DANA CORPORATION AMENDED AND RESTATED STOCK INCENTIVE PLAN

      Dana Corporation, a corporation organized and existing under the laws of the Commonwealth of Virginia (the “Corporation”), has established the Dana Corporation 1997 Stock Option Plan, hereby amended and restated and re-named the Dana Corporation Amended and Restated Stock Incentive Plan (the “Plan”), for employees of the Corporation and its Subsidiaries.

      SECTION 1. Purpose. The purposes of the Plan are to (a) secure for the Corporation and its stockholders the benefits of incentive inherent in stock ownership in the Corporation by key employees of the Corporation and its Subsidiaries, who are largely responsible for its future growth and continued success, (b) provide long-term incentive compensation opportunities that are competitive with those of other similar companies, (c) attract and retain qualified employees who are eligible to participate in the Plan, and (d) further align the interests of eligible employees with those of the Corporation’s stockholders through long-term incentive compensation that is based on the Corporation’s Stock; and thereby promote the long-term financial interests of the Corporation and its Subsidiaries.

      SECTION 2. Definitions. For purposes of the Plan, the following terms shall have the meanings set forth below.

      “Act of Special Service” shall mean any act, which a Strategic Business Unit President, Regional President, Division General Manager, or Corporate Office Department Head determines is so substantial and exceptional as to make the Eligible Employee eligible for a Stock Award as described in Section 7 of the Plan. In making such a determination, the following criteria shall be considered:

 

 

 

 

(a) 

that the Eligible Employee has contributed in a substantial degree to the success of the Corporation by suggesting or implementing significant cost-saving measures or productivity improvements that improve the quality of the Corporation’s products or services; and

 

 

 

 

(b) 

the efforts of the Eligible Employee substantially exceed what would normally be expected of the person recommended for the award, given his or her job responsibilities.

      “Assets” shall mean the total assets of the Corporation.

      “Average Assets” shall mean the aggregate sum of the Corporation’s Assets as of the end of the prior Year and as of the end of each quarter of the current Year, divided by five.

      Average Invested Capital” shall mean the aggregate sum of the Corporation’s Invested Capital (as defined below) as of the end of the prior Year and as of the end of each quarter of the current Year, divided by five.

      “Award” shall mean a stock option, Stock Appreciation Right, Stock Award, Restricted Stock Award, Performance Stock Award, Performance Unit, Stock Unit Award, or Other Stock-Based Award granted under the Plan.

      “Beginning Shareholders’ Equity” shall mean the shareholders’ equity of the Corporation as reported to shareholders at the end of the prior Year.

      “Board” shall mean the Board of Directors of the Corporation.

      “Change in Control of the Corporation” shall mean the first to occur of any of the following events:

 

 

 

 

(a) 

any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (1) of paragraph (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 31, 2002, constitute the Board and any new director whose appointment or election by the Board or nomination for election by the Corporation’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on December 31, 2002 or whose appointment, election or nomination for election was previously so approved or recommended. For purposes of the preceding sentence, any director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Corporation, shall not be treated as having received the requisite approval or recommendation; or

 

 

 

 

(c) 

there is consummated a merger, consolidation, share exchange or similar corporate transaction involving the Corporation or any direct or indirect Subsidiary of the Corporation with any other corporation, other than (1) a transaction which would result in the voting securities of the Corporation outstanding immediately prior to such transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the ultimate parent thereof) at least 50% of the combined voting power of the securities of the Corporation or such surviving entity or the ultimate parent thereof outstanding immediately after such transaction, or (2) a transaction effected to implement a recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities; or

 

 

 

 

(d) 

the stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or there is consummated an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s assets, other than a sale or disposition by the Corporation of all or substantially all of the Corporation’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Corporation in substantially the same proportions as their ownership of the Corporation immediately prior to such sale.

      For purposes of this “Change in Control of the Corporation” 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 Corporation. For the purpose of this definition, the terms “control”, “controls” and “controlled” mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a corporation or other entity, whether through the ownership of voting securities, by contract, or otherwise.

 

 

 

“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 Corporation or any of its Subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation.

 

 

 

“Subsidiary” shall mean a corporation or other entity, of which 50% or more of the voting securities or other equity interests is owned directly, or indirectly through one or more intermediaries, by the Corporation.

 

      “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

      “Committee” shall mean the Compensation Committee of the Board whose members shall be (a) “non-employee directors” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended; and (b) “outside directors” within the meaning of Section 162(m) of the Code.

      “Earnings Before Interest and Taxes” or “EBIT” shall mean the sum of (a) Net Income, (b) minority interest in the net income of consolidated subsidiaries, (c) estimated taxes on income, and (d) interest expense.

      “Earnings Per Share” shall mean the Net Income for the Year divided by the average number of shares of Stock outstanding (calculated on a fully diluted basis) for such Year, subject to adjustment as set forth in Section 10.

      “Eligible Employee” for purposes of determining who shall be eligible to receive a Stock Award pursuant to Section 7 shall mean any full-time employee of the Corporation or its Subsidiaries, other than a current member of the Corporation’s World Operating Committee. Any authorized temporary absence from active employment without pay by reason of short-term disability, layoff, vacation, military leave or other authorized leave of absence will not affect the eligibility of any Eligible Employee under Section 7.

      “Fair Market Value” shall mean, as applied to a specified date, the mean between the highest and lowest prices of a share of Stock as reported on the New York Stock Exchange-Composite Transactions published in The Wall Street Journal for such date; provided, however, that in the case of an ISO or a SAR related to an ISO, if any of the foregoing methods of determining fair market value should be inconsistent with any ruling or regulation of the United States Treasury Department applicable to ISOs, fair market value shall be determined by the Committee in a manner consistent with such rulings or regulations, and shall mean the value as so determined.

      “Incentive Stock Option” or “ISO” shall mean an option granted under the Plan and in conformity with the requirements of Section 422(b) of the Code, to purchase shares of Stock

      “Invested Capital” shall mean the aggregate sum of the Corporation’s notes payable, long-term debt and shareholders’ equity.

      “Net Income” shall mean the annual profits, after taxes, of the Corporation.

      “Non-ISO Option” shall mean an option granted under the Plan to purchase shares of Stock, other than an Incentive Stock Option.

