana's international operations increased $52 or 4% over 1997, with
the impact of acquisitions, net of divestitures, equaling $33 or 3%. The impact
of changes in foreign currency exchange rates decreased 1998 sales by
approximately $82.
(in Millions)
- -------------------------------------------------------------
SALES FOR SIX MONTHS ENDED JUNE 30
- -------------------- ----------- ------------ ---------------
%
1997 1998 CHANGE
- -------------------- ----------- ------------ ---------------
U.S. $3,066 $3,449 12
- -------------------- ----------- ------------ ---------------
International 1,190 1,242 4
- -------------------- ----------- ------------ ---------------
Total $4,256 $4,691 10
- -------------------- ----------- ------------ ---------------
U.S. sales of light truck components to OE manufacturers increased 8%
over Dana's strong performance in 1997, with acquisitions having little impact.
U.S. sales of heavy truck OE components rose 69% over last year (20% with
acquisitions, net of divestitures). Worldwide sales to manufacturers of
off-highway vehicles increased 10%, primarily from acquisitions. Passenger car
OE sales grew 2%, with little impact from acquisitions, net of divestitures.
14
15
ITEM 2. (Continued)
Results of Operations (Six Months 1998 vs Six Months 1997)
- ----------------------------------------------------------
(in Millions)
- -------------------------------------------------------------
SALES BY REGION FOR SIX MONTHS ENDED
JUNE 30
- ---------------------- ----------- ------------ -------------
%
REGION 1997 1998 CHANGE
- ---------------------- ----------- ------------ -------------
North America $3,247 $3,680 13
- ---------------------- ----------- ------------ -------------
Europe 610 585 (4)
- ---------------------- ----------- ------------ -------------
South America 303 341 13
- ---------------------- ----------- ------------ -------------
Asia Pacific 96 85 (11)
- ---------------------- ----------- ------------ -------------
North American sales increased 13% in the first six months of 1998,
with acquisitions, net of divestitures, accounting for 5% of the increase.
Excluding the net effect of acquisitions and divestitures, sales in South
America increased 2% while Europe and Asia Pacific sales were down 1% and 10%,
respectively. OE sales increased 11% in Europe and 3% in Asia Pacific with both
regions being impacted by sluggish distribution sales.
Dana's worldwide distribution business declined 6% in the first six
months of 1998. U.S. distribution sales declined 1%; international distribution
sales decreased 16% due to the exchange rate impact of a stronger U.S. dollar
and the disposition of the European warehouse distribution business in March
1997. Worldwide automotive distribution sales were down 10%, all of which
resulted from acquisitions and divestitures. Off-highway/industrial distribution
sales decreased 2% and truck parts distribution sales fell 4%; excluding the
impact of acquisitions, net of divestitures, these sales declined 4% and 2%,
respectively.
Revenue from lease financing and other income decreased $83 in 1998.
Other income recorded in 1997 included $76 relating to the divestiture of the
European warehouse distribution operations and $13 from the sale of an
investment in a leveraged lease by DCC. Lease-related revenue increased $12 or
13% in 1998 corresponding to a 16% increase in average lease financing assets.
Dana's gross margin for the first six months of 1998 was 15.7%,
compared to 14.3% in 1997. Charges to cost of sales in 1997 included $26
relating to the rationalization plan at the Company's Perfect Circle Europe
operations in France and $9 associated with the cost of closing the Berwick, Pa.
plant. Excluding the charges in 1997, Dana's gross margin improved .6%.
SG&A expenses increased $15 in 1998, the effect of higher start-up and
development costs associated with new leasing programs and expansion of the
lease portfolio. The ratio of SG&A expense to sales improved from 8.9% in 1997
to 8.4% in 1998.
Dana's operating margin for the six-month period was 7.2% compared to
5.4% in 1997. Excluding the previously explained charges to cost of sales
recorded in 1997, Dana's operating margin improved 1.0% in 1998.
Interest expense was $16 higher than in 1997 due to higher average debt
levels related to acquisitions.
Dana's effective tax rate for the first half of 1998 was 40% compared
to 46% for 1997's first six months. The effective rate in 1997 was higher due to
providing valuation reserves for tax benefits previously recorded in France and
for tax benefits associated with the expenses recorded for the rationalization
plan at Dana's Perfect Circle Europe operations.
15
16
ITEM 2. (Continued)
Results of Operations (Six Months 1998 vs Six Months 1997)
- ----------------------------------------------------------
(in Millions)
Minority interest in net income of consolidated subsidiaries decreased
$3, primarily due to the lower earnings of Albarus S.A. (a Brazilian subsidiary)
and its majority-owned subsidiaries.
Equity in earnings of affiliates was higher in 1998 by $8, primarily
due to losses no longer being recorded for Korea Spicer Corporation, which was
sold in November of 1997, as well as higher earnings of the Company's Mexican
affiliates and DCC's leasing affiliates.
The Company reported record profit of $224, an increase of $37 or 20%
from 1997. Earnings per diluted share increased 17% over the first six months of
1997. The Company's 1998 earnings included a $3 after-tax gain on the sale of
its hydraulic brake hose business. The earnings for 1997 included a $45
after-tax gain on the sale of the European warehouse operations and charges of
$36 for the rationalization plan of the Perfect Circle Europe operations and $5
for the Berwick, Pa. plant closing.
Dana's component sales to producers of light truck and sport utility
vehicles continued strong in the first six months of 1998 as the popularity of
these vehicles remained steady. Second-half demand for light truck and sport
utility vehicles is anticipated to remain strong; however, the GM work stoppage
has reduced the demand for Dana products and will adversely affect Dana's sales
and profits in the third quarter. The impact on Dana's second-half results will
depend on GM's ability to recoup lost production resulting from the work
stoppage. Sales to the medium and heavy truck markets should continue
significantly above last year due to the integration of the Eaton axle
operations and higher North American truck production levels.
Forward Looking Information
- ---------------------------
Any forward-looking statements contained in this report represent
management's current expectations based on present information and current
assumptions. Such statements are indicated by words such as "anticipates,"
"expects," "believes," "intends," "plans," and similar expressions.
Forward-looking statements are inherently subject to risks and uncertainties.
Actual results could differ materially from those which are anticipated or
projected due to a number of factors. These factors include changes in business
relationships with the Company's major customers, work stoppages at major
customers, competitive pressures on sales and pricing, increases in production
or material costs that cannot be recouped in product pricing, factors affecting
the ability of the Company and/or third parties with whom it does business to
resolve Year 2000 problems in a timely manner, and changes in global economic
and market conditions.
16
17
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS.
- ---------------------------
The Company and its consolidated subsidiaries are parties to various
pending judicial and administrative proceedings arising in the ordinary course
of business. The Company's management and legal counsel have reviewed the
probable outcome of these proceedings, the costs and expenses reasonably
expected to be incurred, the availability and limits of the Company's insurance
coverage, and the Company's established reserves for uninsured liabilities.
While the outcome of the pending proceedings cannot be predicted with certainty,
based on its review, management believes that any liabilities that may result
are not reasonably likely to have a material effect on the Company's liquidity,
financial condition or results of operations.
Under the rules of the Securities and Exchange Commission, certain
environmental proceedings are not deemed to be ordinary routine proceedings
incidental to the Company's business and are required to be reported in the
Company's annual and/or quarterly reports. The Company is not currently a party
to any such proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- -------------------------------------------------------------
The following are the results of voting by stockholders present or
represented at the Special Meeting of Dana's stockholders on June 30, 1998:
The stockholders approved Proposal 1 to issue shares of the Company's
common stock in connection with the merger of Echo Acquisition Corp. (a
wholly-owned subsidiary of the Company) with and into Echlin Inc. There were
76,633,836 shares voted in favor, 950,767 shares voted against, and 479,479
shares abstaining.
The stockholders approved Proposal 2 to amend the Company's Restated
Articles of Incorporation to increase the number of shares of the common stock
authorized to be issued from 240 million to 350 million shares. There were
81,707,900 shares voted in favor, 2,255,735 shares voted against, and 293,872
shares abstaining.
The stockholders approved Proposal 3 to adjourn the Special Meeting to
permit further solicitation of proxies in the event that there were insufficient
votes at the time of the meeting to approve Proposal 1. There were 57,549,542
shares voted in favor, 20,138,943 shares voted against, and 375,598 shares
abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- ------------------------------------------
a). The exhibits listed in the "Exhibit Index" are filed as a part of
this report.
b). Reports on Form 8-K
The Company filed a Form 8-K on July 9, 1998, reporting the completion
of the merger of Echo Acquisition Corp., a wholly-owned subsidiary of the
Company, with and into Echlin Inc., with Echlin surviving the merger as a
wholly-owned subsidiary of Dana.
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18
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DANA CORPORATION
Date: August 14, 1998 /s/ John S. Simpson
- --------------------- -------------------
John S. Simpson
Chief Financial Officer
18
19
EXHIBIT INDEX
-------------
No. Description Method of Filing
- --- ----------- ----------------
3-A Restated Articles of Incorporation, effective July 2, Filed with this Report
1998
3-B Restated By-Laws, effective July 20, 1998 Filed with this Report
4-A Specimen Single Denomination Stock Certificate Filed by reference to Exhibit 4-B to Registrant' s
Registration Statement No. 333-18403 filed December 20,
1996
4-B Rights Agreement, dated as of April 25, 1996, between Filed by reference to Exhibit 1 to Registrant's Form 8-A
Registrant and ChemicalMellon Shareholder Services, filed May 1, 1996
L.L.C., Rights Agent
4-C Indenture for Senior Securities between Dana Filed by reference to Exhibit 4-B of Registrant's
Corporation and Citibank, N.A., Trustee, dated as of Registration Statement No. 333-42239 filed December 15,
December 15, 1997 1997
4-D First Supplemental Indenture between Dana Filed by reference to Exhibit 4-B-1 to Registrant's
Corporation, as Issuer, and Citibank, N.A., Trustee, Report on Form 8-K dated March 12, 1998
dated as of March 11, 1998
4-E Form of 6.50% Notes due March 15, 2008 and 7.00% Notes Included in Exhibit 4-D and filed by reference to Exhibit
due March 15, 2028 4-C-1 to Registrant's Report on Form 8-K dated March 12,
1998
10-F Excess Benefits Plan, restated as of December 8, 1997 Filed with this Report
10-H Directors Retirement Plan, restated as of December 8, Filed with this Report
1997
10-K Supplemental Benefits Plan, restated as of April 20, Filed with this Report
1998
27 Financial Data Schedule Filed with this Report
19
1
Exhibit 3-A
Effective July 2, 1998
RESTATED ARTICLES OF INCORPORATION
OF
DANA CORPORATION
FIRST: The name of the corporation is DANA CORPORATION (hereinafter referred to
as the "Corporation").
SECOND: The purposes for which the Corporation is formed are to manufacture and
deal in metal and other products. The Corporation may engage in any other
business except a business that is required to be stated in these articles.
THIRD: The maximum number of shares of stock that may be issued by the
Corporation shall be 350,000,000 shares of Common Stock of the par value of
$1.00 per share and 5,000,000 shares of Preferred Stock, without par value.
1. Shares of Preferred Stock may be divided into and issued in
one or more series, each series to be so designated as to
distinguish the shares thereof from the shares of all other
series and classes; authority is hereby expressly vested in
the Board of Directors to divide any or all of the Preferred
Stock into series and, within the limitations prescribed by
law and by this Article, to fix and determine the following
relative rights and preferences, as to which there may be
variations between different series:
(a) the number of shares constituting such series and the
designation of such series which shall be such as to
distinguish the shares thereof from the shares of all
other series and classes;
(b) the rate of dividend, the time of payment and, if
cumulative, the dates from which dividends shall be
cumulative, and the extent of participation rights,
if any;
(c) any right to vote with holders of shares of any other
series or class and any right to vote as a class,
either generally or as a condition to specified
corporation action;
(d) in the event the shares of the series are to be
redeemable, the price at and the terms and conditions
on which shares may be redeemed;
(e) the amount payable upon shares in event of
involuntary liquidation;
(f) the amount payable upon shares in event of voluntary
liquidation;
(g) any sinking fund provisions for the redemption or
purchase of shares; and
(h) the terms and conditions on which shares may be
converted, if the shares of any series are issued
with the privilege of conversion.
20
2
The shares of all series of Preferred Stock shall be identical
except as, within the limitations set forth above in this
Section l, shall have been fixed and determined by the Board
of Directors prior to the issuance thereof.
2. The holders of shares of Preferred Stock of each series shall
be entitled to receive, when and as declared payable by the
Board of Directors, dividends at the dividend rate fixed by
the Board of Directors for such series and not exceeding such
rate except to the extent of any participation right.
Dividends, if cumulative and in arrears, shall not bear
interest. No dividends shall be declared or paid on or set
apart for the Common Stock or for stock of any other class
hereafter created ranking junior to the Preferred Stock in
respect of dividends or assets (hereinafter called Junior
Stock) unless and until (i) full dividends on the outstanding
Preferred Stock at the dividend rate or rates therefor,
together with the full additional amount required by any
participation right, shall have been paid or declared and set
apart for payment with respect to all past dividend periods,
to the extent that the holders of the Preferred Stock are
entitled to dividends with respect to any particular past
dividend period, and the current dividend period, and (ii) all
mandatory sinking fund payments that shall have become due in
respect of any series of the Preferred Stock shall have been
made. Unless full dividends with respect to all past dividend
periods on the outstanding Preferred Stock at the dividend
rate or rates therefor, to the extent that holders of the
Preferred Stock are entitled to dividends with respect to any
particular past dividend period, together with the full
additional amount required by any participation right, shall
have been paid or declared and set apart for payment and all
mandatory sinking fund payments that shall have become due in
respect of any series of the Preferred Stock shall have been
made, no distributions shall be made to the holders of the
Preferred Stock of any series unless distributions are made to
the holders of the Preferred Stock of all series then
outstanding in proportion to the aggregate amounts of the
deficiencies in payments due to the respective series, and all
payments shall be applied, first, to dividends accrued and in
arrears, next, to any amount required by any participation
right, and, finally, to mandatory sinking fund payments. The
terms "current dividend period" and "past dividend period"
mean, if two or more series of Preferred Stock having
different dividend periods are at the time outstanding, the
current dividend period or any past dividend period, as the
case may be, with respect to each such series.
