EXHIBIT 10.11
EMPLOYMENT AGREEMENT
TERRY R. MCCORMACK
EMPLOYMENT AGREEMENT (the "Agreement") dated July 21, 2005
by and
between Affinia Group Inc. (the "Company") and Terry R. McCormack
(the
"Executive").
The Company desires to continue to employ Executive and to
enter into
an agreement embodying the terms of such employment;
Executive desires to continue to be employed by the
Company and enter
into such an agreement;
In consideration of the premises and mutual covenants
herein and for
other good and valuable consideration, the parties agree as
follows:
1. Term of Employment. Subject to the provisions of
Section 7 of this
Agreement, Executive shall be employed by the Company for a period
commencing on
May 1, 2005 and ending on December 31, 2007 (the "Employment Term")
on the terms
and subject to the conditions set forth in this Agreement;
provided, however,
that commencing with December 31, 2007 and on each December 31
thereafter (each
an "Extension Date"), the Employment Term shall automatically be
extended for an
additional one year period, unless the Company or Executive
provides the other
party hereto 90 days prior written notice before the next Extension
Date that
the Employment Term shall not be so extended.
2. Position.
a. During the Employment Term, Executive shall
serve as the
Company's Chief Executive Officer and President. In such
position,
Executive shall have such duties and authority as shall be
determined
from time to time by the Board of Directors of the Company
(the
"Board"). If requested, Executive shall also serve as a
member of the
Board without additional compensation.
b. During the Employment Term, Executive will
devote
Executive's full business time and best efforts to the
performance of
Executive's duties hereunder and will not engage in any
other business,
profession or occupation for compensation or otherwise
which would
conflict or interfere with the rendition of such services
either
directly or indirectly, without the prior written consent
of the Board;
provided that nothing herein shall preclude Executive,
subject to the
prior approval of the Board, from accepting appointment to
or continue
to serve on any board of directors or trustees of any
business
corporation or any charitable organization; provided in
each case, and
in the aggregate, that such activities do not conflict or
interfere
with the performance of Executive's duties hereunder or
conflict with
Section 8.
3. Base Salary. During the Employment Term, the Company
shall pay
Executive a base salary at the annual rate of $600,000, payable in
regular
installments in accordance with the Company's usual payment
practices. Executive
shall be entitled to such increases in Executive's base salary, if
any, as may
be determined from time to time in the sole
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discretion of the Board. Executive's annual base salary, as in
effect from time
to time, is hereinafter referred to as the "Base Salary."
4. Annual Bonus. With respect to each full fiscal year
during the
Employment Term, Executive shall be eligible to earn an annual
bonus award (an
"Annual Bonus") of one hundred percent (100%) of Executive's Base
Salary (the
"Target Annual Bonus") upon the achievement of performance goals
established by
the Board. Executive may be entitled to greater Annual Bonus for
performance in
excess targeted performance goals or a lesser Annual Bonus for
performance which
does not meet such targeted performance goals, in each case in the
discretion of
the Board.
5. Employee Benefits. During the Employment Term,
Executive shall
generally be entitled to participate in the Company's employee
benefit plans
(other than any severance plan) as in effect from time to time
(collectively
"Employee Benefits"), on the same basis as those benefits are
generally made
available to other senior executives of the Company.
6. Business Expenses. During the Employment Term,
reasonable business
expenses incurred by Executive in the performance of Executive's
duties
hereunder shall be reimbursed by the Company in accordance with
Company
policies.
7. Termination. The Employment Term and Executive's
employment
hereunder may be terminated by either party at any time and for any
reason;
provided that Executive will be required to give the Company at
least 30 days
advance written notice of any resignation of Executive's
employment.
Notwithstanding any other provision of this Agreement, the
provisions of this
Section 7 shall exclusively govern Executive's rights upon
termination of
employment with the Company and its affiliates.
a. By the Company For Cause or By Executive
Resignation
Without Good Reason.
(i) The Employment Term and Executive's
employment hereunder
may be terminated by the Company for Cause (as defined
below) and shall
terminate automatically upon Executive's resignation
without Good
Reason (as defined in Section 7(c)).