      “Other Stock-Based Awards” shall have the meaning set forth in Section 8.1 of the Plan.

      “Option Agreement” shall mean the agreement entered into between the Corporation and an Optionee evidencing the grant of an option to purchase shares of Stock or SARs under the Plan.

      “Option Certificate” shall mean a certificate issued by the Corporation evidencing the grant of an option to purchase shares of Stock or SARs under the Plan.

      “Optionee” shall mean an individual who has been granted an option to purchase shares of Stock or a SAR under the Plan.

      “Parent” shall mean a parent corporation of the Corporation as defined in Section 424(e) of the Code.

      “Participant” shall mean an employee who has been granted an Award under the Plan, including an Optionee.

      “Performance Stock Award” shall mean a right granted under the Plan to receive shares of Stock or their cash equivalent which is contingent on the achievement of performance or other objectives established by the Committee during a specified performance period.

      “Performance Unit” shall mean a unit granted pursuant to Section 8 of the Plan that has a pre-assigned target dollar value (unless otherwise determined by the Committee, $100 per unit). A Performance Unit shall

 

entitle the recipient to receive, at the end of a specified performance period and based upon the extent to which the Corporation has achieved pre-established performance goals determined by the Committee, the actual dollar value of the Performance Units, either in cash, or by delivery of a number of shares of Stock determined by dividing such dollar value by the Fair Market Value of a share of Stock on the payment date, or in a combination of the foregoing.

      “Restricted Stock Award” shall mean shares of Stock granted under the Plan subject to certain restrictions determined by the Committee pursuant to Section 8 which may include performance criteria set forth in Section 8.2(b).

      “Return on Average Assets” shall mean the percent return determined by dividing Net Income for the Year by Average Assets.

      “Return on Beginning Shareholders’ Equity” shall mean the percent return determined by dividing Net Income by Beginning Shareholders’ Equity.

      “Return on Invested Capital” shall mean the percent return determined by dividing the sum of (a) Net Income plus (b) the Corporation’s interest expense, on an after-tax basis (using the effective annual tax rate) for the Year, by the Corporation’s Average Invested Capital.

      “Return on Sales” shall mean the percent return determined by dividing Net Income for the Year by the net sales of the Corporation for such Year.

      “SAR Grant Value” shall mean, as applied to a SAR granted independent of an option, such amount, which shall not be less than and may be greater than, 100% of the Fair Market Value of one share of Stock on the date the SAR is granted, as shall be fixed by the Committee.

      “Stock” shall mean the common stock, par value $1 per share, of the Corporation.

      “Stock Appreciation Right” or “SAR” shall mean a stock appreciation right granted under Section 6.6 of the Plan, which is the right to receive cash or Stock, having a value on the date the SAR is exercised equal to: (a) the excess of the Fair Market Value of one share of Stock on the exercise date over (b) the SAR Grant Value.

      “Stock Award” shall mean an award of Stock granted pursuant to Section 7 of the Plan to an Eligible Employee, as defined herein.

      “Stock Unit Award” shall mean a right granted under the Plan to receive shares of Stock in the future contingent upon the satisfaction of conditions established by the Committee, which may include performance criteria set forth in Section 8.2(b).

      “Subsidiary” shall mean each corporation the financial results of which are consolidated with those of the Corporation for purposes of the statement of consolidated income included in the Corporation’s annual report to stockholders for the year to which the report applies, and each corporation in an unbroken chain of corporations beginning with the Corporation if, on the date as to which the term refers, each of the corporations other than the last corporation in the unbroken chain owns stock possessing more than 50% of the total combined voting powers of all classes of stock in one of the other corporations in such chain, provided, however, that in the case of an ISO, the term “Subsidiary” shall mean any corporation that is a “subsidiary corporation,” as that term is defined in Section 424(f) of the Code, or any provisions that may hereafter be enacted in lieu thereof.

      “Year” shall mean a calendar year.

      SECTION 3. Administration.

      (a) Subject to the express provisions of the Plan, including, without limitation, the provisions of Section 7, the Committee shall administer the Plan, determine the persons to whom Awards shall be made, the nature and timing of Awards, the number of shares of Stock to be subject to each Award, the target value of Awards, if applicable, and shall determine the terms and conditions of all Awards granted under the Plan, including, without limitation, the purchase price of the shares of Stock covered by each option or Restricted

 

Stock Award, the SAR Grant Value of each SAR, when an option to purchase shares of Stock or SARs may be exercised and when, and under what conditions Awards will vest. The Committee may grant either ISOs or Non-ISO Options under the Plan. No option granted under the Plan shall constitute an ISO unless expressly so determined by the Committee and so stated in the related Option Agreement or Option Certificate. Only the Committee shall have the authority, in its discretion, to determine whether specific options granted pursuant to the Plan shall or shall not be subject to the limitations and provisions imposed by Section 422 of the Code in respect of ISOs, and to determine whether specific options granted pursuant to the Plan shall or shall not be intended or granted as ISOs or Non-ISO Options. The grant of an Award hereunder to any Participant shall not entitle such person to a grant of any other Awards.

      (b) Subject to the express provisions of the Plan, the Committee shall interpret the Plan, prescribe, amend, and rescind rules and regulations relating to it, prescribe and amend the terms and provisions of Option Agreements, Option Certificates or other Award agreements (which need not be identical), and make all other determinations deemed necessary or advisable for the administration of the Plan. The Committee shall have discretionary authority 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.

      (c) Any interpretation of the Plan by the Committee and any decision by it under the Plan shall be final and binding on all persons.

      SECTION 4. Shares Authorized for Issuance Under the Plan.