3. In the event of any liquidation, dissolution, or winding up of
the Corporation, the holders of the Preferred Stock of each
series shall be entitled to receive, for each share thereof,
the fixed liquidation price for such series, plus, in case
such liquidation, dissolution or winding up shall have been
voluntary, the fixed liquidation premium for such series, if
any, together in all cases with a sum equal to all dividends
accrued or in arrears thereon and the full additional amount
required by any participation right, before any distribution
of the assets shall be made to holders of the Common Stock or
Junior Stock; but the holders of the Preferred Stock shall be
entitled to no further participation in such distribution. If,
upon any such liquidation, dissolution or winding up, the
assets distributable among the holders of the Preferred Stock
shall be sufficient to permit the payment of the full
preferential amounts aforesaid, then such assets shall be
distributed among the holders of the Preferred Stock then
outstanding ratably in proportion to the full preferential
amounts to which they are respectively entitled. For the
purposes of this Section 3, the expression "dividends accrued
or in arrears" means, in respect of each share of the
Preferred Stock of any series at a
21
3
particular time, an amount equal to the product of the rate of
dividend per annum applicable to the shares of such series
multiplied by the number of years and any fractional part of a
year that shall have elapsed from the date when dividends on
such shares become cumulative to the particular time in
question less the total amount of dividends actually paid on
the shares of such series or declared and set apart for
payment thereon; provided, however, that, if the dividends on
such shares shall not be fully cumulative, such expression
shall mean the dividends, if any, cumulative in respect of
such shares for the period stated in the Articles of Serial
Designation creating such shares less all dividends paid in or
with respect to such period.
4. Except as the right to vote generally or as a class may be
conferred upon holders of outstanding shares of Preferred
Stock by law or by any Articles of Serial Designation issued
with respect to any series thereof, holders of issued and
outstanding shares of Common Stock shall have the exclusive
right to vote on the Election of Directors and on all other
matters submitted to a vote of stockholders. Such holders of
Common Stock shall be entitled to one vote for each share of
Common Stock held by them. Subject to the prior rights and
preferences of the holders of Preferred Stock as set forth in
these Articles and in any Articles of Serial Designation
issued with respect to any series of Preferred Stock, the
holders of outstanding shares of Common Stock shall be
entitled to receive dividends, if, when and as declared by the
Board of Directors out of funds legally available for payment
thereof, and to receive in pro rata distribution the assets of
the Corporation remaining after payment of all liabilities and
all preferential amounts to which the holders of shares at the
time outstanding of all classes of stock having prior rights
thereto shall be entitled upon voluntary or involuntary
liquidation of the Corporation.
5. No holder of any stock of the Corporation of any class now or
hereafter authorized shall, as such, have any preemptive right
to acquire any shares of any stock of the Corporation, of any
class now or hereafter authorized, or any securities
convertible into stock of the Corporation, or any warrants,
rights or options granted by the Corporation for the purchase
of any such shares or securities.
6. Series A Junior Preferred Stock:
A. Designation and Amount. The shares of such series
shall be designated as a "Series A Junior
Participating Preferred Stock" (the "Junior Preferred
Stock") and the number of shares constituting such
series shall be 1,000,000. Such number of shares may
be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce
the number of shares of Junior Preferred Stock to a
number less than the number of shares then
outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants
or upon conversion of outstanding securities issued
by the Corporation. All shares removed from the
Junior Preferred Stock by any such decrease become
authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred
Stock subject to the restrictions and conditions set
forth herein.
B. Dividends and Distributions.
22
4
(i) Subject to the prior and superior rights of
the holders of any shares of any series of
Preferred Stock ranking prior and superior
to the shares of Junior Preferred Stock with
respect to dividends, the holders of shares
of Junior Preferred Stock, in preference to
the holders of the Common Stock and of any
other junior stock, shall be entitled to
receive, when, as and if declared by the
Board of Directors out of funds legally
available for the purpose, quarterly
dividends payable on the first day of March,
June, September and December in each year
(each such date being referred to herein as
a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend
Payment Date after the first issuance of a
share or fraction of a share of Junior
Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the
greater of (a) $10.00 (payable in cash) or
(b) subject to the provision for adjustment
hereinafter set forth, 100 times the
aggregate per share amount of all cash
dividends, and 100 times the aggregate per
share amount (payable in kind) of all
non-cash dividends or other distributions,
other than a dividend payable in shares of
Common Stock or a subdivision of the
outstanding shares of Common Stock (by
reclassification or otherwise), declared on
the Common Stock since the immediately
preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly
Dividend Payment Date, since the first
issuance of any share or fraction of a share
of Preferred Stock. In the event the
Corporation shall at any time after the date
hereof declare or pay any dividend on Common
Stock payable in shares of Common Stock, or
effect a subdivision or combination or
consolidation of the outstanding shares of
Common Stock (by reclassification or
otherwise than by payment of a dividend in
shares of Common Stock) into a greater or
lesser number of shares of Common Stock,
then in each such case the amount to which
holders of shares of Junior Preferred Stock
were entitled immediately prior to such
event under clause (b) of the preceding
sentence shall be adjusted by multiplying
such amount by a fraction the numerator of
which is the number of shares of Common
Stock outstanding immediately after such
event and the denominator of which is the
number of shares of Common Stock that were
outstanding immediately prior to such event.
(ii) The Corporation shall not declare and set
aside for payment a dividend or distribution
on the Common Stock (other than a dividend
payment in shares of Common Stock) until it
shall declare and set aside for payment a
dividend or distribution on the Junior
Preferred Stock as provided in paragraph (i)
of this Section. In the event no dividend or
distribution shall have been declared on the
Common Stock during the period between any
Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date,
a dividend of $10.00 per share on the Junior
Preferred Stock shall nevertheless be
payable on such subsequent Quarterly
Dividend Payment Date.
23
5
(iii) Dividends shall begin to accrue and be
cumulative on outstanding shares of Junior
Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of
issue of such shares of Junior Preferred
Stock, unless the date of issue of such
shares is prior to the record date for the
first Quarterly Dividend Payment Date, in
which case dividends on such shares shall
begin to accrue from the date of issue of
such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a
date after the record date for the
determination of holders of shares of Junior
Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which
events such dividends shall begin to accrue
and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends
paid on the shares of Junior Preferred Stock
in an amount less than the total amount of
such dividends at the time accrued and
payable on such shares shall be allocated
pro rate on a share-by-share basis among all
such shares at the time outstanding. The
Board of Directors may fix a record date for
the determination of holders of shares of
Junior Preferred Stock entitled to receive
payment of a dividend or distribution
declared thereon, which record date shall be
not more than 60 days prior to the date
fixed for the payment thereof.
C. Voting Rights. The holders of shares of Junior
Preferred Stock shall have the following voting
rights:
(i) Subject to the provision for adjustment
hereinafter set forth, each share of Junior
Preferred Stock shall entitle the holder
thereof to 100 votes on all matters
submitted to a vote of the stockholders of
the Corporation. In the event the
Corporation shall at any time declare or pay
any dividend on Common Stock payable in
shares of Common Stock, or effect a
subdivision or combination or consolidation
of the outstanding shares of Common Stock
(by reclassification or otherwise than by
payment of a dividend in shares of Common
Stock) into a greater or lesser number of
shares of Common Stock, then in each such
case the number of votes per share to which
holders of shares of Junior Preferred Stock
were entitled immediately prior to such
event shall be adjusted by multiplying such
number by a fraction the numerator of which
is the number of shares of Common Stock
outstanding immediately after such event and
the denominator of which is the number of
shares of Common Stock that were outstanding
immediately prior to such event.
(ii) Except as otherwise provided herein or by
law, the holders of shares of Junior
Preferred Stock and the holders of Shares of
Common Stock and any other capital stock of
the Corporation having general voting rights
shall vote together as one voting group on
all matters submitted to a vote of
stockholders of the Corporation.
(iii) The Articles of Incorporation of the
Corporation shall not be amended in any
manner which would materially alter or
change
24
6
the powers, preferences or special rights of
the Junior Preferred Stock so as to affect
them adversely without the affirmative vote
of the holders of at least two-thirds of the
outstanding shares of Junior Preferred
Stock, voting together as a single voting
group.
(iv) Except as set forth herein or as otherwise
provided by law or by the Articles of
Incorporation, holders of Junior Preferred
Stock shall have no voting rights.
D. Certain Restrictions.
(i) Whenever quarterly dividends or other
dividends or distributions payable on the
Junior Preferred Stock as provided in
Section (b) of this Paragraph 6 are in
arrears, thereafter and until all accrued
and unpaid dividends and distributions,
whether or not declared, on shares of Junior
Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(a) declare or pay, or set apart for
payment, dividends on, make any
other distributions on, or redeem or
purchase or otherwise acquire for
consideration any shares of stock
ranking junior (either as to
dividends or upon liquidation,
dissolution or winding up) to the
Junior Preferred Stock;
(b) declare or pay dividends on or make
any other distributions on any
shares of stock ranking on a parity
(either as to dividends or upon
liquidation, dissolution or winding
up) with the Junior Preferred Stock,
except dividends paid ratably on the
Junior Preferred Stock and all such
parity stock on which dividends are
payable or in arrears in proportion
to the aggregate amounts of the
deficiencies in payments due to the
respective series;
(c) purchase or otherwise acquire for
consideration any shares of Junior
Preferred Stock, or any shares of
Stock ranking on a parity with the
Junior Preferred Stock, except in
accordance with a purchase offer
made in writing or by publication
(as determined by the Board of
Directors) to all holders of such
shares upon such terms as the Board
of Directors, after consideration of
the respective annual dividend rates
and other relative rights and
preferences of the respective series
and classes, shall determine in good
faith will result in fair and
equitable treatment among the
respective series or classes.
(ii) The Corporation shall not permit any
subsidiary of the Corporation to purchase or
otherwise acquire for consideration any
shares of stock of the Corporation unless
the Corporation could, under paragraph (i)
of this Section D purchase or otherwise
acquire such shares at such time and in such
manner.
E. Reacquired Shares. Any shares of Junior Preferred
Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be
25
7
retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their
cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new
series of Preferred Stock, subject to the conditions
and restrictions on issuance set forth herein.
F. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred
Stock unless, prior thereto, the holders of shares of
Junior Preferred Stock shall have received an amount
equal to accrued and unpaid dividends and
distribution thereon, whether or not declared, to the
date of such payment plus an amount equal to the
greater of (a) $100 per share and (b) an aggregate
amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times
the aggregate amount to be distributed per share to
holders of Common Stock, or (2) to the holders of
stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the
Junior Preferred Stock, except distributions made
ratably on the Junior Preferred Stock and all other
such parity stock in proportion to the full
preferential amounts to which the holders of all such
shares are entitled upon such liquidation,
dissolution or winding up. In the event the
Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into
a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which
holders of shares of Junior Preferred Stock were
entitled immediately prior to such event under the
provision in clause (1) of the preceding sentence
shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after
such event and the denominator of which is the number
of shares of Common Stock that were outstanding
immediately prior to such event.
G. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, share
exchange, combination or other transaction in which
the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or
any other property, then in any such case the shares
of Junior Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share
(subject to the provision for adjustment thereinafter
set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any
time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the
outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then, in
each such case the amount set forth in the preceding
sentence with respect to the exchange or change of
shares of Junior Preferred Stock shall be adjusted by
multiplying such amount by a
26
8
fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after
such event and the denominator of which is the number
of shares of Common stock that were outstanding
immediately prior to such event.
H. Redemption; Repurchase. The outstanding shares of
Junior Preferred Stock may be redeemed at the option
of the Board of Directors, in whole, but not in part,
at any time, or from time to time, at a cash price
per share equal to (i) the greater of (a) $100 or (b)
subject to the provision for adjustment hereinafter
set forth, the product of 100 times the Current
Market Price, as such term is hereinafter defined, of
the Common Stock, plus (ii) all dividends which on
the redemption date have accrued on the shares to be
redeemed and have not been paid or declared and a sum
sufficient for the payment thereof set apart, without
interest. The Corporation may, from time to time and
to the extent allowed by law, purchase or otherwise
acquire shares of Junior Preferred Stock provided,
however, that if and whenever any quarterly dividend
shall have accrued on the Junior Preferred Stock
which has not been paid or declared and a sum
sufficient for the payment thereof set apart, the
Corporation may not purchase or otherwise acquire any
shares of Junior Preferred Stock unless all shares of
such stock at the time outstanding are so purchased
or otherwise acquired. In the event the Corporation
shall at any time after July 25, 1986 pay any
dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into
a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of
shares of Junior Preferred Stock were entitled
immediately prior to such event under subsection (i)
of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock
outstanding immediately after such event and the
denominator of which is the number of shares of
Common Stock that were outstanding immediately prior
to such event.
The "Current Market Price" shall be deemed to be the
average of the daily closing prices per share of the
Common Stock for the thirty (30) consecutive Trading
Days (as such term is hereinafter defined)
immediately prior to the day before the redemption
date; provided, however, that in the event that the
Current Market Price per share of the Common Stock is
determined during a period following the announcement
by the Corporation of (A) a dividend or distribution
on such Common Stock payable in shares of such Common
Stock or securities convertible into shares of such
Common Stock, or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to
the expiration of the requisite thirty (30)
Trading-Day period, as set forth above, after the
ex-dividend date for such dividend or distribution,
or the record date for such dividend or distribution,
or the record date for such subdivision, combination
or reclassification, then, and in each such case, the
Current Market Price shall be properly adjusted to
take into account ex-dividend trading. The closing
price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked
prices,
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regular way, in either case as reported in the
principal consolidated transaction reporting system
with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the
shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting
system with respect to securities listed on the
principal national securities exchange on which the
shares of Common Stock are listed or admitted to
trading or, if the shares of Common Stock are not
listed or admitted to trading on any national
securities exchange, the average of the last quoted
high bid and low asked prices in the over-the-counter
market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if
on any such date the shares of Common Stock are not
quoted by any such organization, the average of the
closing bid and asked prices as furnished by a
professional market maker making a market in the
Common Stock selected by the Board of Directors of
the Company. If on any such date no market maker is
making a market in the Common Stock, the fair value
of such shares on such date as determined in good
faith by the Board of Directors of the Company shall
be used. The term "Trading Day" shall mean a day on
which the principal national securities exchange on
which the shares of Common Stock are listed or
admitted to trading is open for the transaction of
business or, if the shares of the Common Stock are
not listed or admitted to trading on any national
securities exchange, a business day.
I. Fractional Shares. The Junior Preferred Stock may be
issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit
of all other rights of holders of shares of Junior
Preferred Stock.