(ii) For purposes of this Agreement, "Cause"
shall mean (A)
the Executive's continued failure to perform such
Executive's duties
(other than as a result of total or partial incapacity due
to physical
or mental illness) which is not cured for a period of 10
days following
written notice by the Company or its affiliates to the
Executive of
such failure, (B) conviction or plea of guilty or no
contest to a (x)
felony, or (y) crime involving moral turpitude or the
property or
business of the Company or its affiliates, (C) willful
malfeasance or
willful misconduct in performance of duties to the Company
or its
affiliates, or (D) Executive's breach of the provisions of
Sections 8
or 9 of this Agreement.
(iii) If Executive's employment is terminated by
the Company
for Cause, or if Executive resigns without Good Reason,
Executive shall
be entitled to receive:
(A) the Base Salary through the date of
termination;
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(B) any Annual Bonus earned but unpaid as of the
date of
termination for any previously completed fiscal year;
(C) reimbursement for any unreimbursed business
expenses
properly incurred by Executive in accordance with Company
policy prior
to the date of Executive's termination; and
(D) such Employee Benefits, if any, as to which
Executive may
be entitled under the employee benefit plans of the
Company (the
amounts described in clauses (A) through (D) hereof being
referred to
as the "Accrued Rights").
Following such termination of Executive's employment by
the Company for
Cause or resignation by Executive without Good Reason, except as
set forth in
this Section 7(a)(iii), Executive shall have no further rights to
any
compensation or any other benefits under this Agreement.
b. Disability or Death.
(i) The Employment Term and Executive's
employment hereunder
shall terminate upon Executive's death and may be
terminated by the
Company if Executive becomes physically or mentally
incapacitated and
is therefore unable for a period of six (6) consecutive
months or for
an aggregate of nine (9) months in any twenty-four (24)
consecutive
month period to perform Executive's duties (such
incapacity is
hereinafter referred to as "Disability").
(ii) Upon termination of Executive's employment
hereunder for
either Disability or death, Executive or Executive's
estate (as the
case may be) shall be entitled to receive:
(A) the Accrued Rights; and
(B) a pro rata portion of any Annual Bonus, if
any, that
Executive would have been entitled to receive pursuant to
Section 4
hereof in such year based upon the percentage of the
fiscal year that
shall have elapsed through the date of Executive's
termination of
employment, payable when such Annual Bonus would have
otherwise been
payable had Executive's employment not terminated.
Following Executive's termination of employment due to
death or
Disability, except as set forth in this Section 7(b)(ii), Executive
shall have
no further rights to any compensation or any other benefits under
this
Agreement.
c. By the Company Without Cause or Resignation by
Executive
for Good Reason.
(i) The Employment Term and Executive's
employment hereunder
may be terminated by the Company without Cause or by
Executive's
resignation for Good Reason.
(ii) For purposes of this Agreement, "Good
Reason" shall mean
(A) the failure of the Company to pay or cause to be paid
Executive's
Base Salary or Annual Bonus, when due hereunder or a
reduction in the
Base Salary or Target Annual Bonus from the levels set
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forth in Sections 3 and 4, respectively (other than any
across the
board reduction in Base Salary and/or Annual Bonus of 15%
or less which
similarly affects the four other highest paid executive
officers of the
Company as of the date hereof, to the extent they are then
employed by
the Company) (B) any substantial and sustained diminution
in
Executive's title, authority or responsibilities from
those described
in Section 2 hereof or (C) any relocation of Executive's
principal
place of employment by more than 50 miles from the
Company's current
offices in Ann Arbor, Michigan, without Executive's
consent; provided
that either of the events described in clauses (A) and (B)
of this
Section 7(c)(ii) shall constitute Good Reason only if the
Company fails
to cure such event within 30 days after receipt from
Executive of
written notice of the event which constitutes Good Reason;
provided,
further, that "Good Reason" shall cease to exist for an
event on the
60th day following the later of its occurrence or
Executive's knowledge
thereof, unless Executive has given the Company written
notice thereof
prior to such date.