      4.1. Shares Authorized for Issuance. The total number of shares of Stock authorized for issue under the Plan is 28,850,000 (which consists of 24,200,000 shares previously authorized less 350,000 previously authorized shares which were subsequently reallocated for distribution under the Corporation’s Additional Compensation Plan, plus the 5,000,000 additional shares authorized by this amended and restated Plan, subject to approval of the Corporation’s stockholders at the Corporation’s 2003 Annual Meeting). Such number of shares is subject to adjustment upon changes in capitalization, as provided in Section 10 hereof. Any shares subject to a stock option, SAR or other Award that remain unissued, or which are forfeited, upon the cancellation, surrender, exchange, termination or expiration of such Award for any reason whatsoever shall again become available for the issuance of other Awards under the Plan. The grant of any Award which is denominated in shares at the time it is granted under the Plan will, at the time it is granted, decrease the number of shares available for future grants under the Plan, regardless of whether the Award is later exercised (or distributed or settled) in the form of stock or cash. If an Award that is denominated in cash at the time it is granted is later settled in Stock, the shares of Stock that are distributed in settlement of such Award will, at the time the Award is settled, decrease the number of shares that are available for future grants under the Plan. Shares of Stock that are issuable to a participant in the Plan but which are used to satisfy tax-withholding requirements will not again be available for future issuances under the Plan.

      4.2. Limits Applicable to Certain Awards. Subject to adjustment pursuant to Section 10, the total number of shares of Stock authorized for the issuance of Stock Awards pursuant to Section 7 of the Plan in any Year shall not exceed 100,000 shares (provided, that for calendar year 2003, such limit shall be reduced by the number of shares awarded in that year pursuant to the Company’s Employee Stock Award Plan). Subject to adjustment pursuant to Section 10, the total number of shares of Stock that may be authorized for issuance during the term of the Plan in connection with Awards made under Section 8 of the Plan shall not exceed 1,000,000 shares.

      4.3. Individual Limits.

      (a) The total number of shares of Stock subject to options or SARs awarded to any individual employee shall not exceed 1,000,000 shares during any Year in which the employee first becomes employed by the Corporation or a Subsidiary, or 500,000 shares in any other Year (in each case subject to adjustment as provided in Section 10).

      (b) In accordance with Section 7.3, no employee shall receive, during any Year, more than 1,000 shares of Stock subject to Stock Awards (subject to adjustment as provided in Section 10 hereof).

 

      (c) For any Year, the total number of shares of Stock subject to Awards (other than Performance Units) granted to any one individual under Section 8 of the Plan shall not exceed 100,000 shares (subject to adjustment as provided in Section 10 hereof).

      (d) The maximum dollar amount that may be paid to any one individual in respect of Performance Units granted under Section 8 of the Plan shall not exceed $750,000 times the number of Years in the performance period that is applicable to those Performance Units.

      SECTION 5. Eligibility for Participation. With respect to Awards other than Stock Awards under the Plan, any key employee of the Corporation or of any Subsidiary, including any such employee who is also a director of the Corporation or of any Subsidiary, whose judgment, initiative, and efforts contribute (or may be expected to contribute) materially to the successful performance of the Corporation or any Subsidiary, shall be eligible to receive an option to purchase shares of Stock under the Plan, a SAR or other Award under the Plan. The eligibility requirements relating to Stock Awards under the Plan are separately provided for in Section 7 of the Plan. In determining the employees to whom an Award, other than a Stock Award, shall be granted and the number of shares of Stock (or number of Performance Units) that may be granted pursuant to such an Award, the Committee shall take into account the duties of the respective employees, their present and potential contributions to the success of the Corporation or any Subsidiary, and such other factors as the Committee shall deem relevant in connection with accomplishing the purposes of the Plan. In no event, however, shall any employee who, at the time he would otherwise be granted an option to purchase shares of Stock, owns (within the meaning of Section 424(d) of the Code) Stock of the Corporation or any Subsidiary possessing more than 10% of the total combined voting power of all classes of stock of the Corporation or any Subsidiary, be eligible to receive an ISO to purchase shares of Stock hereunder.

      SECTION 6. Option and Stock Appreciation Rights Awards.

      6.1. Option and SAR Price and Maximum Award. The price at which each share of Stock covered by each Non-ISO Option shall be purchased by an Optionee, and the SAR Grant Value of each SAR granted independent of an option, shall be established by the Committee, but in no event shall such price be less than 100% of the Fair Market Value of the Stock on the date the option is granted. In the case of any ISO granted under the Plan, (a) the exercise price may not be less than the Fair Market Value of the Stock on the date of grant; and (b) the aggregate Fair Market Value (determined at the time such option is granted) of the Stock with respect to which ISOs are exercisable for the first time by the Optionee during any calendar year (under the Plan and all other Incentive Stock Option plans of the Corporation and any Parent or Subsidiary) shall not exceed $100,000.

      6.2. Terms of Options and SARs. The term of each ISO and Non-ISO Option to purchase shares of Stock and of each SAR shall be fixed by the Committee, but no such option or SAR shall be exercisable after the expiration of 10 years from the date of grant.

      6.3. Option Agreements and Certificates; Exercise of Options and SARs.

      (a) Each Optionee shall execute an Option Agreement or be issued an Option Certificate with respect to each grant of options and SARs. Through the Option Agreement or Option Certificate, the Optionee shall agree to remain in the service of the Corporation or a Subsidiary for a period of at least 1 year from the grant date of the options or SARs, except as otherwise provided in Section 6.5 with respect to retirement, death, or disability. Except as provided below, such period of service must be completed before the right to exercise such options or SARs will accrue. Subject to the provisions of Section 6.5 and to the terms of any employment contract between the Optionee and the Corporation or a Subsidiary, such service shall be at the pleasure of the Corporation or the Subsidiary, as it shall determine from time to time. Each option to purchase shares of Stock and each SAR granted in connection with an option under the Plan shall be exercisable for such number of shares and at such time or times, including periodic installments, as may be determined by the Committee at the time of the grant but, except as provided below and in Section 6.5, in no event shall any such option or SAR be exercisable within 1 year, or after 10 years, of the date of grant. Except as otherwise provided in the

 

Option Agreement or Option Certificate, during the foregoing exercise period, options to purchase shares of Stock and SARs shall be exercisable as follows:

 

 

 

      (i) Twenty-five percent (25%) of the total number of shares originally covered by such option or right may be purchased or exercised after 1 year from the date it is granted;

 

 

 

      (ii) Fifty percent (50%) of the total number of shares originally covered by such option or right may be purchased or exercised after 2 years from the date it is granted;

 

 

 

      (iii) Seventy-five percent (75%) of the total number of shares originally covered by such option or right may be purchased or exercised after 3 years from the date it is granted; and

 

 

 

      (iv) One hundred percent (100%) of the total number of shares originally covered by such option or right may be purchased or exercised after 4 years from the date it is granted;

provided, however, that anything elsewhere in the Plan to the contrary notwithstanding, upon a Change in Control of the Corporation, all outstanding unexercised options granted under the Plan, whether or not then exercisable, shall become fully exercisable, and shall remain fully exercisable for their term.

