Exhibit (10)

 

KEY MANAGEMENT SEVERANCE AGREEMENT

 

This Severance Agreement (the “Agreement”) is made as of July 7, 2000 by and
between OWENS CORNING, a Delaware corporation (the “Company”), and Charles E.
Dana, an officer of the Company (“Executive”).

 

WHEREAS the Company and Executive have previously entered into a Severance
Agreement dated as of November 24, 1998 (the “Prior Agreement”) providing for
certain benefits to be conferred upon Executive under specified circumstances in
the event that Executive’s employment is terminated by the Company on the terms
and conditions set forth therein, and:

 

WHEREAS the Compensation Committee of the Board of Directors of the Company (the
“Committee”) has approved a new severance agreement to provide Executive with
certain additional protections and to conform the terms of such agreement to the
current policy of the Company regarding an officer’s entitlement to pay,
benefits and privileges on the termination of his employment;

 

NOW THEREFORE, the parties hereto agree as follows:

 

1.

Termination Absent a Change of Control.

 

a)

If, prior to a Change of Control (as defined in paragraph 7(c) below), (i) the
Company terminates Executive’s employment for any reason other than Permanent
Total Disability or Cause (as defined in paragraphs 7(e) and 7(b)(1)&(2),
respectively, below), or (ii) Executive voluntarily terminates his employment
under circumstances involving a Constructive Termination (as defined in
paragraph 7(d), below), Executive will be entitled to the following
compensation, provided that Executive executes a Release and Non-Competition
Agreement satisfactory to the Company:

 

 

1)

Base salary earned and as yet unpaid through the effective date of termination;
and

 

 

2)

Two years’ Base Pay (as defined in paragraph 7(a) below); and

 

 

3)

Two times Executive’s Separation Incentive Payment (as defined in paragraph 7(f)
below); and

 

 

4)

Incentive Pay as yet unpaid from the prior fiscal year and Incentive Pay for the
fiscal year of termination, prorated for the period of Executive’s actual
employment prior to termination; and

 

 

5)

The greater of (i) Executive’s vested Cash Balance Pension Benefit or (ii) an
amount equal to Executive’s vested Pension Benefit under the Company’s Salaried
Employees’ (Final Average) Retirement Plan plus a pension supplement calculated
as though Executive had been credited with three additional years of service
under that Plan and had Executive been three years older at the date of
termination, or (iii) Executive’s separately negotiated Pension Agreement
amount, referenced in the December 9, 1997 letter (and attachment) from Glen
Hiner, a copy of which is appended to this Agreement.

 

b)

If, prior to a Change of Control, the Company terminates Executive’s employment
for Cause (as defined in paragraph 7(b)(3), below), Executive will only be
entitled to base salary earned and as yet unpaid through the effective date of
termination and Executive’s vested Cash Balance Pension Benefit, or Executive’s
vested Final Average Plan Pension Benefit, or Executive’s separately negotiated
Pension Agreement amount, whichever is greater, UNLESS, (i) the Company
exercises its discretion to award Executive (in addition to the aforementioned
base salary and vested pension amounts) some portion of the following
compensation, based on effort expended and results obtained to date and (ii)
Executive executes a Release and Non-Competition Agreement satisfactory to the
Company:

 

 

1)

Up to but no more than Twelve months’ Base Pay (as defined in paragraph 7(a)
below); and

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2)

Up to but no more than One times of Executive’s Separation Incentive Payment (as
defined in paragraph 7(f) below); and

 

 

3)

Up to but no more than the amount of Incentive Pay as yet unpaid from the prior
fiscal year.

 

c)

The compensation payable under paragraph 1(a) or 1(b), above, shall be paid as
soon as practicable after Executive signs, returns and does not revoke the
requisite Release and Non-Competition Agreement.

 

d)

In the event of a termination of Executive’s employment under the circumstances
described in paragraph 1(a) above:

 

 

1)

All stock options previously awarded to Executive shall, to the extent not
already vested, immediately vest, and shall be exercisable (subject to
applicable blackout restrictions) for up to six months following the date of
termination or the original expiration date, whichever is sooner.

 

 

2)

All shares of restricted stock previously awarded to Executive shall, to the
extent not already vested, immediately vest and be payable.

 

 

3)

All outstanding but unearned performance shares shall be forfeited.