J. Rank. Nothing herein contained shall preclude the
Board of Directors from creating or authorizing any
class or series of Preferred Stock ranking on a
parity with or prior to the Junior Preferred Stock as
to the payment of dividends or the distribution of
assets.
FOURTH: No contract or other transaction between the Corporation and any other
corporation, in the absence of fraud, shall be affected or invalidated by the
fact that any one or more of the directors of the Corporation is or are
interested in, or is a director or officer or are directors or officers of, such
other corporation, and any director or directors, individually or jointly, may
be a party or parties to, or may be interested in, any such contract or
transaction of the Corporation or in which the Corporation is interested and no
contract, act or transaction of the Corporation with any person or persons, firm
or corporation in the absence of fraud shall be affected or invalidated by the
fact that any director or directors of the Corporation is a party, or are
parties to or interested in such contract, act or transaction, or in any way
connected with such person or persons, firm or corporation, and each person and
every person who may become a director of the Corporation is hereby relieved
from any liability that might otherwise exist from thus contracting with the
Corporation for the benefit of himself or any firm, association or corporation
in which he may be in anywise interested.
FIFTH: Unless otherwise changed by the By-Laws, the number of the directors
shall be ten.
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SIXTH: 1. In this Article:
"applicant" means the person seeking indemnification
pursuant to this Article.
"expenses" includes counsel fees.
"liability" means the obligation to pay a judgment,
settlement, penalty, fine, including any excise tax
assessed with respect to an employee benefit plan, or
reasonable expenses incurred with respect to a
proceeding.
"party" includes an individual who was, is, or is
threatened to be made a named defendant or respondent
in a proceeding.
"proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative and whether
formal or informal.
2. In any proceeding brought by a shareholder of the
Corporation in the right of the Corporation or
brought by or on behalf of shareholders of the
Corporation, no director or officer of the
Corporation shall be liable to the Corporation or its
shareholders for monetary damages in excess of
$50,000.00 with respect to any transaction,
occurrence or course of conduct, whether prior or
subsequent to the effective date of this Article,
except for liability resulting from such person's
having engaged in willful misconduct or a knowing
violation of the criminal law or any federal or state
securities law.
3. The Corporation shall indemnify any person who was or
is a party to any proceeding, including a proceeding
brought by a shareholder in the right of the
Corporation or brought by or on behalf of
shareholders of the Corporation, by reason of the
fact that he is or was a director or officer of the
Corporation against any liability incurred by him in
connection with such proceeding unless he engaged in
willful misconduct or a knowing violation of the
criminal law.
4. The provisions of this Article shall be applicable to
all proceedings commenced on or after the effective
date hereof, arising from any act or omission,
whether occurring before or after such effective
date. The effective date of this Article shall be the
date on which the State Corporation Commission of the
Commonwealth of Virginia issues a Certificate of
Amendment with respect hereto. No amendment or repeal
of this Article shall have any effect on the rights
provided under this Article with respect to any act
or omission occurring prior to such amendment or
repeal. The Corporation shall promptly take all such
actions, and make all such determinations, as shall
be necessary or appropriate to comply with its
obligation to make any indemnity under this Article
and shall promptly pay or reimburse all reasonable
expenses, including attorneys' fees, incurred by any
such director, officer, employee or agent in
connection with such actions and determinations or
proceedings of any kind arising therefrom.
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5. The termination of any proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not of itself
create a presumption that the applicant did not meet
the standard of conduct described in Section 2 or 3
of this Article.
6. Any indemnification under Section 3 of this Article
(unless ordered by a court) shall be made by the
Corporation in accordance with the procedures set
forth in Section 13.1-701 of the Virginia Stock
Corporation Act as in effect from time to time,
except that in the event there has been a change in
the composition of a majority of the Board of
Directors after the date of (i) the alleged act or
omission or (ii) commencement of a continuing act or
omission with respect to which indemnification is
claimed, any determination as to indemnification and
advancement of expenses with respect to any claim for
indemnification made pursuant to this Article shall
be made exclusively by special legal counsel agreed
upon by the Board of Directors and the applicant. If
the Board of Directors and the applicant are unable
to agree upon such special legal counsel, the Board
of Directors and the applicant each shall select a
nominee, and the nominees shall select such special
legal counsel.
7. (a) The Corporation shall pay for or reimburse the
reasonable expenses incurred by any applicant who is
a party to a proceeding in advance of final
disposition of the proceeding or the making of any
determination under Section 3 if the applicant
furnishes the Corporation:
(i) a written statement of his good
faith belief that he has met the
standard of conduct described in
Section 3; and
(ii) a written undertaking, executed
personally or on his behalf, to
repay the advance if it is
ultimately determined that he did
not meet such standard of conduct.
(b) The undertaking required by paragraph (ii)
of subsection (a) of this section shall be
an unlimited general obligation of the
applicant but need not be secured and may be
accepted without reference to financial
ability to make repayment.
(c) Authorizations of payments under this
section shall be made in accordance with the
procedure specified in Section 6.
8. The Board of Directors is hereby empowered, by
majority vote of a quorum consisting of disinterested
Directors, to cause the Corporation to indemnify, or
to agree in advance to indemnify, by Bylaw provision
or agreement any person who was, is or may become a
party to any proceeding, by reason of the fact that
he is or was an employee or agent of the Corporation,
or is or was serving at the request of the
Corporation as director, officer, employee or agent
of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, to
the same extent as if such person were specified as
one to whom indemnification is granted in Section 3.
The provisions of Sections 4 through 7 of this
Article shall be applicable to any indemnification
provided hereafter pursuant to this Section 8.
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9. Every reference herein to directors, officers,
employees or agents shall include former directors,
officers, employees and agents and their respective
heirs, executors and administrators. The
indemnification hereby provided and provided
hereafter pursuant to the power hereby conferred by
this Article on the Board of Directors shall not be
exclusive of any other rights to which any person may
be entitled, including any right under policies of
insurance that may be purchased and maintained by the
Corporation or others, with respect to claims, issues
or matters in relation to which the Corporation would
not have the power to indemnify such person under the
provisions of this Article. Such rights shall not
prevent or restrict the power of the Corporation to
make or provide for any further indemnity, or
provisions for determining entitlement to indemnity,
pursuant to one or more indemnification agreements,
bylaws, or other arrangements (including, without
limitation, creation of trust funds or security
interests funded by letters of credit or other means)
approved by the Board of Directors (whether or not
any of the directors of the Corporation shall be a
party to or beneficiary of any such agreements,
bylaws or arrangements); provided, however, that any
provision of such agreements, bylaws or other
arrangements shall not be effective if and to the
extent that it is determined to be contrary to this
Article or applicable laws of the Commonwealth of
Virginia.
10. Each provision of this Article shall be severable,
and an adverse determination as to any such provision
shall in no way affect the validity of any other
provision.
SEVENTH: Except as expressly otherwise required in these Articles of
Incorporation, an amendment or restatement of these Articles that requires
shareholder approval shall be approved by a majority of the votes entitled to be
cast by each voting group that is entitled to vote on the matter.
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Exhibit 3-B
Adopted July 20, 1998
BY-LAWS OF DANA CORPORATION
ARTICLE I. EFFECTIVE DATE
SECTION 1.1. EFFECTIVE DATE. These By-Laws are adopted by the Board of Directors
(the "Board") of Dana Corporation ("Dana") on and effective July 20, 1998.
ARTICLE II. OFFICES
SECTION 2.1. REGISTERED OFFICE. Dana's registered office shall be located at
Riverfront Plaza, East Tower, 951 East Byrd Street, Richmond, Virginia 23219.
SECTION 2.2. BUSINESS OFFICE. Dana's principal business office shall be located
at 4500 Dorr Street, Toledo, Ohio 43615, with a mailing address of P.O. Box
1000, Toledo, Ohio 43697.
ARTICLE III. SHAREHOLDER MEETINGS
SECTION 3.1. ANNUAL MEETINGS. Unless the Board fixes a different date, the
annual meeting of shareholders of Dana to elect directors and to transact other
business (if any) shall be held on the first Wednesday of April each year, at
the time and place designated by the Board in the notice of meeting. The Board
may postpone or cancel any annual meeting at any time prior to the designated
meeting date and time by means of (i) a press release reported by the Dow Jones
News, Associated Press or a comparable national news service, or (ii) a document
filed with the Securities and Exchange Commission ("SEC") (in either case, a
"Public Announcement").
SECTION 3.2. SPECIAL MEETINGS. Special meetings of shareholders may be called by
the Board, the Chairman of the Board (the "Chairman"), or the President, to
elect directors and/or transact such other business as is described in the
notice of meeting, at the date, time and place designated therein. Notice of
special meetings shall be given to shareholders in accordance with the Virginia
Stock Corporation Act ("Virginia Law"). The Board may postpone or cancel any
special meeting at any time prior to the designated meeting date and time by
means of a Public Announcement.
SECTION 3.3. SHAREHOLDER NOMINATIONS AND PROPOSALS. In submitting nominations
for persons to be elected as directors of Dana or proposals for other business
to be presented at any shareholder meeting, shareholders shall comply with the
following procedures and such other requirements as are imposed by Virginia Law
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"):
a. DELIVERY. Shareholder notices shall be addressed and delivered to
the Secretary at Dana's principal business office.
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b. TIMELINESS.
i. ANNUAL MEETINGS. Shareholder notices of nominations to be
voted on at any annual meeting must be delivered not later than the close of
business on the 90th day prior to such meeting, and notices of proposals to be
voted on must be delivered in compliance with the timeliness provisions of SEC
Rule 14a-8(a)(3)(i) or any rule hereafter adopted in its place as though such
rules applied to the proposals, whether or not they actually do so.
ii. SPECIAL MEETINGS. Shareholder notices of nominations or of
proposals to be voted on at any special meeting must be delivered (i) not
earlier than the close of business on the 90th day prior to such meeting and
(ii) not later than the close of business on the later of the 70th day prior to
the date of the special meeting or the 3rd day following the date on which Dana
first makes a Public Announcement of the date of the meeting.
iii. ADJOURNMENTS AND POSTPONEMENTS. A Public Announcement of
an adjournment or postponement of an annual or special meeting shall not
commence a new time period for the giving of shareholder notices.
c. CONTENTS. Shareholder notices shall contain the names and addresses
(as they appear on the records of Dana's transfer agent) of the shareholder(s)
and all beneficial owners on whose behalf the nomination or proposal is made,
and the class and number of Dana shares which are owned of record and
beneficially by the shareholder(s) and the beneficial owners. The notice shall
also contain, as applicable, (i) the information about director-nominees which
is required to be disclosed in solicitations of proxies for the election of
directors in an election contest or otherwise pursuant to Regulation 14A under
the Exchange Act and Rule 14a-11 thereunder, or any rules hereafter adopted in
their place (including such person's written consent to being named in the proxy
as a nominee and to serving as a director if elected), and (ii) a brief
description of any other proposed business, the reason for presenting such
business at the meeting, and any material interests which the shareholder(s) and
the beneficial owners have in such business.
SECTION 3.4. CONDUCT OF MEETINGS.
SECTION 3.4.1. CHAIRMAN AND PROCEDURES. Shareholder meetings shall be
chaired by the Chairman of the Board or by such person as he or she may
designate. The chairman of the meeting shall determine and announce the rules of
procedure for the meeting and shall rule on all procedural questions during the
meeting.
SECTION 3.4.2. PROPER NOMINATIONS AND BUSINESS. Nominations for
directors and other proposals shall be deemed properly brought before a
shareholder meeting only when brought in accordance with Virginia Law and this
Article III. The chairman of the meeting shall determine whether each nomination
or proposal has been properly brought and shall declare that any improperly
brought nomination or proposal be disregarded.
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SECTION 3.4.3. ADJOURNMENTS. The chairman of any shareholder meeting,
or the holders of a majority of the shares represented at the meeting (whether
or not constituting a quorum), may adjourn the meeting from time to time. No
further notice need be given if the adjournment is for a period not exceeding
120 days and the new date, time and place are announced at the adjourned
meeting. Otherwise, notice shall be given in accordance with Virginia Law.
ARTICLE IV. BOARD OF DIRECTORS
SECTION 4.1. AUTHORITY. The business and affairs of Dana shall be managed under
the direction of the Board, and all of Dana's corporate powers shall be
exercised by or pursuant to the Board's authority.
SECTION 4.2. NUMBER AND TERM OF DIRECTORS. The number of directors of Dana shall
be eleven. Each director shall hold office until the next annual meeting of
shareholders and the election and qualification of his or her successor, or
until his or her earlier retirement, resignation, or removal.
SECTION 4.3. MEETINGS AND NOTICE.
SECTION 4.3.1. REGULAR MEETINGS. The Board shall hold regular meetings
at such dates, times and places as it may determine from time to time, and no
notice thereof need be given other than such determination. However, if the
date, time or place of any regular meeting is changed, notice of the change
shall be given to all directors by means of (i) a written notice mailed at least
5 calendar days before the meeting, (ii) a written notice delivered in person,
by recognized national courier service, or by telecopy at least 1 business day
before the meeting, or (iii) by telephone notification given at least 12 hours
before the meeting.
SECTION 4.3.2. SPECIAL MEETINGS. The Board or the Chairman may call a
special meeting of the Board at any date, time and place by causing the
Secretary to give notice thereof to each director in the manner provided in
Section 4.3.1. Neither the purpose of the meeting nor the business to be
transacted need be specified in the notice of meeting, except for proposed
amendments to these By-Laws.
SECTION 4.3.3. TELEPHONIC MEETINGS. Members of the Board may
participate in any Board meeting by means of conference telephone or similar
communications equipment by means of which all meeting participants can hear
each other, and such participation shall constitute presence in person at such
meeting.
SECTION 4.3.4. WAIVER OF NOTICE. A director may waive any notice of
meeting required under Virginia Law, Dana's Articles of Incorporation ("Dana's
Articles") or these By-Laws, before or after the date and time set out in the
notice, by signed written waiver submitted to the Secretary and filed with the
minutes of the meeting. A director's attendance or participation at any meeting
shall constitute a waiver of notice unless the director objects, at the
beginning of the meeting or promptly upon his or her arrival, to holding the
meeting or transacting business at the meeting, and thereafter does not vote on
or assent to actions taken at the meeting.
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SECTION 4.4. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken at a Board meeting may be taken without a meeting if the action is taken
by all members of the Board. The action shall be evidenced by one or more
written consents, signed by each director either before or after the action is
taken. The action shall be effective when the last director signs his or her
consent unless the consent specifies a different effective date, in which event
the action taken will be effective as of the date specified therein provided
that the consent states the date of execution by each director.