      (b) Options to purchase shares of Stock or SARs that are exercisable in periodic installments shall be cumulative so that when the right to purchase any shares of Stock or exercise any SAR has accrued, such shares or any part thereof may be purchased, and such option or SAR may be exercised, at any time thereafter until its expiration or termination. An option may be exercised by giving written notice of exercise to the Corporation, specifying the number of shares of Stock to be purchased and by paying the purchase price, in full in cash or, with the approval of the Committee, in Stock or in a combination of cash and Stock in an amount determined by the Fair Market Value of the Stock on the date of exercise, provided, however, that any Stock so tendered in payment must have been held by the Optionee for a period of not less than 6 months prior to such tender in payment, or, if such Stock tendered was received upon exercise of an ISO, for a period of not less than 1 year prior to such tender in payment. Upon or following such exercise, but no later than the time certificates for or other evidences of the purchased shares are delivered, the Optionee shall pay the Corporation therefor the full purchase price of the shares purchased, and certificates or other evidences therefor shall be delivered promptly by the Corporation.

      (c) An Optionee shall have none of the rights of a stockholder of the Corporation with respect to the shares of Stock subject to any option or SAR granted under this Plan until the option or SAR has been exercised and such shares of Stock have been issued and registered on the Corporation’s transfer books.

      6.4. Nonassignability of Options and SARs. No option to purchase shares of Stock and no SAR granted under the Plan, shall be transferable by an Optionee other than by will, or, if the Optionee dies intestate, by the laws of descent and distribution of the state of such Optionee’s domicile at the time of death. An option and a SAR shall be exercisable during the lifetime of an Optionee only by him.

      6.5. Rights In The Event of Termination of Employment or Death or Disability of Optionee.

      (a) In the event that the employment of an Optionee is terminated for any reason other than retirement (as defined in Section 6.5(b)), death, or permanent and total disability, the outstanding options and SARs of such Optionee shall terminate immediately upon the termination of employment. For purposes of the Plan, a transfer of an Optionee’s employment between the Corporation (or a Subsidiary) and an affiliate of the Corporation in which the Corporation owns between 1% and 50% of the voting interest of the affiliate, or a situation where an Optionee becomes immediately employed by such an affiliate following his termination of employment with the Corporation (or a Subsidiary), shall not be deemed to be a termination of employment for purposes of this Section 6.5(a). Notwithstanding anything contained in this Section 6.5 or elsewhere in the Plan to the contrary, the Committee can choose, in its absolute discretion, to permit an Optionee whose employment is involuntarily terminated (other than for cause) to exercise any then-outstanding option to purchase shares of Stock or to exercise any then-outstanding SAR for up to two years following the Optionee’s termination of employment (but not beyond the 10-year term of the option or SAR). Only those Optionees whose names appear on a listing maintained by the Secretary to the Committee shall be entitled to have the exercise period on their options so extended.

 

      (b) In the event that the employment of an Optionee is terminated by retirement, as defined in this Section 6.5(b), and if the Optionee has given prior written notice of intent to retire, all of the Optionee’s outstanding options and SARs granted more than 6 months prior to such retirement date and not theretofore exercised or terminated shall become exercisable in full beginning on such retirement date and ending on the earlier of the expiration date of the option or SAR, as the case may be, or on the day that is 60 months after such retirement date, provided, however, that any ISOs so exercised that are not exercised within 3 months after such retirement date will not be eligible for taxation under Section 421(a) of the Code. For purposes of the Plan, retirement shall be defined as an Optionee’s retirement under a retirement income plan of the Corporation or a Subsidiary, after the Optionee has attained age 55 and 15 years of service, but shall not include a retirement in connection with a company-initiated termination of employment, or following an Optionee’s departure under conditions adverse to the Corporation, in either case as determined solely by the Committee. The Committee shall have the absolute discretion, which may be exercised in conjunction with the grant of an option or a SAR or thereafter, to vest any options or SARs that were granted less than 6 months prior to the Optionee’s retirement date, or that would otherwise be forfeited because the Optionee had not met the definition of retirement described in this Section 6.5(b). It shall also have the discretion to treat an Optionee’s termination of employment as a retirement under the Plan even though he might not have met the age, service or other requirements specified above.

      (c) In the event that an Optionee shall die while employed by the Corporation or a Subsidiary, or following retirement while he is eligible to exercise options or SARs under Section 6.5(b), options and SARs held by him at the date of death shall become exercisable in full (regardless of the date such options or SARs were granted) by the person or persons to whom the Optionee’s rights pass by will or by the laws of descent and distribution. All such options and SARs shall be exercisable at any time within 1 year after the date of such death, regardless of the expiration date of the option or SAR, provided, however, that in no event shall any such option or SAR be exercisable after the expiration of 10 years from its date of grant.

      (d) In the event that an Optionee becomes permanently and totally disabled (within the meaning of Section 22(e)(3) of the Code), all options and SARs granted prior to such disability date shall become exercisable in full beginning on such disability date and ending on the expiration date of the option or SAR, as the case may be, or on the day that is 12 months after such disability date, whichever is the shorter period.

      6.6. SARs.

      (a) SARs may be granted in conjunction with any option granted under the Plan, or may be granted under the Plan independent of any option. Nothing shall preclude the grant on the same day of an option (with or without related SARs) and SARs independent of the option. SARs granted in conjunction with, or in addition to, an option may be granted either at the time of the grant of the option or any time thereafter during the term of the option.

      (b) SARs granted in conjunction with an option shall entitle the holder of the related option, upon exercise (in whole or in part) of the SARs, to surrender the option (or any portion thereof) to the extent unexercised, and to receive a number of shares of Stock determined pursuant to Section 6.6(d). Such option shall, to the extent so surrendered, thereupon cease to be exercisable.