 

 

4)

All of Executive’s non-qualified deferred compensation or retirement benefits,
if any, accrued through the date of termination under any non-qualified deferred
compensation plan or arrangement shall immediately vest and be payable, to the
extent permissible under the terms of such plan or arrangement.

 

e)

In the event of a termination of Executive’s employment under the circumstances
described in paragraph 1(b) above:

 

 

1)

All stock options previously awarded to Executive which are exercisable on the
date of termination shall be exercisable (subject to applicable blackout
restrictions) for up to six months following the date of termination or the
original expiration date, whichever is sooner.

 

 

2)

All unvested shares of restricted stock and all outstanding but unearned
performance shares previously awarded to Executive shall be forfeited.

 

 

3)

All of Executive’s non-qualified deferred compensation or retirement benefits,
if any, accrued and vested through the date of termination under any
non-qualified deferred compensation plan or arrangement shall be payable, to the
extent permissible under the terms of such plan or arrangement.

 

f)

If Executive’s employment ends under circumstances described in paragraph 1(a)
above as a result of the sale by the Company of a business unit, division or
facility, payments will be made under this paragraph 1 only if Executive is not
offered a substantially equivalent position with the Company or with the new
owner of the business (without regard to whether Executive accepts such a
position). If Executive receives and accepts a suitable offer from the new owner
of the business and is subsequently terminated within one year of the closing
date of the sale under circumstances that would result in payment of benefits
under this paragraph 1(a), Executive will be treated as though he had been
terminated by the Company and receive the payments provided for in this
Agreement, less any amounts or benefits provided by the new owner in connection
with Executive’s termination.

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2.

Termination On or After a Change of Control.

 

a)

If, within a two-year period after a Change of Control, (i) the Company (or any
successor) terminates Executive’s employment for any reason other than Permanent
Total Disability or Cause (as defined in paragraphs 7(e) and 7(b)(1)&(2),
respectively, below), or (ii) Executive voluntarily terminates his employment
under circumstances involving a Constructive Termination, Executive will be
entitled to the following compensation, provided that Executive executes a
Release and Non-Competition Agreement satisfactory to the Company:

 

 

1)

Base salary earned and as yet unpaid through the effective date of termination;
and

 

 

2)

Two years’ Base Pay; and

 

 

3)

Two times Executive’s Separation Incentive Payment; and

 

 

4)

Incentive Pay as yet unpaid from the prior fiscal year and Target Level
Incentive Pay (as defined in paragraph 7(h) below) for the fiscal year of
termination, prorated for the period of Executive’s actual employment prior to
termination; and

 

 

5)

The greater of (i) Executive’s vested Cash Balance Pension Benefit or (ii) an
amount equal to Executive’s vested Pension Benefit under the Company’s Salaried
Employees’ (Final Average) Retirement Plan plus a pension supplement calculated
as though Executive had been credited with three additional years of service
under that Plan and had Executive been three years older at the date of
termination, or (iii) Executive’s separately negotiated Pension Agreement
amount, referenced in the December 9, 1997 letter (and attachment) from Glen
Hiner, a copy of which is appended to this agreement.

 

b)

If, within a two-year period after a Change of Control, the Company (or any
successor) terminates Executive’s employment for Cause (as defined in paragraph
7(b)(3), below), Executive will only be entitled to base salary earned and as
yet unpaid through the effective date of termination and Executive’s vested Cash
Balance Pension Benefit, or Executive’s vested Final Average Plan Pension
Benefit, or Executive’s separately negotiated Pension Agreement amount,
whichever is greater, UNLESS, (i) the Company exercises its discretion to award
Executive (in addition to the aforementioned base salary and vested pension
amounts) some portion of the following compensation, based on effort expended
and results obtained to date and (ii) Executive executes a Release and
Non-Competition Agreement satisfactory to the Company:

 

 

1)

Up to but no more than Twelve months’ Base Pay (as defined in paragraph 7(a)
below); and

 

 

2)

Up to but no more than One times Executive’s Separation Incentive Payment (as
defined in paragraph 7(f) below); and

 

 

3)

Up to but no more than the amount of Incentive Pay as yet unpaid from the prior
fiscal year.

 

c)

The compensation payable under paragraphs 2(a) or 2(b), above, will be paid as
soon as practicable after Executive signs, returns and does not revoke the
requisite Release and Non-Competition Agreement.