SECTION 4.5. QUORUM, BOARD ACTION. A majority of the directors shall constitute
a quorum of the Board. If a quorum is present when a vote is taken, the
affirmative vote of the majority of directors present shall constitute the act
of the Board; provided, that the authorization, approval or ratification of any
transaction in which a director has a direct or indirect personal interest shall
also be subject to the provisions of Virginia Law.
SECTION 4.6. RESIGNATIONS. A director may resign at any time by giving written
notice to the Board, the Chairman, the President or the Secretary. Unless
otherwise specified in the notice, the resignation shall take effect upon
delivery and without Board action. A director's resignation shall not affect any
contractual rights and obligations of Dana or the director, except as specified
in any particular contract.
SECTION 4.7. VACANCIES. The Board shall fill all vacancies, including those
resulting from an increase in the number of directors, by majority vote of the
remaining directors, whether or not such number constitutes a quorum.
ARTICLE V. BOARD COMMITTEES
SECTION 5.1. ESTABLISHMENT OF COMMITTEES. The Board may, by amendment to the
By-Laws, establish and dissolve Board Committees and establish and change the
authority of such Committees; provided, that each Committee shall consist of two
or more directors (who shall serve thereon at the Board's pleasure) and shall
have a chairman who is designated by the Board. Each Committee shall exercise
such of the Board's powers as are authorized by the Board, subject to any
limitations imposed by Virginia Law. The Board may, from time to time and
without amendment to the By-Laws, change the membership or chairmanship of any
Board Committee and fill any vacancies thereon or designate another director to
act in the place of any Committee member who is absent or disqualified from
voting at any meeting of the Committee.
SECTION 5.2. STANDING COMMITTEES. The Board shall have the following Standing
Committees:
A. ADVISORY COMMITTEE. The Advisory Committee shall make
recommendations to the Board on matters relating to the qualifications of
directors; the selection of nominees for election as directors at annual
shareholder meetings and in filling Board vacancies; the selection and retention
of elected officers and management succession; the cash and non-cash
compensation of directors; the structure of the Board's Committees; the schedule
and agenda for meetings of the Board and its Committees; the criteria for
assessing the performance of the Board, its Committees, and the individual
directors; and other Board governance matters. When the Board is not in session
and when the Advisory Committee is convened by and meeting with the Chairman of
the Board for such purpose, the Advisory Committee shall serve as an "executive
committee" of the Board and shall have the full authority of the Board under
Virginia Law.
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B. AUDIT COMMITTEE. The Audit Committee shall periodically meet with
Dana's financial and accounting management and independent auditors and
accountants to review Dana's audit plans, financial reporting, internal
controls, and significant issues relating to Dana's contingent liabilities,
taxes and insurance programs. The Audit Committee shall provide oversight for
Dana's audit programs and shall make recommendations to the Board on matters
relating to the selection and retention of the independent auditors. The members
of the Audit Committee shall not be employees of Dana.
C. COMPENSATION COMMITTEE. The Compensation Committee shall make
recommendations to the Board on matters relating to base salaries and other cash
and non-cash compensation for senior management under those Dana executive
benefit plans in effect from time to time which the Committee interprets and
administers. The Compensation Committee shall maintain familiarity with
generally accepted national and international compensation practices and may
consult with such compensation consultants as it deems appropriate. In making
its recommendations, the Compensation Committee shall endeavor to maintain the
compensation of Dana's senior management at levels appropriate for Dana's size
and business, the responsibilities and performance of the individuals, and
Dana's performance. The members of the Compensation Committee shall qualify as
"outside directors" under Internal Revenue Service Regulation Section 1.162-27
and shall not be employees of Dana.
D. FINANCE COMMITTEE. The Finance Committee shall review Dana's
financial condition, liquidity (including aggregate corporate borrowings) and
results of operations, and shall recommend to the Board appropriate courses of
action with respect to Dana's financial performance and capital structure.
Within parameters established with the Board, the Finance Committee shall review
and approve management's recommendations on matters relating to major corporate
actions (including fixed capital expenditures; acquisitions, investments, and
divestitures; working capital programs; and issuances of equity and debt
securities) and shall present such recommendations to the Board.
E. FUNDS COMMITTEE. The Funds Committee shall review the structure and
allocation of assets in Dana's pension and other employee benefit funds and the
performance of the fund managers, to assure that the funds are managed in
compliance with applicable laws and regulations. In performing these advisory
functions, the Funds Committee shall refrain from making specific investment
recommendations. The Funds Committee shall review and approve management's
recommendations on matters relating to the selection and retention of the
investment managers.
SECTION 5.3. COMMITTEE MEETINGS AND PROCEDURES. Each Committee shall hold
regular meetings at such dates, times and places as it may determine from time
to time, and no notice thereof need be given other than such determination.
Sections 4.3 through 4.5, which govern meetings, notices and waivers of notice,
actions without meeting, and quorum and voting requirements for the Board and
the directors, shall also apply to the Committees and their members. Each
Committee shall keep written records of its proceedings and shall report such
proceedings to the Board from time to time as the Board may require.
SECTION 5.4. RESIGNATIONS. A Committee member may resign at any time by giving
written notice to the Chairman of the Board. Unless otherwise specified in the
notice, the resignation shall take effect upon delivery and without Board
action.
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ARTICLE VI. OFFICERS
SECTION 6.1. OFFICES AND ELECTION. The Board shall elect the following officers
annually at the first Board meeting following the annual shareholders meeting:
the Chairman (who shall be a member of the Board), the Chief Executive Officer,
the Chief Operating Officer, the President, the President-Dana international,
the Chief Financial Officer, the Treasurer, the Secretary, and such Executive
Vice Presidents, Vice Presidents, Assistant Treasurers and Assistant Secretaries
as it deems appropriate. Any person may simultaneously hold more than one
office. Each officer shall hold office until the election and qualification of
his or her successor, or until his or her earlier resignation or removal.
Election as an officer shall not, of itself, create any contractual rights in
the officer or in Dana, including, without limitation, any rights in the officer
for compensation beyond his or her term of office.
SECTION 6.2. REMOVALS AND RESIGNATIONS. Officers shall serve at the pleasure of
the Board and may be removed from office by the Board at any time. An officer
may resign at any time by giving written notice to the Chairman or the
Secretary. Unless otherwise specified in the notice, the resignation shall take
effect upon delivery and without Board action. An officer's resignation shall
not affect any contractual rights and obligations of Dana or the officer, except
as specified in any particular contract.
SECTION 6.3. DUTIES OF OFFICERS. The officers shall perform the following duties
and any others which are assigned by the Board from time to time, are required
by Virginia Law, or are commonly incident to their offices:
A. CHAIRMAN OF THE BOARD. The Chairman shall provide leadership to the
Board in discharging its functions; shall preside at all meetings of the Board;
shall act as a liaison between the Board and Dana's management; and, with the
Chief Executive Officer, shall represent Dana to the shareholders, investors and
other external groups. If the Chairman is absent or incapacitated, the Chairman
of the Advisory Committee shall have his or her powers and duties.
B. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be Dana's
principal executive officer, with responsibility for the general management of
Dana's business affairs. The Chief Executive Officer shall develop and recommend
to the Board long-term strategies for Dana, annual business plans and budgets to
support those strategies, and plans for management development and succession
that will provide Dana with an effective management team. He or she shall serve
as Dana's chief spokesperson to internal and external groups. If the Chief
Executive Officer is absent or incapacitated, the President shall have his or
her powers and duties.
C. CHIEF OPERATING OFFICER. The Chief Operating Officer shall oversee
the management of Dana's day-to-day business in a manner consistent with Dana's
financial and operating goals and objectives, continuous improvement in Dana's
products and services, and the achievement and maintenance of satisfactory
competitive positions within Dana's industries.
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PRESIDENT. The President shall have such duties as are assigned by the
Chief Executive Officer. If the President is absent or incapacitated, the
Chairman shall have his or her powers and duties.
E. PRESIDENT-DANA INTERNATIONAL. The President-Dana International shall
have such duties as are assigned by the Chairman.
F. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall be
responsible for the overall management of Dana's financial affairs.
G. EXECUTIVE VICE PRESIDENTS AND VICE PRESIDENTS. The Executive Vice
Presidents and the Vice Presidents shall have such duties as are assigned by the
Chairman.
H. TREASURER. The Treasurer shall have charge and custody of Dana's
funds and securities and shall receive monies due and payable to Dana from all
sources and deposit such monies in banks, trust companies, and depositories as
authorized by the Board. If the Treasurer is absent or incapacitated and has not
previously designated in writing another person or persons to have his or her
powers and duties, any Assistant Treasurer shall have such powers and duties.
I. SECRETARY. The Secretary shall prepare and maintain minutes of all
meetings of the Board and of Dana's shareholders; shall assure that notices
required by these By-Laws, Dana's Articles, Virginia Law or the Exchange Act are
duly given; shall be custodian of Dana's seal (if any) and affix it as required;
shall authenticate Dana's records as required; shall keep or cause to be kept a
register of the shareholders' names and addresses as furnished by them; and
shall have general charge of Dana's stock transfer books. If the Secretary is
absent or incapacitated and has not previously designated in writing another
person or persons to have his or her powers and duties, any Assistant Secretary
shall have such powers and duties.
J. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Assistant
Treasurers and Assistant Secretaries shall have such duties as are assigned by
the Treasurer and the Secretary, respectively.
SECTION 6.4. CONTRACTS AND INSTRUMENTS. Except as limited in Section 6.5 with
respect to Dana's guarantees of the indebtedness of subsidiaries, affiliates and
third parties, each of the Chairman, the Chief Executive Officer, the Chief
Operating Officer, the President, the President-Dana International, the Chief
Financial Officer, any Executive Vice President, any Vice President, and the
Treasurer shall have the power to enter into, sign (manually or through
facsimile), execute, and deliver contracts (including, without limitation,
bonds, deeds and mortgages) and other instruments evidencing Dana's rights and
obligations on behalf of and in the name of Dana. Except as otherwise provided
by law, any of these officers may delegate the foregoing powers to any other
officer, employee or attorney-in-fact of Dana by written special power of
attorney.
SECTION 6.5. GUARANTEES OF INDEBTEDNESS.
SECTION 6.5.1. DEBT OF WHOLLY OWNED SUBSIDIARIES. Within any
limitations set by the Board on total outstanding guarantees for Dana
subsidiaries, each of the Chairman, the Chief Executive Officer, the Chief
Operating Officer, the President, the Chief Financial Officer, and the
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Treasurer shall have the power to approve guarantees by Dana of the indebtedness
of direct and indirect wholly owned Dana subsidiaries.
SECTION 6.5.2. DEBT OF NON-WHOLLY OWNED SUBSIDIARIES, AFFILIATES, AND
OTHER ENTITIES. Each of the Chairman, the Chief Executive Officer, the Chief
Operating Officer, the President, the Chief Financial Officer, and the Treasurer
shall have the power to approve guarantees by Dana of the indebtedness of
non-wholly owned Dana subsidiaries, Dana affiliates and third party entities;
provided, that the aggregate amount of such guarantees made by these officers
collectively between Board meetings may not exceed $10 million and that all such
guarantees in the aggregate may not exceed any limitations set by the Board on
total outstanding guarantees for Dana subsidiaries.
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SECTION 6.6. STOCK CERTIFICATES. The Chairman, the President, and the Secretary
shall each have the power to sign (manually or through facsimile) certificates
for shares of Dana stock which the Board has authorized for issuance.
SECTION 6.7. SECURITIES OF OTHER ENTITIES. With respect to securities issued by
another entity which are beneficially owned by Dana, each of the Chairman, the
Chief Executive Officer, the Chief Operating Officer, the President, the
President-Dana International, the Chief Financial Officer, any Executive Vice
President, any Vice President, the Treasurer, and the Secretary shall have the
power to attend any meeting of security holders of the entity and vote thereat;
to execute in the name and on behalf of Dana such written proxies, consents,
waivers or other instruments as they deem necessary or proper to exercise Dana's
rights as a security holder of the entity; and otherwise to exercise all powers
to which Dana is entitled as the beneficial owner of the securities. Except as
otherwise provided by law, any of these officers may delegate any of the
foregoing powers to any other officer, employee or attorney-in-fact of Dana by
written special power of attorney.
ARTICLE VII. INDEMNIFICATION
SECTION 7.1. INDEMNIFICATION. Dana shall indemnify any of the following persons
who was, is or may become a party to any "proceeding" (as such term is defined
in Section 1 of Article SIXTH of Dana's Articles) to the same extent as if such
person were specified as one to whom indemnification is granted in Section 3 of
the foregoing Article SIXTH: (i) any Dana director, officer or employee who was,
is, or may become a party to the proceeding by reason of the fact that he or she
is or was serving at Dana's request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, and (ii) any Dana employee who was, is, or may become a party
to the proceeding by reason of the fact that he or she is or was an employee of
Dana. In all cases, the provisions of Sections 4 through 7 of the foregoing
Article SIXTH shall apply to the indemnification granted hereunder.
ARTICLE VIII. DANA STOCK
SECTION 8.1. LOST CERTIFICATES. A shareholder claiming that any certificate for
Dana stock has been lost or destroyed shall furnish the Secretary with an
affidavit stating the facts relating to such loss or destruction. The
shareholder shall be entitled to have a new certificate issued in the place of
the certificate which is claimed to be lost or destroyed if (i) the affidavit is
satisfactory to the Secretary, and (ii) if requested by the Secretary, the
shareholder gives a bond (in form and amount satisfactory to the Secretary) to
protect Dana and other persons from any liability or expense that might be
incurred upon the issue of a new certificate by reason of the original
certificate remaining outstanding.
SECTION 8.2. RIGHTS AGREEMENT. Any restrictions which are deemed to be imposed
on the transfer of Dana securities by the Rights Agreement dated as of April 25,
1996, between Dana and Chemical Mellon Shareholder Services, L.L.C., or by any
successor or replacement rights plan or agreement, are hereby authorized.
SECTION 8.3. CONTROL SHARE ACQUISITIONS. Article 14.1 of the Virginia Stock
Corporation Act shall not apply to the acquisition of shares of Dana's common
stock.
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ARTICLE IX. AMENDMENT
SECTION 9.1. AMENDMENT. The Board, by resolution, or the shareholders may amend
or repeal these By-Laws, subject to any limitations imposed by Dana's Articles
and Virginia Law.