      (c) SARs shall be subject to such terms and conditions not inconsistent with the Plan as shall from time to time be approved by the Committee and to the following terms and conditions:

 

 

 

      (i) SARs granted in conjunction with an option shall be exercisable at such time or times and to the extent, but only to the extent, that the option to which they relate shall be exercisable; and

 

 

 

      (ii) SARs not granted in conjunction with an option shall be exercisable at such time or times as may be determined by the Committee at the time of grant, but subject to the same restrictions and other rules as to exercisability that are set out for options in Sections 6.1 through 6.5 above;

provided, however, that anything elsewhere in the Plan to the contrary notwithstanding, upon a Change in Control of the Corporation, all outstanding, unexercised SARs granted under the Plan, whether or not then exercisable, shall become fully exercisable, and shall remain fully exercisable for their term.

 

      (d) Upon exercise of SARs, the holder thereof shall be entitled to receive a number of shares of Stock equal in the aggregate Fair Market Value to the amount by which the Fair Market Value per share of one share of the Stock on the date of such exercise shall exceed (i) in the case of SARs granted in conjunction with an option or in addition to an option, the option price per share of the related option, or (ii) in the case of SARs unrelated to an option, its SAR Grant Value, in each case multiplied by the number of shares in respect of which the SARs shall have been exercised.

      (e) All or any part of the obligation arising out of an exercise of SARs, whether or not such rights are granted in conjunction with an option may, at the election of the Committee, be settled by the payment of cash equal to the aggregate Fair Market Value of the shares that would otherwise have been delivered under the provisions of Section 6.6(d).

      (f) To the extent that SARs granted in conjunction with an option shall be exercised, and whether the obligation upon such exercise shall be discharged by the delivery of shares of Stock or the payment of cash, the related option shall be deemed to have been exercised for the purpose of the maximum share limitations set forth in Sections 4.1 and 4.3. To the extent that SARs granted in addition to, or independent of, an option shall be exercised, and whether the obligation upon such exercise shall be discharged by the delivery of shares of Stock or the payment of cash, the number of shares in respect of which the SARs shall have been exercised shall be charged against the maximum share limitations set forth in Sections 4.1 and 4.3.

      SECTION 7. Stock Awards.

      7.1. Grant of Stock Awards. Subject to the limitations in Section 7.3, and subject to adjustments pursuant to Section 10, any Strategic Business Unit (“SBU”) President, Regional President, Division General Manager, or Corporate Office Department Head of the Corporation or a Subsidiary may make an annual Stock Award of up to 1,000 shares of Stock to an Eligible Employee for an Act of Special Service, provided that, in the case of any award of more than 100 shares of Stock, prior approval of the Policy Committee of the Corporation (the “Policy Committee”) is required, and in the case of any award of 100 shares of Stock or less, prior approval of an SBU President or, in the case of the Corporate Office, any member of the Support Operating Committee of the Corporation is required. Notwithstanding the foregoing, any Stock Award to be made to an Eligible Employee who is an executive officer of the Corporation must be approved by the Committee.

      In addition, the Corporation may, by following the approval process described in this Section 7.1, make Stock Awards to Eligible Employees based upon such Eligible Employee’s contributions to the success of the Corporation, including, without limitation, obtaining patents on behalf of the Corporation or publishing technical papers.

      7.2. Duties of the Policy Committee. The Policy Committee shall keep records of the aggregate amount of Stock Awards that have been approved under Section 7.1, and shall periodically provide the Committee with a current listing of all such Stock Awards.

      7.3. Award Limitations. Subject to adjustment pursuant to Section 10, no Eligible Employee shall be entitled to receive Stock Awards for more than 1,000 shares of Stock during any Year.

      7.4. Assignment. The right to receive shares of Stock which have been awarded pursuant to this Section 7 is not transferable, and shares of Stock will be delivered only to the Eligible Employee or his personal representative in the event of the death of the Eligible Employee prior to delivery of the Stock Award.

      7.5. Termination of Eligibility. If any person for any reason whatever ceases to be an Eligible Employee, he shall no longer be eligible to receive Stock Awards pursuant to this Section 7, provided, however, that this will not affect his eligibility to receive awards following his termination of employment from the Corporation (or a Subsidiary) where the award is related to services performed while he was an Eligible Employee.

 

      7.6. Taxes. Each Stock Award pursuant to this Section 7 shall be accompanied by a cash payment by the Corporation in an amount equal to the taxes required by applicable law to be withheld as a consequence of both the Stock Award and the cash payment provided for in this paragraph.

      SECTION 8. Other Awards.

      8.1. In General. The Committee may, in its discretion, grant Restricted Stock Awards, Performance Stock Awards, Stock Unit Awards or Performance Units subject to the terms of the Plan and the restrictions set forth in this Section 8. Other forms of Awards (“Other Stock-Based Awards”) valued in whole or in part by reference to, or otherwise based on, Stock may be granted by the Committee either alone or in addition to other Awards under the Plan. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the persons to whom and the time or times at which such Awards shall be granted, the number of shares of Stock to be granted pursuant to such Awards (or the target value of Performance Units) and all other conditions of such Awards, including whether the vesting or value of such Awards may be based on the attainment of one or more of the performance criteria set forth in Section 8.2(b) hereof.

      8.2. Restrictions on Awards Other Than Options, SARs and Stock Awards. Any Award made pursuant to this Section 8 of the Plan shall be subject to the following:

 

 

 

 

(a) 

Subject to the terms of the Plan, any such Award shall be subject to such conditions, restrictions and contingencies as the Committee shall determine. Without limiting the generality of the foregoing, the Committee may determine that (i) dividend equivalents shall be payable or otherwise credited to the recipient of an Award with respect to any dividends that are paid (or would be paid if the shares were then outstanding) on shares of Stock underlying the Award and (ii) restricted stock units (“Units”) may be awarded or otherwise credited to the recipient of an Award in respect of dividend equivalents awarded pursuant to clause (i) above, the conversion of outstanding Restricted Stock Awards, or otherwise. Unless otherwise determined by the Committee, each Unit credited to a recipient hereunder shall have a value equal to the average of the last reported sales price for a share of Stock on the New York Stock Exchange – Composite Transactions on each trading day during the calendar month preceding the month in which the crediting is made.