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d)

In the event of a termination of Executive’s employment under the circumstances
described in paragraph 2(a) above:

 

 

1)

All stock options previously awarded to Executive shall, to the extent not
already vested, immediately vest, and shall be exercisable (subject to
applicable blackout restrictions) for up to six months following the date of
termination or the original expiration date, whichever is sooner.

 

 

2)

All shares of restricted stock previously awarded to Executive shall, to the
extent not already vested, immediately vest and be payable.

 

 

3)

All outstanding but unearned performance shares shall be forfeited.

 

 

4)

All of Executive’s non-qualified deferred compensation or retirement benefits,
if any, accrued through the date of termination under any non-qualified deferred
compensation plan or arrangement shall immediately vest and be payable, to the
extent permissible under the terms of such plan or arrangement.

 

e)

In the event of a termination of Executive’s employment under the circumstances
described in paragraph 2(b) above:

 

 

1)

All stock options previously awarded to Executive which are exercisable on the
date of termination shall be exercisable (subject to applicable blackout
restrictions) for up to six months following the date of termination or the
original expiration date, whichever is sooner.

 

 

2)

All unvested shares of restricted stock and all outstanding but unearned
performance shares previously awarded to Executive shall be forfeited.

 

 

3)

All of Executive’s non-qualified deferred compensation or retirement benefits,
if any, accrued and vested through the date of termination under any
non-qualified deferred compensation plan or arrangement shall be payable, to the
extent permissible under the terms of such plan or arrangement.

 

f)

The Compensation Committee of the Board of Directors, in its sole discretion,
may determine that no Change of Control or Potential Change of Control shall be
deemed to have occurred with respect to any Executive who, in connection with a
Change of Control or Potential Change of Control, acts in a capacity other than
in their capacity as an employee of the Corporation, its subsidiaries or
affiliates or otherwise fails to act in the Company’s best interests with
respect to said Change of Control.

 

3.

Termination For Other Reasons. If Executive voluntarily terminates his
employment (including by reason of retirement) other than as provided in
paragraph 1(a) or 2(a) above, or if Executive’s employment is terminated due to
death or Permanent Total Disability, Executive shall not be entitled to any
benefits under this Agreement, but shall be entitled to any other benefits to
which he is otherwise entitled under the terms of any employee benefit plans or
arrangements of the Company.

 

4.

Continuation of Insurance Benefits. In the event Executive’s employment
terminates under the circumstances described in paragraph 1(a) or 2(a) of this
Agreement, the Company will continue Executive’s participation and coverage for
a period of two years (the “Severance Period”) from Executive’s last day of
employment with the Company under all the Company’s life, medical and dental
plans (“Insurance Benefits”), in which Executive is participating immediately
prior to such employment termination, subject to the Company’s right to modify
the terms of the plans or arrangements providing these benefits. If Executive is
employed by another entity during the Severance Period, the Company will be a
secondary obligor only with respect to medical and dental Insurance Benefits and
life insurance coverage shall immediately cease.

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5.

Non-Duplication of Benefits. Any compensation or benefits payable under the
terms of this Agreement will be offset and not augmented by other compensation
or benefits of the same or similar type payable under any existing plan or
agreement of the Company or any other arrangement between Executive and the
Company covering the Executive (including, but not limited to, any Company
severance policy and the Company’s Annual Incentive Plan). It is intended that
this Agreement not duplicate benefits Executive is entitled to under the
Company’s regular severance policy, any related policies, or any other
contracts, agreements or arrangements between Executive and the Company.

 

6.

Term. This Agreement shall be effective from the date hereof throughout
Executive’s term of employment as an officer of the Company, but shall expire
and be of no effect immediately after the second anniversary of a Change of
Control.

 

7.

Certain Defined Terms. As used herein, the following terms shall have the
following meanings:

 

a)

“Base Pay” shall mean the greater of the annual salary paid to Executive as of
the date of termination of his employment or the date of the Change of Control,
as the case may be, notwithstanding any pay reduction that may be related to a
Constructive Termination.