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Exhibit 10-F
December 8, 1997
DANA CORPORATION EXCESS BENEFITS PLAN
ARTICLE I
DEFINITIONS
1.1. "Benefit Payment Period" means the one of the following
that applies to the particular Employee or Recipient:
(a) For an Employee or Recipient who is receiving payments
for the remainder of a term certain period, Benefit Payment Period
means the remainder of such term certain period.
(b) For an Employee or Recipient who is receiving payments
for his or her remaining lifetime, the Benefit Payment Period is the
Life Expectancy of the Employee or Recipient.
(c) For an Employee or Recipient who is receiving payments
for his or her remaining lifetime plus payments for the lifetime of a
Contingent Annuitant, the Benefit Payment Period is the Life Expectancy
of the Employee or Recipient plus an additional period to reflect the
Life Expectancy of the Contingent Annuitant after the death of the
Employee or Recipient.
1.2. "Board" means the Board of Directors of the Company.
1.3. "Change in Control" means the occurrence of the event set
forth in any one of the following paragraphs:
(a) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
(not including in the securities Beneficially Owned
by such Person any securities acquired directly from
the Company or its Affiliates) representing 20% or
more of the combined voting power of the Company's
then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a
transaction described in clause (1) of paragraph (c)
below; or
(b) the following individuals cease for any reason to
constitute a majority of the number of directors then
serving: individuals who, on December 8, 1997,
constitute the Board of Directors of the Company
("Board") and any new director whose appointment or
election by the Board or nomination for election by
the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors on December 8, 1997 or whose appointment,
election or nomination for election was previously so
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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 relating to the
election of directors of the Company, shall not be
counted; or
(c) there is consummated a merger of the Company or any
direct or indirect Subsidiary of the Company with any
other corporation, or a statutory share exchange of
the Company's voting securities, other than (1) a
merger or statutory share exchange which would result
in the voting securities of the Company outstanding
immediately prior to such merger 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
Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation, or (2) a merger or statutory share
exchange effected to implement a recapitalization of
the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not
including in the securities Beneficially Owned by
such Person any securities acquired directly from the
Company or its Affiliates) representing 20% or more
of the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or
disposition by the Company of all or substantially
all of the Company's assets, other than a sale or
disposition by the Company of all or substantially
all of the Company'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
Company in substantially the same proportions as
their ownership of the Company immediately prior to
such sale.
For purposes of this "Change in Control" definition, the
following terms shall have the following meanings:
"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 Company. For the purpose of this
definition, the terms "control", "controls" and
"controlled" mean the possession, direct or indirect,
of the power to direct or cause the direction of the
management and policies of a corporation or other
entity, whether through the ownership of voting
securities, by contract, or otherwise.
"Beneficial Owner" or "Beneficially Owned" 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.
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"Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections
13(d) and 14 (d) thereof, except that such term shall
not include (i) the Company or any of its
Subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the
Company.
"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 Company.
1.4. "Code" means the Internal Revenue Code of 1986, as
amended, or as it may be amended from time to time.
1.5. "Company" means Dana Corporation, a corporation
organized under the laws of the Commonwealth of Virginia.
1.6. "Contingent Annuitant" means the person designated to
receive retirement benefits under this Plan following the death of the Employee
or a Recipient.
1.7. "Deferred Awards" means deferred awards, earned under
the Dana Corporation Additional Compensation Plan on account of long- or
short-term award periods
(a) ending on or after January 1, 1988, except as
provided in paragraph (b), below, and
(b) ending either before January 1, 1988, or on or
after January 1, 1988, solely for purposes of determining the amount of
the Employee's benefit under Section 5 of Part I of Appendix E of the
Retirement Plan.
1.8. "Effective Date" means September 1, 1988.
1.9. "Employee" means an individual who is a participant
(including a retired participant) in a funded, defined benefit pension plan
maintained by the Company, or any successor plan that may be adopted or
substituted for such plan if, and only if,
(a) the individual's benefits under such defined
benefit plan are limited by reason of the provisions of such plan that
are designed to comply with the limitations imposed by Section
401(a)(17) or Section 415 of the Code; and/or
(b) the individual is actively employed by the Company
on or after September 1, 1988, and the individual's benefits under such
defined benefit plan are limited by reason of the fact that Deferred
Awards are not recognized as earnings for purposes of determining the
individual's benefits under such defined benefit plan.
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1.10. "Life Expectancy" means the expected remaining lifetime
based on the Mortality Table and the age at the nearest birthday of the Employee
or Recipient at the date the Lump Sum Payment is made. If a joint and contingent
survivor annuity has been elected, then Life Expectancy shall reflect the joint
Life Expectancies of the Employee or Recipient and Contingent Annuitant.
1.11. "Lump Sum Payment" shall be determined as set forth in
paragraph (c) of Section 4.7 of the Plan.
1.12. "Mortality Table" shall mean the Unisex Pension 1984
Mortality Table set forward one year in age (or such other pensioner annuity
mortality table as the Company with the written consent of the Employee or
Recipient shall determine) and the associated Uniform Seniority Table for the
determination of joint life expectancies.
1.13. "Net Specified Rate" shall mean the interest rate which
will produce income on a tax free basis that equals the income produced by the
Specified Rate net of the combined highest rates of Federal, state and local
income taxes that are in effect in the jurisdiction of the Employee or Recipient
on the date of payment of the Lump Sum Payment.
1.14. "Pension Plan" means the funded, defined benefit pension
plan in which an Employee was participating at the time of his termination of
employment (or retirement) from the Company.
1.15. "Plan" means the "Dana Corporation Excess Benefits Plan",
as set forth herein.
1.16. "Plan Administrator" means the Plan Administrator
appointed under the Pension Plan.
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1.17. "Retirement Plan" means the Dana Corporation Retirement
Plan, as amended from time to time.
1.18. "Specified Rate" shall mean an interest rate equal to 85%
of a composite insurance company annuity rate provided by an actuary designated
by the Plan Administrator (and provided by such actuary as of the last month of
the calendar year next preceding the calendar year in which the distribution is
made), subject to the condition that the interest rate in effect for any such
year may not differ from the rate in effect for the prior year by more than
one-half of one percent, and also subject to the condition that any such rate
shall be rounded to the nearest one-tenth of one percent (and if such rate is
equidistant between the next highest and next lowest one-tenth of one percent,
rounded to the next lowest one-tenth of one percent).
ARTICLE II
PURPOSE OF THE PLAN
2.1. Purpose. This Plan as adopted effective September 1, 1988,
is hereby amended effective February 13, 1995 and is intended to continue the
excess benefits plan of the Company that had previously been set forth in a
Resolution of the Board dated June 9, 1975, as amended and supplemented by
Resolutions dated April 14, 1980, February 14, 1983, December 10, 1984, February
16, 1988, and January 29, 1993.
ARTICLE III
ELIGIBILITY
3.1. Eligibility. All Employees and beneficiaries of Employees
eligible to receive retirement benefits from a funded, defined benefit pension
plan sponsored by the Company shall be eligible to receive benefits under this
Plan in accordance with Article IV, regardless of when the Employee may have
terminated employment or retired (except as otherwise specified by Article IV).
ARTICLE IV
BENEFITS
4.1. Basic Benefit.
(a) An Employee who, on or after September 1, 1988,
terminates active employment or retires from active employment with the
Company shall be entitled to receive a lump sum payment equal to the
excess (if any) of:
(i) the total of the lump sum benefits that the
Employee would have received from all Company-sponsored,
funded, defined benefit pension plans in which he was a
participant, determined without regard to the limitations
on such benefits imposed by such plans in order to comply
with the
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limitations imposed by Section 401(a)(17) and Section 415
of the Code and, in the case of an Employee who is
actively employed by the Company on or after September 1,
1988, and solely for purposes of the benefits payable from
the Retirement Plan (but not for purposes of any benefits
payable pursuant to the second paragraph of Section 14 of
Part I of Appendix E of the Retirement Plan), determined
without regard to the provisions of the Retirement Plan
that exclude Deferred Awards under the Dana Corporation
Additional Compensation Plan from the definition of
earnings under the Retirement Plan, and determined, except
as provided in Section 4.1(e) hereof, on the basis of the
Mortality Table and 120 percent of the interest rate that
would be used (as of January 1 of the calendar year in
which the first benefit payment is to be made) by the
Pension Benefit Guaranty Corporation with respect to an
immediate annuity for purposes of determining the present
value of a lump sum distribution on plan termination, over
(ii) the total of the lump sum benefits that he
is entitled to receive from such Company-sponsored,
funded, defined benefit pension plans, determined on the
basis of the assumption that the Employee's benefits under
such plans are paid in the form of a lump sum benefit,
payable as of the Employee's date of retirement under the
Pension Plan and determined, except as provided in Section
4.1(e) hereof, on the basis of the Mortality Table and 120
percent of the interest rate that would be used (as of
January 1 of the calendar year in which the first benefit
payment is to be made) by the Pension Benefit Guaranty
Corporation with respect to an immediate annuity for
purposes of determining the present value of a lump sum
distribution on plan termination.
(b) Subject to the provisions of Section 4.2 hereof, the
benefit payable pursuant to paragraph (a) of this Section 4.1, shall be
paid in the form of a lump sum payment, payable as of the Employee's
date of retirement under the Pension Plan.
(c) If an Employee eligible for a benefit under the Plan
dies before the date as of which such benefit is scheduled to be paid
hereunder, a lump sum benefit shall be paid to the Employee's surviving
spouse (if any), as of the month (if any) in which the spouse's
benefits commence under the Pension Plan. The amount of such benefit
shall be a lump sum payment equal to the excess (if any) of:
(i) the total of the lump sum benefits that the
spouse would have received from all Company-sponsored,
funded, defined benefit pension plans in which the
Employee was a participant but for the limitations on
benefits imposed by such plans in order to comply with the
limitations imposed by Section 401(a)(17) and Section 415
of the Code and, in the case of an Employee who is
actively employed by the Company on or after September 1,
1988, and solely for purposes of the benefits payable from
the Retirement Plan (but not for purposes of any benefits
payable pursuant to the second paragraph of Section 14 of
Part I of Appendix E of the Retirement Plan), determined
without regard to the provisions of the Retirement Plan
that exclude Deferred Awards under the Dana Corporation
Additional Compensation Plan from the definition of
earnings under the Retirement Plan, and
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determined on the basis of the Mortality Table and 120
percent of the interest rate that would be used (as of
January 1 of the calendar year in which the first benefit
payment is to be made) by the Pension Benefit Guaranty
Corporation with respect to an immediate annuity for
purposes of determining the present value of a lump sum
distribution on plan termination, over
(ii) the total of the lump sum benefits that the
spouse is entitled to receive from such Company-sponsored,
funded, defined benefit pension plans, determined on the
basis of the assumption that the spouse's benefits under
such plans are paid in the form of a lump sum benefit and
determined on the basis of the Mortality Table and 120
percent of the interest rate that would be used (as of
January 1 of the calendar year in which the first benefit
payment is to be made) by the Pension Benefit Guaranty
Corporation with respect to an immediate annuity for
purposes of determining the present value of a lump sum
distribution on plan termination.
(d) No benefits shall be paid hereunder with respect
to an active Employee who is not married on the date of his death.
(e) Notwithstanding the foregoing provisions of this
Section 4.1, if an active Employee retires and receives a benefit under
any of the following plan provisions:
(i) Section 3.04D of the Dana Corporation
Retirement Income Plan, as amended by the Second Amendment
to that Plan;
(ii) Section 3.6D of the Dana Corporation Spicer
Axle Salaried Pension Plan, as amended by the First
Amendment to that Plan;
(iii) Section 5.1c.v. of the Retirement Plan for
Management Employees of Racine Hydraulics Division-Dana
Corporation, as amended by the First Amendment to that
Plan;
(iv) Section 4.6.5 of the Dana Corporation
Weatherhead Division Pension Plan for Salaried Employees,
as amended by the First Amendment to that Plan;
(v) Section 4.7.1 of the Dana Corporation Gresen
Manufacturing Division Management Pension Plan, as amended
by the First Amendment to that Plan; or
(vi) Option E of Section 6.4 of the Tyrone
Salaried Pension Plan, as amended by the First Amendment
to that Plan,
then the benefits described in Section 4.1(a)(i) and (ii), in respect
of the above-described plan benefits, shall be determined on the basis
of the mortality rates, interest assumptions and other factors that
would be applicable to the form of payment selected by the Employee
under such other plan.
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(f) Notwithstanding the foregoing provisions of this
Section 4.1, benefits under this Plan shall only be based on that
portion of an Employee's 1994 and subsequent years' Additional
Compensation Plan bonus awards (whether or not deferred) as do not
exceed 125% of the base salary paid to the Employee by the Company for
the applicable year.
4.2. Form of Benefit Payments. An Employee eligible for a
benefit under this Plan shall be entitled to receive his benefit in the form of
an immediate lump sum payment. However, upon the written request of the
Employee, the Treasurer of the Company may, in his sole discretion, permit such
benefit to be paid instead pursuant to an optional form of payment that is used
for the payment of the Employee's retirement benefit under the Pension Plan. Any
such written request must be filed by the Employee with the Treasurer of the
Company on or before the Employee's date of retirement under the Pension Plan.
If the Employee is the Treasurer of the Company, the duties of the Treasurer of
the Company under this Section 4.2 shall be discharged by the President of the
Company. The amount of the benefit payable pursuant to any form of payment under
this Plan shall be determined by applying the mortality rates, interest
assumptions and other factors prescribed by the Retirement Plan that would be
applicable to the form of payment applicable to the Employee under this Plan.
Any post-retirement increase in the benefits being paid to an Employee under the
Pension Plan shall also be applied on a comparable basis to any monthly
supplemental benefits being paid under this Plan.
4.3. Time and Duration of Benefit Payments. Benefits due under
the Plan shall be paid in a lump sum, except as otherwise determined by the
Treasurer or the President of the Company pursuant to Section 4.2 hereof.
4.4. Benefits Unfunded. The benefits payable under the Plan
shall be paid by the Company each year out of its general assets and shall not
be funded in any manner. The obligations that the Company incurs under this Plan
shall be subject to the claims of the Company's other creditors having priority
as to the Company's assets.