(iii) If Executive's employment is terminated by
the Company
without Cause (other than by reason of death or
Disability) or if
Executive resigns for Good Reason, Executive shall be
entitled to
receive:
(A) the Accrued Rights;
(B) subject to Executive's continued compliance
with the
provisions of Sections 8 and 9, an amount equal to 2 times
the sum of
(x) Base Salary and the Average Bonus (as defined below)
paid as
follows: (i) the amount equal to 1 times the sum of Base
Salary and the
Average Bonus shall be paid in equal monthly installments
for 12 months
following the date of such termination of employment and
(ii) the
amount equal to 1 times the sum of Base Salary and the
Average Bonus
shall be paid on the first anniversary of the date of such
termination
of employment in a lump sum cash payment; provided that
the aggregate
amount described in this clause (B) shall be reduced by
the present
value of any other cash severance or termination benefits
payable to
Executive under any other plans, programs or arrangements
of the
Company or its affiliates. "Average Bonus" shall mean an
amount equal
to the average of the Annual Bonuses paid to Executive
hereunder for
the two most recently completed fiscal years preceding
Executive's
termination of employment (or if there has been one, but
less than two
completed fiscal years during the Employment Term, an
amount equal to
the average of the Annual Bonus hereunder for the
preceding completed
fiscal year and the annual bonus (excluding any special
non-recurring
bonuses or retention incentive payments) paid to Executive
in respect
of calendar year 2004 from Dana Corporation (including any
pro-rata
annual bonus paid to Executive by the Company for the part
of 2004 in
which Executive was employed by the Company) (the "2004
Annual Bonus")
or if there have been no previously completed fiscal years
during the
Employment Term, then an amount equal to the 2004 Annual
Bonus).
(C) a pro rata portion of any Annual Bonus, if
any, that
Executive would have been entitled to receive pursuant to
Section 4
hereof in such year based upon the percentage of the
fiscal year that
shall have elapsed through the date of Executive's
termination of
employment, payable when such Annual Bonus would have
otherwise been
payable had Executive's employment not terminated; and
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(D) continued medical and dental coverage at the
Company's
cost (comparable to such coverage provided by the Company
to active
executives of the Company) for a period of 24 months after
the date of
such termination; provided that if the Company is unable
to provide
such coverage to Executive under the terms of its medical
and dental
plans for any portion of such period, the Company may in
lieu of
providing such coverage pay to Executive an amount equal
to the premium
that would otherwise be paid by active executives for such
coverage
during such period (without giving effect to any Company
subsidy).
(iv) If Executive's employment is terminated by
the Company
without Cause (other than by reason of death or
Disability) or if
Executive resigns for Good Reason, in each case, within
twenty-four
months following a Change of Control (as defined in the
Affinia Group
Holdings Inc. 2005 Stock Incentive Plan), Executive shall
be entitled
to receive, in addition to the payments and benefits set
forth in
Section 7(c)(iii), a lump sum cash payment equal to the
excess, if any,
of (A) the product of (x) 2 times (y) the Target Annual
Bonus over (B)
the product of (x) 2 times (y) the Average Bonus.
For purposes of this Section 7(c), in the event such
termination of
employment occurs as a result of a resignation by Executive for
Good Reason due
to a reduction in Executive's Base Salary or Target Annual Bonus
pursuant to
Section 7(c)(ii)(A), the references to Base Salary and Target
Annual Bonus in
Sections 7(c)(iii) and 7(c)(iv) shall be deemed to be references to
Executive's
Base Salary and Target Bonus immediately before such reduction.
Following Executive's termination of employment by the
Company without
Cause (other than by reason of Executive's death or Disability) or
by
Executive's resignation for Good Reason, except as set forth in
this Section
7(c)(iii), or Section 7(c)(iv) if applicable, Executive shall have
no further
rights to any compensation or any other benefits under this
Agreement.
d. Expiration of Employment Term.
(i) In the event either party elects not to
extend the
Employment Term pursuant to Section 1, unless Executive's
employment is
earlier terminated pursuant to paragraphs (a), (b) or (c)
of this
Section 7, Executive's termination of employment under
this Agreement
(whether or not Executive continues as an employee of the
Company
thereafter) shall be deemed to occur on the close of
business on the
day immediately preceding the next scheduled Extension
Date and
Executive shall be entitled to receive:
(A) if Executive is the party that elected not to
extend the
Employment Term, Executive shall be entitled to receive
the (x) Accrued
Rights and (y) commencing upon the date of Executive's
termination of
employment with the Company (which, for the avoidance of
doubt, may
occur after the expiration of the Employment Term),
subject to
Executive's continued compliance with the provisions of
Section 8 and
9, an amount equal to 2 times the Base Salary paid in
equal monthly
installments for 24 months following the date of such
termination of
employment; provided that the aggregate amount described
in this clause
(y) shall be reduced by the present value of any other
cash severance
or termination benefits payable to
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Executive under any other plans, programs or arrangements
of the
Company or its affiliates; and
(B) if the Company is the party that
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