 

b)

“Cause” shall mean:

 

 

1)

conviction of any felony or failure to contest prosecution for a felony; or

 

 

2)

willful misconduct or dishonesty which is directly and materially harmful to the
business or reputation of the Company; or

 

 

3)

willful or continued failure to substantially perform his duties as an executive
of the Company, other than as a result of total or partial incapacity due to
physical or mental illness (abuse of alcohol, drugs or controlled substances not
being considered a physical or mental illness for purposes of this paragraph),
unless within three to six months after written notice has been provided to
Executive by the Company, Executive cures such willful or continued failure to
perform.

 

c)

“Change of Control” shall mean:

 

 

1)

the holders of the voting securities of the Company shall have approved a merger
or consolidation of the Company with any other entity, unless the proposed
merger or consolidation would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, where such merger or
consolidation is, in fact, consummated;

 

 

2)

a plan of complete liquidation of the Company shall have been adopted or the
holders of voting securities of the Company shall have approved an agreement for
the sale or disposition by the Company (in one transaction or a series of
transactions) of all or substantially all of the Company’s assets;

 

 

3)

any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the “1934 Act”) shall become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 15% or
more of the combined voting power of the Company’s then outstanding shares;

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4)

during any period of two consecutive years, members who at the beginning of such
period constituted the Board shall have ceased for any reason to constitute a
majority thereof, unless the election, or nomination for election by the
Company’s stockholders, of each director shall have been approved by the vote of
at least two-thirds of the directors then still in office and who were directors
at the beginning of such period (so long as such director was not nominated by a
person who has expressed an intent to effect a Change of Control or engage in a
proxy or other control contest); or

 

 

5)

the occurrence of any other change of control of a nature that would be required
to be reported in accordance with Form 8-K pursuant to Sections 13 or 15(d) of
the 1934 Act or in the Company’s proxy statement in accordance with Schedule 14A
of Regulation 14A promulgated under the 1934 Act, or in any successor forms or
regulations to the same effect.

 

d)

A “Constructive Termination” shall be deemed to have occurred only if:

 

 

1)

prior to a Change of Control: Executive’s Base Pay is reduced without his
written consent;

 

 

2)

on or within a two-year period after a Change of Control: (A) Executive’s Base
Pay or annual incentive pay opportunity is reduced without his written consent;
(B) Executive is required by the Company without his written consent to relocate
to a new place of business that is more than fifty miles from Executive’s place
of business prior to the Change of Control (or the Company mandates a
substantial increase in the amount of required business travel); or (C) there is
a material adverse change in Executive’s duties or responsibilities in
comparison to the duties or responsibilities which Executive had prior to the
Change of Control.

 

e)

“Permanent Total Disability” shall be deemed to have occurred if, at the end of
any month Executive then is, and has been, for eighteen (18) consecutive
calendar months then ending, unable to perform his duties in the normal and
regular manner due to mental or physical illness or injury. Any determination of
such inability to perform shall be made by the Company in good faith.

 

f)

“Separation Incentive Payment” shall be the greater of (i) Executive’s average
payments under the Company’s normal, annual Corporate Incentive Plan (CIP) for
the three years immediately preceding the year of termination (or annualized for
such shorter period as Executive may have been employed by the Company), or (ii)
one-half of Executive’s average participating salary under such Plan for the
three years immediately preceding the year of termination (or annualized for
such shorter period as Executive may have been employed by the Company).

 

g)

“Participating Salary” is the product of Executive’s total base salary paid
during any given incentive year, multiplied by Executive’s incentive pay
percentage, at maximum funding.

 

h)

“Target Level Incentive” shall be the greater of (i) one-half of Executive’s
participating salary under the Company’s Annual Incentive Plan for the year of
termination, or (ii) the payment Executive would have received under such Plan
for the year of termination based on projected corporate performance for such
year as determined by the Committee in its sole discretion at the time of the
Change of Control.

 

8.

Outplacement Assistance. The Company will arrange outplacement assistance for
Executive, to be provided by a mutually agreed-upon firm engaged in said
business. Such assistance shall continue for up to one year following
Executive’s termination or until such time as suitable employment is attained,
whichever is sooner. Outplacement costs incurred in this connection will be
borne by the Company, but will not include costs of travel to/from the
outplacement firm or in connection with job interviews, etc. For up to six
months following Executive’s termination, the Company will also make

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available reasonable office space and administrative and communication services
for Executive’s use in seeking suitable employment. In no event will the Company
pay Executive in lieu of outplacement assistance.

 

9.