 

 

 

 

(b) 

The Committee may designate whether any such Award granted to an employee is intended to qualify as “performance-based compensation,” within the meaning of Section 162(m) of the Code. Any such Awards designated as intended to be performance-based compensation shall be conditioned upon the achievement of one or more performance measures, to the extent required by Section 162(m) of the Code. The performance measures to be used by the Committee as a basis for payment with respect to an Award shall consist of one or more of the following, selected by the Committee (in each case, as determined in accordance with generally accepted accounting principles and the definitions set forth in the Plan): (1) Earnings Per Share; (2) Stock price appreciation; (3) attainment or growth in a specified level of Net Income; (4) Earnings Before Interest and Taxes; (5) revenues; (6) market share; (7) cost reduction goals; (8) Return on Beginning Shareholders’ Equity; (9) Return on Invested Capital; (10) Return on Sales; (11) Return on Average Assets; (12) any combination of, or a specified increase in, any of the foregoing; (13) the achievement of certain target levels of discovery and/or development of products, including, without limitation, regulatory or customer approval of new products; and (14) the formation of joint ventures, or the completion of other corporate transactions. In addition, such performance goals may be based upon the attainment of specified levels of Corporation performance under one or more of the measures described above relative to the performance of other corporations. To the extent not inconsistent with the requirements of Section 162(m) of the Code, the Committee may adjust, modify or amend the aforementioned business criteria. Without limiting the generality of the foregoing, the Committee shall have the authority to make equitable adjustments in the aforementioned performance measures in recognition of unusual or non-recurring events affecting the Corporation, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or

 

 

 

 

 

 

infrequent occurrence or related to the disposal of a segment of a business or related to a change in accounting principles.

 

 

 

 

(c) 

Unless otherwise determined by the Committee at the time a grant is made, upon the occurrence of a Change in Control of the Corporation: (i) with respect to outstanding Awards subject to time-based vesting or payment conditions, all such Awards shall vest or become immediately due and payable, and any Units credited to the account of a Participant related to a previously outstanding Restricted Stock Award shall become immediately due and payable; and (ii) the pro-rata portion (through the date of the Change in Control) of the aggregate value of all outstanding Awards for all then uncompleted performance periods shall become immediately due and payable. The amount of the payment due shall be calculated for each Award by multiplying the amount the Participant would have received at the end of the performance period assuming the achievement at target level of the performance goals established with respect to such Award, by the fraction obtained by dividing the number of full and partial months from the beginning of the performance period through the date of the Change in Control of the Corporation by the number of full months in the performance period. Unless otherwise determined by the Committee, the form of payment in settlement of such Awards shall be made in the same form as that payable to the stockholders of the Corporation in connection with the Change in Control transaction, provided that if the event constituting the Change in Control does not involve payment to such stockholders, the settlement of such Awards shall be made in cash.

      SECTION 9. Regulatory Approvals and Listing. The Corporation shall not be required to issue any certificate or certificates for shares of Stock upon the grant or exercise of any Award granted under the Plan prior to (a) the obtaining of any approval from any governmental agency that the Corporation shall, in its sole discretion, determine to be necessary or advisable; (b) the admission of such shares to listing on any national securities exchange on which the Corporation’s Stock may be listed; and (c) the completion of any registration or other qualification of such shares of Stock under any state or federal law or ruling or regulations of any governmental body that the Corporation shall, in its sole discretion, determine to be necessary or advisable.

      SECTION 10. Adjustments Upon Changes in Capitalization. In the event of a capital adjustment resulting from a Stock dividend, Stock split, recapitalization, reorganization, merger, consolidation, liquidation, combination or exchange of Stock, or a similar event, the number of shares of Stock subject to the Plan, the number of shares of Stock subject to the grant of Awards under the Plan, the number of shares set forth in Sections 4 and 7 hereof, and the number and kind of shares of other stock that may be substituted or exchanged for shares of Stock in the capital adjustment, shall be adjusted in a manner consistent with such capital adjustment. The price of any shares under option, the SAR Grant Value of all outstanding and unexercised SARs granted independent of an option, and the purchase price applicable to any other Award shall be adjusted so that there will be no change in the aggregate purchase price payable upon exercise of any Award and so that after the capital adjustment the SAR Grant Value of the number and kind of shares of stock received in substitution or exchange for one share of Stock in the capital exchange shall be equal to the SAR Grant Value of one share of Stock immediately prior to the capital adjustment.

      SECTION 11. Modification of Previously Granted Options, SARs and Other Awards. The Committee shall have the authority to modify or amend a previously granted option, SAR, or other Award on terms not inconsistent with the requirements of this Plan, including, without limitation, a modification changing a previously granted ISO into a Non-ISO Option; provided that no such modification that would adversely affect the rights of the Participant (or his or her beneficiary, if the Participant is not then living) shall be made without the consent of the affected Participant or beneficiary.

      In no event shall the Committee have the authority to, directly or indirectly, reprice (or cancel and regrant) any option, SAR or other Award to which an exercise or purchase price applies, at a lower price.

      SECTION 12. Withholding. Appropriate provision shall be made for all taxes the Corporation determines are required to be withheld in connection with the exercise of any option or SAR or upon the vesting of Restricted Stock or the settlement of any other Award (whether denominated in shares of Stock or

 

in cash) under the laws or other regulations of any governmental authority, whether federal, state, or local, and whether domestic or foreign. The Committee may provide, in the agreement or certificate evidencing an Award, that in the event that a Participant is required to pay to the Corporation any amount to be withheld in connection with the exercise, vesting or settlement of an Award denominated in shares, the Participant may satisfy such obligation (in whole or in part) by electing to have the Corporation withhold a portion of the shares of Stock otherwise to be issued upon the exercise, vesting or settlement of such Award equal in value to the minimum amount required to be withheld. The value of the shares to be withheld shall be their Fair Market Value on the date that the amount of tax to be withheld is determined. Any election by a Participant to have shares withheld under this Section 12 shall be subject to such terms and conditions as the Committee may specify.