4.5. Nonalienability. Except as to withholding of any tax under
the laws of the United States or any state or locality, no supplemental benefit
payable at any time hereunder shall be subject in any manner to alienation,
sale, transfer, assignment, pledge, attachment or other legal process, or
encumbrance of any kind. Any attempt to alienate, sell, transfer, assign, pledge
or otherwise encumber any such supplemental benefit, whether currently or
thereafter payable, shall be void.
4.6. Successors to the Corporation. This Plan shall be binding
upon and inure to the benefit of any successor or assign of the Company,
including, without limitation, any corporation or corporations acquiring
directly or indirectly all or substantially all of the assets of the Company
whether by merger, consolidation, sale or otherwise (and such successor or
assign shall thereafter be deemed embraced within the term "Company" for the
purposes of this Plan).
4.7. Change in Control. Anything hereinabove in this Article
IV or elsewhere in this Plan to the contrary notwithstanding:
(a) Lump sum payment. Upon the occurrence of a Change in
Control, each Employee and each Employee's spouse or beneficiary
following his death who are
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receiving benefits under the Plan ("Recipient") shall receive, on
account of future payments of any and all benefits due under the Plan,
a Lump Sum Payment, so that each such Employee or Recipient will
receive substantially the same amount of after-tax income as before the
Change in Control, determined as set forth in paragraph (c) of this
Section 4.7.
(b) Certain matters following a lump sum payment. An
Employee who has received a Lump Sum Payment pursuant to paragraph (a)
of this Section 4.7 shall, thereafter (i) while in the employ of the
Company, continue to accrue benefits under the Plan, and (ii) be
eligible to be paid further benefits under the Plan, after appropriate
reduction in respect of the Lump Sum Payment previously received. For
purposes of calculating such reduction, the Lump Sum Payment shall be
accumulated with interest at the Specified Rate in effect from time to
time for the period of time from initial payment date to the next date
on which a computation is to be made (i.e., upon Change in Control,
retirement, or other termination of employment). It shall then be
converted to a straight-life annuity using the current annuity certain
factor. The current annuity certain factor will be determined on the
Net Specified Rate basis if this benefit payment is being made due to a
subsequent Change in Control; otherwise, the Specified Rate shall be
used.
(c) Determination of lump sum payment. The Lump Sum
Payment referred to in paragraph (a) of this Section 4.7 shall be
determined by multiplying the annuity certain factor (for monthly
payments at the beginning of each month) based on the Benefit Payment
Period and the Net Specified Rate by the monthly benefit (adjusted for
assumed future benefit adjustments due to Social Security and Code
Section 415 changes in the Pension Plan) to be paid to the Employee or
Recipient under the Plan.
4.8. Taxation. Notwithstanding anything in the Plan to the
contrary, if the Internal Revenue Service determines that the Employee is
subject to Federal income taxation on an amount in respect of any benefit
provided by the Plan before the distribution of such amount to him, the Company
shall forthwith pay to the Employee all (or the balance) of such amount as is
includible in the Employee's Federal gross income and shall correspondingly
reduce future payments, if any, of the benefit.
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ARTICLE V
AMENDMENT, TERMINATION AND INTERPRETATION
5.1. Amendment and Termination. The Company reserves the right,
by action of the Board, to amend, modify or terminate, either retroactively or
prospectively, any or all of the provisions of this Plan without the consent of
any Employee or beneficiary; provided, however, that no such action on its part
shall adversely affect the rights of an Employee and his beneficiaries without
the consent of such Employee (or his beneficiaries, if the Employee is deceased)
with respect to any benefits accrued prior to the date of such amendment,
modification, or termination of the Plan if the Employee has at that time a
non-forfeitable right to benefits under a funded, defined benefit pension plan
sponsored by the Company.
5.2. Interpretation. The Plan Administrator shall have the
power to interpret the Plan and to decide any and all matters arising hereunder;
including but not limited to the right to remedy possible ambiguities,
inconsistencies or omissions by general rule or particular decision; provided,
that all such interpretations and decisions shall be applied in a uniform and
nondiscriminatory manner to all Employees similarly situated. In addition, any
interpretations and decisions made by the Plan Administrator shall be final,
conclusive and binding upon the persons who have or who claim to have any
interest in or under the Plan.
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Exhibit 10-H
December 8, 1997
DANA CORPORATION
DIRECTORS RETIREMENT PLAN
The objective of this Dana Corporation Directors Retirement Plan
(hereinafter called "Plan") is to recognize the value of a Director's past
service to the Dana Corporation (hereinafter called "Company"), to compensate
for the availability of the Director's knowledge and experience as a resource to
the Company, and to assist the Company in attracting and retaining new
Directors.
To that end, the outside Directors of the Company shall be entitled to
receive retirement benefits in the amounts and on the terms and conditions set
forth in the following:
1. Except as otherwise provided in Paragraphs 3, 7, and 10 hereof, each
outside Director who retires between February 18, 1985 and December 31, 1996
shall, upon his retirement from the Board after attaining age 65, be entitled to
receive a monthly retirement payment in the amount hereinafter provided for,
payable on the first day of each month commencing with the month following his
retirement from the Board and continuing through the month in which his death
shall occur, provided that in no event shall the aggregate number of payments
exceed the number of months he served as a Director of the Company. For purposes
of this Plan, an "outside Director" shall be defined as a Director of the
Company who is not an employee of the Company and who is not entitled, either
before or after retirement from the Board, to receive employee pension benefits
from the Company or from any of its subsidiaries. Notwithstanding anything else
in this Plan to the contrary, no benefits shall be payable to or accrued on
behalf of a Director under this Plan unless the Director was eligible to receive
benefits under this Plan and retired as a Director of the Company between
February 18, 1985 and December 31, 1996.
2. The monthly retirement payment shall be in an amount equal to 1/12
of the product of 50% times the annual average of the fees and retainers
(exclusive of any fees solely attributable to professional or other consulting
services furnished to the Company independently of his service as a Director)
payable to the Director by the Company (whether on a current or deferred payment
basis) for his services as a member or chairman of the Board or any committee of
the Board, including fees for attendance at any meeting of the Board or any
committee thereof, during his last three full calendar years of service as a
Director. All Plan benefits will be paid in cash.
3. Subject to the provisions of Paragraph 7 below, in order to be
entitled to any retirement benefits under the Plan, a Director must not
voluntarily terminate (whether by resignation or refusal to stand for
re-election) his service as a Director of the Company for any reason (other than
illness or other incapacity that ends his active business career), or be
involuntarily terminated by reason of any failure of the stockholders to elect
or re-elect the Director to the Board, or otherwise, prior to the Annual
Shareholders Meeting immediately following his 65th birthday. If a Director
voluntarily terminates, or has his service involuntarily terminated, as provided
above, he shall not have any right to receive retirement benefits from the
Company under this Plan unless the provisions of Paragraph 7 apply. An eligible
Director who voluntarily terminates his service as a Director of the Company
prior to such Annual
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Shareholders Meeting due to illness or other medical incapacity which ends his
active business career will be entitled to receive monthly retirement payments
in the amount provided by Paragraph 2 above, for the number of months provided
in Paragraph 1 above and commencing, however, on the first day of the month in
which such Director so terminates his service.
(a) Pre-Retirement Survivors Benefit. If a Director dies prior to
his retirement from the Board, his surviving spouse (if any)
shall be entitled to receive a monthly survivors benefit equal
to the monthly benefit which would have been payable to the
Director had he retired on the day prior to his death. Such
monthly survivors benefit shall be paid to the surviving
spouse until the month in which her death shall occur,
provided that in no event shall the aggregate number of such
monthly survivor benefit payments exceed the number of months
that the Director served on the Board of the Company. Solely
for the purposes of this paragraph, a deceased Director will
be deemed to have been eligible to receive a retirement
benefit from the Plan even though he may not have obtained age
65 at the time of his death.
(b) Post-Retirement Survivors Benefit. In lieu of a Director's
receiving monthly retirement benefit payments in the form and
amount provided in Paragraphs 1 and 2, a Director may elect to
receive a reduced benefit for his life, with a provision for a
survivor's benefit payable to his spouse following the
Director's death. In the event the Director elects to receive
his monthly retirement benefit in the form of a
post-retirement survivor annuity, he shall be entitled to
receive the monthly benefits provided in Paragraph 1 for his
life, and following his death, his spouse shall be entitled to
receive any monthly retirement payments that remained payable
to the Director at the time of his death. Such monthly
survivors benefit shall be paid to the spouse until the month
in which her death shall occur, provided that in no event
shall the aggregate number of monthly benefit payments made to
the Director and his spouse exceed the number of months that
the Director served on the Board of the Company. The amount of
benefits payable to the Director and his spouse pursuant to
the election of a post-retirement survivor form of payment
shall be determined by applying the mortality rates, interest
assumptions and other factors prescribed by the Dana
Corporation Retirement Plan that would be applicable to the
Director had he elected a post-retirement joint and survivor
form of payment under such Retirement Plan.
4. Neither the establishment of, nor the participation or eligibility
for participation of any Director in this Plan, shall be construed to confer any
right of tenure on the part of any Director or any right of nomination,
renomination, election or re-election to the Board of Directors of the Company.
The Company shall not incur any liability for any loss of benefits that might
result under this Plan from any failure of the stockholders to elect or re-elect
any Director to the Board of Directors or any failure of the Board of Directors
to nominate any Director for re-election. Benefits payable under the Plan will
not be funded by the Company, or be transferable or assignable by a Director,
nor shall they be subject to encumbrance, pledge, hypothecation or set-off.
5. So long as he is receiving any retirement payments from the Company,
each retired Director agrees that the Company may, in its annual report and
other appropriate documents enumerating the Directors of the Company, include
the retired Director with appropriate indication of his retired or emeritus
status.
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6. It is intended that this Plan will operate in addition to, and not
as a replacement for, the Dana Corporation Directors Deferred Fee Plan, and
Directors will still be permitted to defer all or a portion of their fees under
the Directors Deferred Fee Plan without in any way reducing the benefits to
which they are entitled under this Plan. The establishment and operation of this
Plan shall not affect in any way the Directors Deferred Fee Plan, which shall
continue in effect in accordance with its terms as if this Plan had never been
established.
7. This Plan shall be binding upon and inure to the benefit of the
Company and any successor or assign of the Company, including, without
limitation, any corporation or corporations acquiring directly or indirectly all
or substantially all of the assets of the Company whether by merger,
consolidation, sale or otherwise (and such successor or assign shall thereafter
be deemed embraced within the term "Company" for the purposes of this Plan);
provided that no assignment by the Company of any of its obligations under this
Plan shall without the written consent of affected participants release the
Company from its obligations hereunder.
(a) Lump Sum Payment. Upon the occurrence of a "change in control of
the Company", as hereinafter defined, then each Director, each retired
Director, and each spouse of a deceased Director (collectively referred
to as "Recipient") shall receive on account of future payments of any
and all benefits accrued under the Plan, a Lump Sum Payment, so that
each such Recipient will receive substantially the same amount of
after-tax income as before the change in control, determined as set
forth in subparagraph (c) below of this Paragraph 7. Solely for the
purpose of calculating the benefit accrual of active outside Directors
under the next preceding sentence, it is to be assumed that the
Directors were entitled to, and did, retire under this Plan at the date
of the change in control of the Company, with a deferred vested benefit
commencing at age 65 for those Directors under age 65 and an immediate
retirement annuity for older Directors. Such Lump Sum Payment shall be
made irrespective of whether or not the Recipient shall, upon or after
such change in control, voluntarily or involuntarily terminate his
service as a Director of the Company. The Lump Sum Payment payable to
such Recipient in such event shall be based on the annual average of
the fees and retainers payable to the Director for his services during
his last three full calendar years of service as a Director of the
Company prior to the Lump Sum Payment pursuant to this Paragraph. The
amount of each Lump Sum Payment shall be governed in all other respects
by the provisions of this Plan as in effect on the date of such change
in control. No provision of this Paragraph 7 is intended to reduce or
duplicate any monthly retirement payment or payments to which any
Recipient may be entitled under any provision of this Plan other than
this Paragraph 7.
For the purposes of this Paragraph 7, a "change in control of the
Company" means the occurrence of the event set forth in any one of the following
paragraphs:
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
(not including in the securities Beneficially Owned
by such Person any securities acquired directly from
the Company or its Affiliates) representing 20% or
more of the combined voting power of the Company's
then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a
transaction described in clause (1) of paragraph
(iii) below; or
(f) the following individuals cease for any reason to
constitute a majority of the number of directors then
serving: individuals who, on December 8,
54
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1997, constitute the Board of Directors of the
Company ("Board") and any new director whose
appointment or election by the Board or nomination
for election by the Company's stockholders was
approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in
office who either were directors on December 8, 1997
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
relating to the election of directors of the Company,
shall not be counted; or
(g) there is consummated a merger of the Company or any
direct or indirect Subsidiary of the Company with any
other corporation, or a statutory share exchange of
the Company's voting securities, other than (1) a
merger or statutory share exchange which would result
in the voting securities of the Company outstanding
immediately prior to such merger 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
Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation, or (2) a merger or statutory share
exchange effected to implement a recapitalization of
the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not
including in the securities Beneficially Owned by
such Person any securities acquired directly from the
Company or its Affiliates) representing 20% or more
of the combined voting power of the Company's then
outstanding securities; or
(h) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or
disposition by the Company of all or substantially
all of the Company's assets, other than a sale or
disposition by the Company of all or substantially
all of the Company'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
Company in substantially the same proportions as
their ownership of the Company immediately prior to
such sale.
For purposes of this "Change in Control" definition, the following
terms shall have the following meanings:
"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
Company. For the purpose of this definition, the
terms "control", "controls" and "controlled" mean the
possession, direct or indirect, of the power to
direct or cause the direction of the management and
policies of a corporation or other entity, whether
through the ownership of voting securities, by
contract, or otherwise.
"Beneficial Owner" or "Beneficially Owned" shall have the
meaning set forth in Rule 13d-3 under the Exchange
Act.
55
5
"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 Company or any of its
Subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the
Company.
"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 Company.
(b) Certain Matters Following a Lump Sum Payment. A Director who has
received a Lump Sum Payment pursuant to subparagraph (a) of this
Paragraph 7 shall, thereafter (i) while serving as a Director of the
Company, continue to accrue benefits under the Plan, and (ii) be
eligible to be paid further benefits under the Plan, after appropriate
reduction in respect of the Lump Sum Payment previously received. For
purposes of calculating such reduction, the Lump Sum Payment shall be
accumulated with interest at the Specified Rate in effect from time to
time for the period of time from initial payment date to the next date
on which a computation is to be made (i.e., upon a change of control of
the Company, retirement or other termination of employment). It shall
then be converted to a straight-life annuity using the current annuity
certain factor. The current annuity certain factor will be determined
on the Net Specified Rate basis if this benefit payment is being made
due to a subsequent change in control of the Company; otherwise, the
Specified Rate shall be used.