Confidentiality. Consistent with Executive’s preexisting legal and contractual
obligations and in exchange for the consideration provided by the Company in
this Agreement and for Executive’s continued employment and exposure to
confidential information at the Company, Executive agrees to hold in strict
confidence and not disclose to any other person any confidential or proprietary
information of the Company, including, without limitation, trade secrets,
formulas for Company products, production techniques or processes or methods and
apparatus for producing any products of the Company, or other non-public
information relating to the business, research and development, employees and/or
customers of the Company and its subsidiaries and affiliates, except to the
extent required by law, or with the written consent of the Company. Executive
will, immediately on termination, deliver to the Company all files containing
data, correspondence, books, notes, and other written, graphic or computer
records under Executive’s control relating to the Company or its subsidiaries or
affiliates, regardless of the media in which they are embodied or contained.

 

10.

Agreement Not To Compete. In exchange for the consideration provided by the
Company in this Agreement as well as Executive’s continued employment and
exposure to confidential information at the Company, Executive agrees not to,
directly or indirectly, for a period of two years following Executive’s
termination of employment, engage or participate in any business that is
involved in research or development activities or in the manufacturing of any
product which competes with any of the Company’s products, except with the
written consent of the Company. On termination, Executive agrees to execute a
separate Release and Non-Competition Agreement in a form acceptable to the
Company to memorialize this agreement and understands that the failure to do so
will render Executive ineligible for any severance pay, benefits or privileges
whatsoever.

 

11.

Mutual Release and Indemnity. In the event of Executive’s termination under
circumstances described in paragraphs 1(a), 1(b), 2(a) or 2(b), the Company
agrees to release and discharge Executive from any claim it may then or
thereafter have against Executive with respect to employment with the Company or
any of its subsidiaries or affiliates (other than with regard to Executive’s
obligations under this Agreement), and agrees to indemnify Executive in
accordance with its then current policies or practices for active employees for
any claims made against Executive by third parties arising out of the proper
performance of Executive’s duties as an employee of the Company or any of its
subsidiaries or affiliates. In exchange for the consideration provided by the
Company in this Agreement, together with the Company’s release and indemnity,
Executive agrees to release and discharge the Company, and its subsidiaries,
affiliates, officers, directors, employees and agents (the “Released Persons”)
from any claim that Executive may then or thereafter have against the Company or
such Released Persons (excluding any claim for the compensation, benefits and
privileges described herein) arising out of or in connection with Executive’s
employment or termination of employment by the Company or any of its
subsidiaries or affiliates. On termination, Executive agrees to execute a
separate Release and Non-Competition Agreement in a form acceptable to the
Company to memorialize this agreement and understands that the failure to do so
will render Executive ineligible for any severance pay, benefits or privileges
whatsoever.

 

12.

Severability. Whenever possible each provision and term of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then such provision or term shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provision or term, or the remaining provisions or terms of this Agreement.

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13.

Modification and Waiver of Breach. No waiver or modification of this Agreement
shall be binding unless it is in writing, signed by the parties hereto. No
waiver of a breach hereof shall be deemed to constitute a waiver of a further
breach, whether of a similar or dissimilar nature.

 

14.

Assignment. This Agreement shall be binding upon and inure to the benefit of any
successors of the Company. As used herein, “successors” shall include any
person, firm, corporation or other business entity which at any time, whether by
merger, purchase or otherwise, acquires all or substantially all of the assets
or business of the Company.

 

15.

Notice. Any written notice to be given hereunder to Executive may be delivered
to him personally or shall be deemed to have been given upon deposit thereof in
the U.S. mail, certified mail, postage prepaid, addressed to Executive at the
address as it shall appear on the records of the Company.

 

16.

Construction of Agreement. This Agreement is made and entered into in the State
of Ohio and shall be construed under the laws of Ohio.

 

17.

Entire Agreement. This Agreement constitutes the entire understanding between
the parties with respect to Executive’s severance pay, benefits and privileges
in the event of a termination of Executive’s employment with the Company,
superseding all negotiations, prior discussions and agreements, written or oral,
concerning said severance arrangements. This Agreement may not be amended except
in writing by the parties hereof.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

OWENS CORNING,

/s/ Glen H. Hiner

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Glen H. Hiner

Chairman and CEO

Agreed to and accepted:

/s/ Charles E. Dana

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Date: July 13, 2000