      SECTION 13. Termination or Amendment of the Plan. The Board shall have the right to terminate or amend the Plan at any time, provided that, unless the requisite approval of stockholders is obtained, no amendment shall be made to the Plan if such amendment would (a) increase the total number of shares of Stock authorized for issue as provided in Section 4.1 or the limits applicable to Awards as provided in Sections 4.2 and 4.3, in each case, except as provided in Section 10; (b) lower the option price or SAR Grant Value specified in Section 6 below 100% of the Fair Market Value of the Stock on the date the option or SAR is granted, except as provided in Section 10; (c) remove the repricing restriction set forth in Section 11; or (d) require stockholder approval as a matter of law or under rules of the New York Stock Exchange. No Plan amendment shall, without the affected Participant’s consent, terminate or adversely affect any right or obligation under any Award previously granted to him under the Plan.

      SECTION 14. Effective Date and Term of the Plan. The Plan as hereby amended and restated was adopted by the Board on February 11, 2003, subject to approval by the stockholders at the Corporation’s Annual Meeting to be held on April 2, 2003 or any adjournment thereof. The term of the Plan is ten years from April 2, 2003 (the “Effective Date”), expiring on April 1, 2013. No Awards may be granted under the Plan subsequent to April 1, 2013, but Awards theretofore granted may extend beyond that date in accordance with their terms.

      SECTION 15. No Right to Employment by the Corporation or Subsidiaries; Awards Not Treated as Earnings. Nothing in the Plan, or as a result of the grant of any Award pursuant to the Plan, shall confer on any Participant any right to continue in the employ of the Corporation or any Subsidiary or interfere in any way with the right of the Corporation or any Subsidiary to terminate a Participant’s employment at any time with or without assigning a cause therefor. Awards and Stock Awards granted under the Plan shall not be affected by any change of employment, so long as the Participant continues to be an employee of the Corporation or a Subsidiary, or of an affiliate of the Corporation as provided in Section 6.5(a) of the Plan. Awards made pursuant to this Plan shall in no event be deemed earnings within the definition of any employee benefit plan of the Corporation or its Subsidiaries.

      SECTION 16. Governing Law. The Plan shall be construed, administered, and governed in all respects under and by the applicable internal laws of the State of Ohio, without giving effect to the principles of conflicts of laws thereof.

 


 
                                 FIRST AMENDMENT
                             TO THE DANA CORPORATION
                    AMENDED AND RESTATED STOCK INCENTIVE PLAN
 
                  Pursuant to resolutions of the Board of Directors adopted on
October 21, 2003, the Dana Corporation Amended and Restated Stock Incentive Plan
(the "Plan") is hereby amended, effective as of December 8, 2003, as set forth
below.
 
                  1.       Section 2 of the Plan is amended by deleting the
definition of "Change in Control of the Corporation" and replacing it in its
entirety as follows:
 
                  "Change in Control of the Corporation" shall mean the first to
          occur of any of the following events:
 
                  (a)      any Person is or becomes the Beneficial Owner,
                           directly or indirectly, of securities of the
                           Corporation (not including in the securities
                           Beneficially Owned by such Person any securities
                           acquired directly from the Corporation or its
                           Affiliates) representing 20% or more of the combined
                           voting power of the Corporation's then outstanding
                           securities, excluding any Person who becomes such a
                           Beneficial Owner in connection with any acquisition
                           by any corporation pursuant to a transaction that
                           complies with clauses (1), (2) and (3) 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, 2003,
                           constitute the Board (the "Incumbent Board") and any
                           new director whose appointment or election by the
                           Board or nomination for election by the Corporation's
                           stockholders was approved or recommended by a vote of
                           at least two-thirds (2/3) of the directors then still
                           in office who either were directors on December 8,
                           2003 or whose appointment, election or nomination for
                           election was previously so approved or recommended.
                           For purposes of the preceding sentence, any director
                           whose initial assumption of office is in connection
                           with an actual or threatened election contest,
                           including but not limited to a consent solicitation,
                           relating to the election of directors of the
                           Corporation, shall not be treated as a member of the
                           Incumbent Board; or
 
                  (c)      there is consummated a merger, reorganization,
                           statutory share exchange or consolidation or similar
                           corporate transaction involving the Corporation or
                           any direct or indirect subsidiary of the Corporation,
                           a sale or other disposition of all or substantially
                           all of the assets of the Corporation, or the
                           acquisition of assets or stock of another entity by
                           the Corporation or any of its subsidiaries (each a
                           "Business Combination"), in each case unless,
                           immediately following such Business Combination, (1)
                           the voting securities of the Corporation outstanding
                           immediately prior to such
 
                           Business Combination (the "Prior Voting Securities")
                           continue to represent (either by remaining
                           outstanding or by being converted into voting
                           securities of the surviving entity of the Business
                           Combination or any parent thereof) at least 50% of
                           the combined voting power of the securities of the
                           Corporation or such surviving entity or parent
                           thereof outstanding immediately after such Business
                           Combination, (2) no Person is or becomes the
                           Beneficial Owner, directly or indirectly, of
                           securities of the Corporation or the surviving entity
                           of the Business Combination or any parent thereof
                           (not including in the securities Beneficially Owned
                           by such Person any securities acquired directly from
                           the Corporation or its Affiliates) representing 20%
                           or more of the combined voting power of the
                           securities of the Corporation or surviving entity of
                           the Business Combination or the parent thereof,
                           except to the extent that such ownership existed
                           immediately prior to the Business Combination and (3)
                           at least a majority of the members of the board of
                           directors of the Corporation or the surviving entity
                           of the Business Combination or any parent thereof
                           were members of the Incumbent Board at the time of
                           the execution of the initial agreement or of the
                           action of the Board providing for such Business
                           Combination; or
 
                  (d)      the stockholders of the Corporation approve a plan of
                           complete liquidation or dissolution of the
                           Corporation.
 
                   Notwithstanding the foregoing, any disposition of all or
          substantially all of the assets of the Corporation pursuant to a
          spinoff, splitup or similar transaction (a "Spinoff") shall not be
          treated as a Change in Control of the Corporation if, immediately
          following the Spinoff, holders of the Prior Voting Securities
          immediately prior to the Spinoff continue to beneficially own,
          directly or indirectly, more than 50% of the combined voting power of
          the then outstanding securities of both entities resulting from such
          transaction, in substantially the same proportions as their ownership,
          immediately prior to such transaction, of the Prior Voting Securities;
          provided, that if another Business Combination involving the
          Corporation occurs in connection with or following a Spinoff, such
          Business Combination shall be analyzed separately for purposes of
          determining whether a Change in Control of the Corporation has
          occurred.
 