(c) Determination of Lump Sum Payment. The Lump Sum Payment referred to
in subparagraph (a) of this Paragraph 7 shall be determined by
multiplying the annuity certain factor (for monthly payments at the
beginning of each month) based on the Life Expectancy of the Director
(but not longer than the number of months he served as a Director of
the Company) and the Net Specified Rate by the monthly benefit to be
paid to the Director under the Plan.
(d) Definitions. The following terms shall have the meaning hereinafter
set forth:
(i) "Life Expectancy" shall mean the expected remaining
lifetime (to the nearest integer) based on the
Mortality Table and the age nearest birthday of the
Director at the date the Lump Sum Payment is made.
(ii) "Lump Sum Payment" shall be determined as set forth
in subparagraph (c) above of this Paragraph 7.
(iii) "Mortality Table" shall mean the UP-1984 Table (or
such other pensioner annuity mortality table as the
Company with the written consent of the Director
shall determine).
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(iv) "Net Specified Rate" shall mean the interest rate
which will produce income on a tax free basis that
equals the income produced by the Specified Rate net
of the combined highest rates of Federal, state and
local income taxes that are in effect in the
jurisdiction of the Director on the date of payment
of the Lump Sum Payment.
(v) "Specified Rate" shall mean the interest rate for
immediate annuities of the Pension Benefit Guaranty
Corporation (PBGC) in effect on the date of payment
of the Lump Sum Payment as set forth in Appendix B to
Part 2619 of 29 Code of Federal Regulations or such
successor to such Appendix B as may be in effect on
such date.
8. This Plan shall be administered by the Advisory Committee of the
Board of Directors. The Advisory Committee of the Board of Directors shall have
the power to interpret the Plan and to decide any and all matters arising
hereunder; including but not limited to the right to remedy possible
ambiguities, inconsistencies or omissions by general rule or particular
decision; provided, that all such interpretations and decisions shall be applied
in a uniform and nondiscriminatory manner to all participants similarly
situated. In addition, any interpretations and decisions made by the Advisory
Committee of the Board of Directors shall be final, conclusive and binding upon
all persons who have or who claim to have any interest in or under the Plan.
9. The obligation of the Company to make or continue payments under
this Plan shall be subject to the condition that the Director or former Director
shall not engage, either directly or indirectly, in any activity which is
competitive with any activity of the Company, it being understood that in the
event of a breach by the Director or former Director of the foregoing condition,
the Company shall not be obligated to make any payment or payments hereunder
coming due subsequent to the occurrence of such breach. The Advisory Committee
of the Board of Directors, upon prior written request of a Director or former
Director, may waive the condition specified above with respect to
non-competition if, based upon all of the relevant circumstances, in the sole
judgment of the Committee, the granting of such waiver is justified.
10. The Company shall have the right, through its Board of Directors,
at any time to amend or terminate this Plan, provided that any amendment or
termination of the Plan shall be prospective in operation only and shall not
adversely affect any rights of any Director to receive retirement payments on
account of his service as a Director prior to such time unless he shall
expressly consent thereto.
Pursuant to Resolutions of the Board of Directors adopted on February
10, 1997, the Board has terminated the Plan effective December 31, 1996 with
respect to any current or future outside Director who was not receiving
retirement benefit distributions from the Plan on December 31, 1996. Retired
Directors (or their beneficiaries) who are currently receiving distributions
from the Plan will continue to be eligible to receive distributions in
accordance with the terms of the Plan as in effect on December 30, 1996. The
Plan will terminate on December 31, 1996 with respect to Directors who, as of
that date, were not currently receiving benefit distributions under the Plan,
and such Directors will have no right to receive a benefit from the Plan
following their retirement from the Board or other termination of service from
the Company.
11. This Dana Corporation Directors Retirement Plan became effective
on February 18, 1985, and shall cover retirements from the Board between that
date and December 31, 1996.
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Exhibit 10-K
April 20, 1998
DANA CORPORATION SUPPLEMENTAL BENEFITS PLAN
ARTICLE I
DEFINITIONS
1.1. "Benefit Payment Period" means the one of the following that
applies to the particular Employee or Recipient:
(a) For an Employee or Recipient who is receiving payments
for the remainder of a term certain period, Benefit
Payment Period means the remainder of such term certain
period.
(b) For an Employee or Recipient who is receiving payments
for his or her remaining lifetime, the Benefit Payment
Period is the Life Expectancy of the Employee or
Recipient.
(c) For an Employee or Recipient who is receiving payments
for his or her remaining lifetime plus payments for the
lifetime of a Contingent Annuitant, the Benefit Payment
Period is the Life Expectancy of the Employee or
Recipient plus an additional period to reflect the Life
Expectancy of the Contingent Annuitant after the death
of the Employee or Recipient.
1.2. "Board" means the Board of Directors of the Company.
1.3. "Change in Control" means the occurrence of the event set
forth in any one of the following paragraphs:
(a) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
(not including in the securities Beneficially Owned
by such Person any securities acquired directly from
the Company or its Affiliates) representing 20% or
more of the combined voting power of the Company's
then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a
transaction described in clause (1) of paragraph (c)
below; or
(b) the following individuals cease for any reason to
constitute a majority of the number of directors
then serving: individuals who, on December 8, 1997,
constitute the Board of Directors of the Company
("Board") and any new director whose appointment or
election by the Board or nomination for election by the
Company's stockholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then
still in office who either were directors on December
8, 1997 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 relating
to the election of directors of the Company, shall not
be counted; or
58
2
(c) there is consummated a merger of the Company or any
direct or indirect Subsidiary of the Company with any
other corporation, or a statutory share exchange of
the Company's voting securities, other than (1) a
merger or statutory share exchange which would result
in the voting securities of the Company outstanding
immediately prior to such merger 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
Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation, or (2) a merger or statutory share
exchange effected to implement a recapitalization of
the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not
including in the securities Beneficially Owned by
such Person any securities acquired directly from the
Company or its Affiliates) representing 20% or more
of the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or
disposition by the Company of all or substantially
all of the Company's assets, other than a sale or
disposition by the Company of all or substantially
all of the Company'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
Company in substantially the same proportions as
their ownership of the Company immediately prior to
such sale.
For purposes of this "Change in Control" definition, the following
terms shall have the following meanings:
"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 Company. For the purpose of
this definition, the terms "control", "controls" and
"controlled" mean the possession, direct or indirect, of the
power to direct or cause the direction of the management and
policies of a corporation or other entity, whether through the
ownership of voting securities, by contract, or otherwise.
"Beneficial Owner" or "Beneficially Owned" 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
Company or any of its Subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock
of the Company.
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"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 Company.
1.4. "Code" means the Internal Revenue Code of 1986, as amended, or
as it may be amended from time to time.
1.5. "Company" means Dana Corporation, a corporation organized
under the laws of the Commonwealth of Virginia.
1.6. "Contingent Annuitant" means the person designated to receive
retirement benefits under this Plan following the death of the Employee or a
Recipient.
1.7. "Credited Service" means "Credited Service" as that term is
defined in the Retirement Income Plan.
1.8. "Effective Date" means September 1, 1988.
1.9. "Employee" means an individual who is a participant (including
a retired participant) in a funded, defined benefit pension plan maintained by
the Company, or any successor plan that may be adopted or substituted for such
plan if, and only if, (a) the individual is actually employed by the Company on
September 1, 1988, and (b) the individual is a U.S.-based member of the
long-term awards group as of September 1, 1988, under the Dana Corporation
Additional Compensation Plan.
1.10. "Excess Plan" means the Dana Corporation Excess Benefits Plan,
as amended from time to time.
1.11. "Highest Average Monthly Earnings" means the sum of
(a) the Employee's basic salary (before any reduction as a
result of an election to have his pay reduced in
accordance with a "cafeteria plan" or a "cash or
deferred arrangement" pursuant to Section 125 or
Section 401(k) of the Code), and
(b) bonuses and incentive payments paid (or that would have
been paid, but for a deferral arrangement) to the
Employee (provided, however, that with respect to 1994
and subsequent years' bonus awards under the Company's
Additional Compensation Plan, only that portion of the
Employee's bonus award as does not exceed 125% of his
base salary will be considered)
during any 3 calendar years out of the last 10 calendar years of active
employment with the Company prior to retirement in which such sum was the
highest, divided by 36.
1.12. "Life Expectancy" means the expected remaining lifetime based
on the Mortality Table and the age at the nearest birthday of the Employee or
Recipient at the date the Lump Sum Payment is made. If a joint and contingent
survivor annuity has been elected, then Life Expectancy shall reflect the joint
Life Expectancies of the Employee or Recipient and Contingent Annuitant.
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1.13. "Lump Sum Payment" shall be determined as set forth in
paragraph (c) of Section 4.7 of the Plan.
1.14. "Mortality Table" shall mean the Unisex Pension 1984 Mortality
Table set forward one year in age (or such other pensioner annuity mortality
table as the Company with the written consent of the Employee or Recipient shall
determine) and the associated Uniform Seniority Table for the determination of
joint life expectancies.
1.15. "Net Specified Rate" shall mean the interest rate which will
produce income on a tax free basis that equals the income produced by the
Specified Rate net of the combined highest rates of Federal, state and local
income taxes that are in effect in the jurisdiction of the Employee or Recipient
on the date of payment of the Lump Sum Payment.
1.16. "Pension Plan" means the funded, defined benefit pension plan
in which an Employee was participating at the time of his termination of
employment (or retirement) from the Company.
1.17. "Plan" means the "Dana Corporation Supplemental Benefits
Plan", as set forth herein.
1.18. "Plan Administrator" means the Plan Administrator appointed
under the Pension Plan.
1.19. "Primary Social Security Benefit" means "Primary Social
Security Benefit" as that term is defined by the Retirement Income Plan.
1.20. "Retirement Income Plan" means The Dana Corporation Retirement
Income Plan, as in effect on June 30, 1988.
1.21. "Specified Rate" means an interest rate equal to 85% of a
composite insurance company annuity rate provided by an actuary designated by
the Plan Administrator (and provided by such actuary as of the last month of the
calendar year next preceding the calendar year in which the distribution is
made), subject to the condition that the interest rate in effect for any such
year may not differ from the rate in effect for the prior year by more than
one-half of one percent, and also subject to the condition that any such rate
shall be rounded to the nearest one-tenth of one percent (and if such rate is
equidistant between the next highest and next lowest one-tenth of one percent,
rounded to the next lowest one-tenth of one percent).
1.22. "Temporary Retirement Benefit" means the benefit described in
Section 4.1(b)(i)(B) hereof.
1.23. "Vesting Service" means "Vesting Service" as that term is
defined by the Retirement Income Plan.
ARTICLE II
PURPOSE OF THE PLAN
2.1. Purpose. This Plan is adopted effective September 1, 1988, and
amended effective April 20, 1998, and is intended to provide supplemental
benefits to Employees and their beneficiaries in addition to any benefits to
which such Employees and beneficiaries may be
61
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entitled under other Company-sponsored, funded, defined benefit pension plans
and the Excess Plan.
ARTICLE III
ELIGIBILITY
3.1. Eligibility. All Employees and beneficiaries of Employees
eligible to receive retirement benefits from a Pension Plan shall be eligible to
receive benefits under this Plan in accordance with Article IV, regardless of
when the Employee may have terminated employment or retired (except as otherwise
specified by Article IV).
ARTICLE IV
BENEFITS
Basic Benefits.
(a) An Employee who, on or after September 1, 1988, retires
from active employment with the Company on or after his
65th birthday, shall be entitled to receive a lump sum
benefit that is the actuarial equivalent (determined in
accordance with Section 4.2 hereof) of a monthly
supplemental benefit equal to the excess (if any) of:
(i)(A) 1.6 percent of the Employee's Highest
Average Monthly Earnings multiplied by
the number of years and fractional parts
thereof of his Credited Service at the
time of retirement, less
(B) 2 percent of the Employee's Primary
Social Security Benefit multiplied by
the number of years and fractional parts
thereof of his Credited Service but not
more than 50 percent of the Employee's
Primary Social Security Benefit, over
(ii) the sum of the monthly benefits he is entitled
to receive from all Company-sponsored, funded,
defined benefit pension plans, and the Excess
Plan, determined in each case on the basis of
the assumption that the Employee's benefits
under such plans are paid in the form of a
single life annuity for the life of the
Employee, commencing as of the Employee's date
of retirement under the Pension Plan.
(b) An Employee who, on or after September 1, 1988, retires
from employment with the Company on or after his 50th
birthday, after completing 10 years of Vesting Service,
after the sum of his age and years of Vesting Service,
both calculated to the nearest month, equal 70 or more,
and before his 65th birthday, shall be entitled to
receive a lump sum benefit that is the actuarial
equivalent (determined in accordance with Section 4.2
hereof) of a monthly supplemental benefit equal to the
excess (if any) of
(i) (A) the retirement benefit described in
Section 4.01(a)(i) hereof, plus
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(B) a Temporary Retirement Benefit equal to
the Employee's Primary Social Security
Benefit, reduced, if applicable, by the
actual amount of any unreduced Social
Security benefit paid to the Employee,
payable through the month in which the
Employee attains age 62, provided that
if the Employee has less than 25 years
of Credited Service, the Temporary
Retirement Benefit shall be prorated
based on the proportion of 25 years of
Credited Service that has been credited
to the Employee at the time of his
retirement; and provided further that
(C) retirement benefits prescribed by
paragraph (A), above, and Temporary
Retirement Benefits prescribed by
paragraph (B), above, shall not exceed
the following limitations:
I. Temporary Retirement Benefits payable
to all Employees, and retirement
benefits payable to all Employees who
participated in the Retirement Income
Plan as of December 31, 1983, and who
had attained age 45 as of that date,
shall not exceed the percentage of such
benefits prescribed by the following
schedule, based on the Employee's age on
the date of retirement:
Age Percentage
--- ----------
64 100%
63 100%
62 100%
61 95%
60 90%
59 85%
58 80%
57 75%
56 70%
55 65%
54 60%
53 55%
52 50%
51 45%
50 40%
II. Retirement benefits payable to all
Employees who did not participate in
the Retirement Income Plan on
December 31, 1983, or who had not
attained age 45 as of that date, shall
not exceed the percentage of such
benefits prescribed by the following
schedule, based on the Employee's age
on the date of retirement:
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Age Percentage
--- ----------
65 100%
64 95%
63 90%
62 85%
61 80%
60 75%
59 70%
58 65%
57 60%
56 55%
55 50%
54 45%
53 40%
52 35%
51 30%
50 25%
over
(ii) the sum of the monthly benefits he is
entitled to receive from all
Company-sponsored, funded, defined
benefit pension plans and the Excess
Plan, determined in each case on the
basis of the assumption that the
Employee's benefits under such plans are
paid in the form of a single life annuity
for the life of the Employee, commencing
as of the Employee's date of retirement
under the Pension Plan.
(c) Subject to the provisions of Section 4.2 hereof, the
benefit payable pursuant to paragraph (a) or (b) of
this Section 4.1, shall be paid in the form of a lump
sum, payable as of the Employee's date of retirement
under the Pension Plan.
(d) If an Employee dies before the date as of which
benefits are scheduled to be paid or to commence
hereunder, the Employee's surviving spouse (if any)
shall be entitled to receive a lump sum benefit equal
to 100 percent of the benefit to which the Employee
would have been entitled under paragraph (c), above, if
the Employee had retired on the date of his death.
(e) No benefits shall be paid hereunder with respect to an
active Employee who is not married on the date of his
death.
4.2. Form of Benefit Payments. An Employee eligible for a benefit
under this Plan shall be entitled to receive his benefit in the form of an
immediate lump sum payment. However, upon the written request of the Employee,
the Treasurer of the Company may, in his sole discretion, permit such benefit to
be paid instead, concurrently with any benefit that the Employee is entitled to
receive under the Excess Plan, pursuant to an optional form of payment that is
used for the payment of the Employee's retirement benefit under the Pension
Plan. Any such written request must be filed by the Employee with the Treasurer
of the Company on or before the Employee's date of retirement under the Pension
Plan. If the Employee is the
64
8
Treasurer of the Company, the duties of the Treasurer of the Company under this
Section 4.2 shall be discharged by the President of the Company. The amount of
the benefit payable pursuant to any form of payment under this Plan shall be
determined by applying the mortality assumptions, interest rates, and other
factors contained in the Retirement Income Plan that would be applicable to the
form of payment payable under this Plan; provided that if a lump sum
distribution is made hereunder, the amount of the lump sum distribution shall be
equal to the excess of the amount determined under paragraph (a), below, over
the amount determined under paragraph (b), below.
(a) The total lump sum amount that is actuarially equivalent to
the monthly supplemental benefit prescribed by Section
4.1(a)(i) or Section 4.1(b)(i), whichever is applicable,
calculated using the basis described in subparagraph (i) or
(ii), below, whichever produces the larger lump sum amount:
(i) 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 Code;
or
(ii) the lump sum amount calculated on the basis of an
interest rate equal to 85% of a composite insurance
company annuity rate provided by an actuary designated
by the Plan Administrator (and provided by such actuary
as of the December next preceding the calendar year in
which the distribution is made), subject to the
condition that the interest rate in effect for any such
year may not differ from the rate in effect for the
prior year by more than one-half of one percent, and
also subject to the condition that any such rate shall
be rounded to the nearest one-tenth of one percent (and
if such rate is equidistant between the next highest
and next lowest one-tenth of one percent, rounded to
the next lowest one-tenth of one percent), and on the
basis of the applicable mortality assumption for males
under the 1971 Group Annuity Mortality Table.
(b) The total lump sum distribution that he is entitled to receive
under all Company-sponsored, funded, defined benefit pension
plans and the Excess Plan, determined on the basis of the
interest rate and mortality assumptions required by the terms
of those plans.
Any post-retirement increase in the benefits being paid to an Employee
under the Pension Plan shall also be applied on a comparable basis to any
monthly supplemental benefits under this Plan.
4.3. Time and Duration of Benefit Payments. Benefits due under the Plan
shall be paid coincident with the payment date of benefits under the Pension
Plan, or at such other time or times as the Plan Administrator in his discretion
determines. All supplemental benefits payable under this Plan shall cease as of
the first day of the month following the Employee's death, except that payments
may continue to the Employee's spouse or beneficiary following his death
pursuant to an optional form of payment selected under Section 4.2.
4.4 Benefits Unfunded. The benefits payable under the Plan shall be
paid by the Company each year out of its general assets and shall not be funded
in any manner. The obligations that the Company incurs under this Plan shall be
subject to the claims of the Company's other creditors having priority as to the
Company's assets.
65
9
4.5 No Right to Transfer Interest. The Plan Administrator may recognize
the right of an alternate payee named in a domestic relations order to receive
all or a portion of an Employee's benefit under this Plan, provided that (i) the
domestic relations order would be a "qualified domestic relations order" within
the meaning of Section 414(p) of the Code if Section 414(p) were applicable to
the Plan; (ii) the domestic relations order does not purport to give the
alternate payee any right to assets of the Company or its affiliates; and (iii)
the domestic relations order does not purport to give the alternate payee any
right to receive payments under the Plan before the Employee is eligible to
receive such payments. If the domestic relations order purports to give the
alternate payee a share of a benefit to which the Employee currently has a
contingent or nonvested right, the alternate payee shall not be entitled to
receive any payment from the Plan with respect to the benefit unless the
Employee's right to the benefit becomes nonforfeitable. Except as set forth in
the preceding two sentences with respect to domestic relations orders, and
except as required under applicable federal, state, or local laws concerning the
withholding of tax, rights to benefits payable under the Plan are not subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
attachment or other legal process, or encumbrance of any kind. Any attempt to
alienate, sell, transfer, assign, pledge, or otherwise encumber any such
supplemental benefit, whether currently or thereafter payable, shall be void.
4.6 Successors to the Corporation. This Plan shall be binding upon and
inure to the benefit of any successor or assign of the Company, including,
without limitation, any corporation or corporations acquiring directly or
indirectly all or substantially all of the assets of the Company whether by
merger, consolidation, sale or otherwise (and such successor or assign shall
thereafter be deemed embraced within the term "Company" for the purposes of this
Plan).
4.7 Change in Control. Anything hereinabove in this Article IV or
elsewhere in this Plan to the contrary notwithstanding:
(a) Lump sum payment. Upon the occurrence of a Change in
Control, each Employee and each Employee's spouse or
beneficiary following his death who are receiving
benefits under the Plan ("Recipient") shall receive, on
account of future payments of any and all benefits due
under the Plan, a Lump Sum Payment, so that each such
Employee or Recipient will receive substantially the
same amount of after-tax income as before the Change in
Control, determined as set forth in paragraph (c) of
this Section 4.7.
(b) Certain matters following a lump sum payment. An
Employee who has received a Lump Sum Payment pursuant
to paragraph (a) of this Section 4.7 shall, thereafter
(i) while in the employ of the Company, continue to
accrue benefits under the Plan, and (ii) be eligible to
be paid further benefits under the Plan, after
appropriate reduction in respect of the Lump Sum
Payment previously received. For purposes of
calculating such reduction, the Lump Sum Payment shall
be accumulated with interest at the Specified Rate in
effect from time to time for the period of time from
initial payment date to the next date on which a
computation is to be made (i.e., upon Change in
Control, retirement, or other termination of
employment). It shall then be converted to a
straight-life annuity using the current annuity certain
factor. The current annuity certain factor will be
determined on the Net Specified Rate basis if this
benefit payment is being made due to a subsequent
Change in Control; otherwise, the Specified Rate shall
be used.
66
10
(c) Determination of lump sum payment. The Lump Sum Payment
referred to in paragraph (a) of this Section 4.7 shall
be determined by multiplying the annuity certain factor
(for monthly payments at the beginning of each month)
based on the Benefit Payment Period and the Net
Specified Rate by the monthly benefit (adjusted for
assumed future benefit adjustments due to Social
Security and Code Section 415 changes in the Pension
Plan) to be paid to the Employee or Recipient under the
Plan.
4.8. Taxation. Notwithstanding anything in the Plan to the
contrary, if the Internal Revenue Service determines that the Participant is
subject to Federal income taxation on an amount in respect of any benefit
provided by the Plan before the distribution of such amount to him, the Company
shall forthwith pay to the Participant all (or the balance) of such amount as is
includible in the Participant's Federal gross income and shall correspondingly
reduce future payments, if any, of the benefit.
67
11
ARTICLE V
AMENDMENT, TERMINATION AND INTERPRETATION
5.1. Amendment and Termination. The Company reserves the right, by
action of the Board, to amend, modify or terminate, either retroactively or
prospectively, any or all of the provisions of this Plan without the
consent of any Employee or beneficiary; provided, however, that no such
action on its part shall adversely affect the rights of an Employee and his
beneficiaries without the consent of such Employee (or his beneficiaries,
if the Employee is deceased) with respect to any benefits accrued prior to
the date of such amendment, modification, or termination of the Plan if the
Employee has at that time a non-forfeitable right to benefits under a
funded, defined benefit pension plan sponsored by the Company.
5.2. Interpretation. The Plan Administrator shall have the power to
interpret the Plan and to decide any and all matters arising hereunder;
including but not limited to the right to remedy possible ambiguities,
inconsistencies or omissions by general rule or particular decision;
provided, that all such interpretations and decisions shall be applied in a
uniform and nondiscriminatory manner to all Employees similarly situated.
In addition, any interpretations and decisions made by the Plan
Administrator shall be final, conclusive and binding upon the persons who
have or who claim to have any interest in or under the Plan.
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12
DANA CORPORATION SUPPLEMENTAL BENEFITS PLAN
APPENDIX A
A.1 Purpose. The purpose of this Appendix A is to provide
supplemental benefits to certain individuals who are not otherwise eligible for
benefits under the Plan. Except to the extent that a contrary rule is expressly
set forth below, capitalized terms used in Appendix A shall have the meaning set
forth in Article I of the Plan, and the benefits provided under Appendix A shall
be subject to the administrative provisions set forth in Sections 4.2 through
4.8 of Article IV and Sections 5.1 and 5.2 of Article V (construed as if the
term "Employee" in those sections referred to an individual who is eligible for
a benefit under this Appendix A).
A.2 Eligibility. An individual is eligible for a supplemental
retirement benefit under this Appendix A if the individual meets all of the
following criteria on the date of his retirement from the Company and its
affiliates (or if he meets the criteria in paragraphs (a) through (c) on the
date of a Change in Control, if earlier):
(a) The individual is not eligible for a supplemental retirement
benefit under any provision of the Plan other than this
Appendix A.
(b) The individual has reached his 50th birthday and has completed
at least 10 years of Vesting Service; and the sum of the
individual's age and years of Vesting Service, both calculated
to the nearest month, equals 70 or more.
(c) The individual is a U.S.-based member of the "A" Group or the
"B" Group, as defined by the Compensation Committee of the
Board, and is a management employee or a highly-compensated
employee.
(d) The individual retires on or after January 1, 1996 and before
January 1, 2010.
A.3 Amount of Benefit. The amount of an individual's supplemental
retirement benefit under Appendix A shall be the initial benefit determined
under paragraph (a), multiplied by the percentage specified in paragraph (b),
and reduced as provided in paragraph (c).
(a) The individual's initial benefit shall be the normal
retirement benefit or early retirement benefit that the
individual would have received under the Retirement Income
Plan if the provisions of that Plan had remained in effect
through the individual's retirement date, with the
modification described in the following sentence. For purposes
of applying the Retirement Income Plan formula, the
individual's "Final Monthly Earnings" shall be the average of
his Earnings during the five consecutive calendar years out of
the last ten years of his active employment with the Company
in which the average was the highest.
(b) The percentage applied to the individual's initial benefit
shall be determined according to the calendar year in which
the individual retires, as follows:
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13
Year in Which Individual Retires Applicable Percentage
1996 - 1999 90%
2000 - 2004 80%
2005 - 2009 70%
After 2009 0%
(c) The benefit determined under this Section A.3 shall be
calculated as a single-life annuity, and shall be reduced by
the sum of the monthly benefits that the individual is
entitled to receive from any source listed in subparagraph
(i), (ii), or (iii), below, determined in each case on the
basis of the assumption that the individual's benefits under
such sources are paid in the form of a single-life annuity for
the life of the individual, commencing as of the individual's
date of retirement under the Pension Plan:
(i) all funded defined benefit pension plans sponsored
by the Company and its affiliates; and
(ii) all unfunded, nonqualified deferred compensation plans
sponsored by the Company and its affiliates (including,
but not limited to, the Excess Plan), with the sole
exception of the Dana Corporation Additional
Compensation Plan; and
(iii) any supplemental retirement benefit provided under an
employment contract, or under any other contract or
agreement, between the individual and the Company or
any affiliate.
A.4 Form of Payment.
(a) An individual shall be entitled to receive his benefit under
this Appendix A in the manner provided in Section 4.2 of the
Plan. If the individual elects to receive a lump sum payment,
however, the lump sum payment shall be calculated as provided
in paragraph (b), below, rather than as provided in Section
4.2 of the Plan.
(b) The single-life annuity determined under paragraphs (a) and
(b) of Section A.3 shall be converted to a lump sum present
value 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 Code. The lump sum
determined under the preceding sentence of this Section A.4
shall be reduced by the lump sum present value of all benefits
that the individual is entitled to receive from all sources
described in paragraph (c) of Section A.3, determined in each
case on the basis of the interest rate and mortality
assumptions required for lump sum calculations by the terms of
those plans or agreements (or, if no such interest rates or
mortality assumptions are specified in the plan or agreement,
on the basis of the interest rate and mortality assumptions
set forth in the first sentence of this paragraph (b)).
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14
A.5 Pre-retirement Death Benefit. Effective March 1, 1998, if an
individual dies before his benefit under this Appendix A commences or is paid,
the individual's surviving spouse (if any) shall be entitled to receive a
lump-sum benefit equal to 100% of the benefit to which the individual would have
been entitled under paragraph A.3, above, subject to the reductions described in
paragraph A.3(c), as if the individual had retired on the date of his death.
71
5
1,000
6-MOS
DEC-31-1998
JAN-01-1998
JUN-30-1998
145,900
0
1,297,000
0
1,052,300
0
4,081,700
1,814,800
7,749,200
0
2,244,600
0
0
105,840
1,747,160
7,749,200
4,690,500
4,819,200
3,955,300
3,955,300
0
0
113,800
354,200
142,000
0
0
0
0
223,600
2.12
2.08