                  2.       Section 8.2 of the Plan is amended by adding the
following new paragraph (d) at the end of such Section:
 
                   (d) Notwithstanding the provisions of Section 8.2(c), unless
          otherwise determined by the Committee pursuant to a grant made after
          the First Amendment Date, upon the occurrence of a Change in Control
          of the Corporation, Restricted Stock and Units subject to time-based
          vesting or payment conditions shall be treated as follows: (i) if (A)
          all of the Stock held by stockholders of the Corporation is converted
          into cash pursuant to the Change in Control transaction or (B) if the
          surviving entity in the Change in Control transaction does not assume
          outstanding Awards of Restricted Stock or Units subject to time-based
          vesting and convert such Awards into equivalent awards based on its
          securities pursuant to Section 10 with the same vesting conditions
 
         as in effect immediately prior to the Change in Control, all of such
         Awards shall vest or become immediately due and payable upon the Change
         in Control; and (ii) if the provisions of clause (i) above are not
         applicable upon the Change in Control transaction, (x) a pro rata
         portion (the fraction obtained by dividing the number of months from
         the beginning of the vesting period through the date of the Change in
         Control by the number of whole months in the vesting period) of the
         Award shall vest upon the Change in Control and (y) the remaining
         portion of the Award shall be adjusted pursuant to Section 10, if
         applicable, and shall continue to vest in accordance with its terms;
         provided, however, that such remaining portion of the Award held by a
         Participant will vest or become immediately due and payable upon a
         termination of the Participant's employment for Good Reason or without
         Cause (as such terms are defined in the Participant's applicable Change
         in Control Agreement or, if the Participant is not a party to a Change
         of Control Agreement, as such terms are defined in the Change of
         Control Severance Plan (notwithstanding that the Participant does not
         participate in the Change of Control Severance Plan)). Unless otherwise
         determined by the Committee, the form of payment in settlement of such
         Awards shall be made in the same form as that applicable to the
         stockholders of the Corporation in connection with the Change in
         Control transaction, provided that if the event constituting the Change
         in Control does not involve payment to such stockholders, the
         settlement of Units shall be made in cash.
 
                  3.       Section 14 of the Plan is amended by adding the
following sentence at the end of such Section:
 
                   The First Amendment to the Plan is effective as of December
          8, 2003 (the "First Amendment Date").
 
In Witness Whereof,  Dana Corporation has adopted this amendment.
 
                                           DANA CORPORATION
 
                                       By:  /s/ R. B. Priory
                                            ----------------
                                            Chairman of the Compensation
                                            Committee of the Board of Directors
 
ATTEST
 
/s/ R. W. Spriggle
------------------
 
 

AMENDMENTS TO THE DANA CORPORATION

AMENDED AND RESTATED STOCK INCENTIVE PLAN

      In order to give the Compensation Committee flexibility to accomplish the compensation goals set out in its Report on Executive Compensation, the Board adopted on February 10, 2004, and is submitting to shareholders for approval, the following amendments to the Dana Corporation Amended and Restated Stock Incentive Plan (the Plan), which amendments shall be effective as of January 1, 2004, if approved:

      1. Section 4.3(c) of the Plan is amended to read in its entirety as follows:

 

 

 

      (c) For any Year, the total number of shares of Stock subject to Awards (other than options and SARs granted under Section 6, Stock Awards granted under Section 7 and Performance Units granted under Section 8) granted to any one individual under the Plan shall not exceed 300,000 shares (subject to adjustment as provided in Section 10 hereof).

      2. Section 2 of the Plan is amended to delete in its entirety each of the following defined terms set forth therein: “Assets”; “Average Assets”; “Average Invested Capital”; “Beginning Shareholders’ Equity”; “Earnings Before Interest and Taxes” or “EBIT”; “Earnings Per Share”; “Invested Capital”; “Net Income”; “Return on Average Assets”; “Return on Beginning Shareholders’ Equity”; “Return on Invested Capital”; and “Return on Sales.”

      3. Section 8.2(b) of the Plan is amended to read in its entirety as follows:

 

 

 

      (b) With respect to any such Award granted to an employee whom the Committee reasonably believes is likely to be a “covered employee” within the meaning of Section 162(m) of the Code for any applicable Year (a “Covered Employee”), the Committee shall designate whether the Award is intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code. The Committee may also designate whether Awards made to participants other than Covered Employees are intended to be performance-based and may designate the performance goals under which such Awards are to be based in its discretion.

 

 

 

      Any such Awards that are intended to qualify as performance-based compensation for Covered Employees shall be conditioned upon the achievement of one or more performance goals, in accordance with the requirements of Section 162(m) of the Code. These performance goals shall be based upon one or more of the following business criteria selected by the Committee at the time the Award is granted (in each case, when applicable, as determined in accordance with U.S. generally accepted accounting principles, except to the extent that the Committee in its discretion determines otherwise at the time of grant): earnings per share; stock price appreciation; net income; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; revenues; market share; cost reduction goals; return on equity; return on invested capital; return on assets; total share return; return on sales; gross margin; operating income; cash flow; debt reduction; working capital; new product launches; completion of joint ventures, divestitures, acquisitions or other corporate transactions; new business or expansion of customers or clients; productivity improvement; asset utilization; disclosure controls and procedures; and internal controls over financial reporting. The performance goals established by the Committee may be based upon the attainment of specified levels of performance under one or more of the above business criteria by the Corporation (including in relation to the performance of a market index or a group of other corporations or entities) or by the Corporation’s operating units.

 

 

 

      To the extent not inconsistent with the requirements of Section 162(m) of the Code, the Committee may adjust, modify or amend the above business criteria at any time before an Award is paid. Without limiting the generality of the foregoing, the Committee shall have the authority to make equitable adjustments in the business criteria in recognition of unusual or non-recurring events affecting the Corporation or its operating units, in response to changes in applicable laws or regulations, or

 

 

 

 

to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business, or related to a change in accounting principles, or as the Committee determines to be appropriate to reflect a true measurement of the profitability of the Corporation or its operating units, as applicable, and to otherwise satisfy the objectives of this Plan.