Keith A. Wilson Employment Agreement

EXHIBIT 10.12 EMPLOYMENT AGREEMENT KEITH A. WILSON EMPLOYMENT AGREEMENT (the "Agreement") dated July 21, 2005 by andbetween Affinia Group Inc. (the "Company") and Keith A. Wilson (the"Executive"). The Company desires to continue to employ Executive and to enter intoan agreement embodying the terms of such employment; Executive desires to continue to be employed by the Company and enterinto such an agreement; In consideration of the premises and mutual covenants herein and forother good and valuable consideration, the parties agree as follows: 1. Term of Employment. Subject to the provisions of Section 7 of thisAgreement, Executive shall be employed by the Company for a period commencing onMay 1, 2005 and ending on December 31, 2007 (the "Employment Term") on the termsand subject to the conditions set forth in this Agreement; provided, however,that commencing with December 31, 2007 and on each December 31 thereafter (eachan "Extension Date"), the Employment Term shall automatically be extended for anadditional one year period, unless the Company or Executive provides the otherparty hereto 90 days prior written notice before the next Extension Date thatthe Employment Term shall not be so extended. 2. Position. a. During the Employment Term, Executive shall serve as theCompany's Vice President and General Manager, Under Hood Group. In suchposition, Executive shall have such duties and authority as shall be determinedfrom time to time by the Board of Directors of the Company (the "Board") and theChief Executive Officer of the Company. If requested, Executive shall also serveas a member of the Board without additional compensation. b. During the Employment Term, Executive will devote Executive'sfull business time and best efforts to the performance of Executive's dutieshereunder and will not engage in any other business, profession or occupationfor compensation or otherwise which would conflict or interfere with therendition of such services either directly or indirectly, without the priorwritten consent of the Board; provided that nothing herein shall precludeExecutive, subject to the prior approval of the Board, from acceptingappointment to or continue to serve on any board of directors or trustees of anybusiness corporation or any charitable organization; provided in each case, andin the aggregate, that such activities do not conflict or interfere with theperformance of Executive's duties hereunder or conflict with Section 8. 3. Base Salary. During the Employment Term, the Company shall payExecutive a base salary at the annual rate of $300,000, payable in regularinstallments in accordance with the Company's usual payment practices. Executiveshall be entitled to such 2increases in Executive's base salary, if any, as may be determined from time totime in the sole discretion of the Board. Executive's annual base salary, as ineffect from time to time, is hereinafter referred to as the "Base Salary." 4. Annual Bonus. With respect to each full fiscal year during theEmployment 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 bythe Board. Executive may be entitled to greater Annual Bonus for performance inexcess targeted performance goals or a lesser Annual Bonus for performance whichdoes not meet such targeted performance goals, in each case in the discretion ofthe Board. 5. Employee Benefits. During the Employment Term, Executive shallgenerally 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 madeavailable to other senior executives of the Company. 6. Business Expenses. During the Employment Term, reasonable businessexpenses incurred by Executive in the performance of Executive's dutieshereunder shall be reimbursed by the Company in accordance with Companypolicies. 7. Termination. The Employment Term and Executive's employmenthereunder 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 daysadvance written notice of any resignation of Executive's employment.Notwithstanding any other provision of this Agreement, the provisions of thisSection 7 shall exclusively govern Executive's rights upon termination ofemployment with the Company and its affiliates. a. By the Company For Cause or By Executive Resignation WithoutGood Reason. (i) The Employment Term and Executive's employment hereunder maybe terminated by the Company for Cause (as defined below) and shall terminateautomatically upon Executive's resignation without Good Reason (as defined inSection 7(c)). (ii) For purposes of this Agreement, "Cause" shall mean (A) theExecutive's continued failure to perform such Executive's duties (other than asa result of total or partial incapacity due to physical or mental illness) whichis not cured for a period of 10 days following written notice by the Company orits affiliates to the Executive of such failure, (B) conviction or plea ofguilty or no contest to a (x) felony, or (y) crime involving moral turpitude orthe property or business of the Company or its affiliates, (C) willfulmalfeasance or willful misconduct in performance of duties to the Company or itsaffiliates, or (D) Executive's breach of the provisions of Sections 8 or 9 ofthis Agreement. (iii) If Executive's employment is terminated by the Company forCause, or if Executive resigns without Good Reason, Executive shall be entitledto receive: (A) the Base Salary through the date of termination; 3 (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 theCompany for Cause or resignation by Executive without Good Reason, except as setforth in this Section 7(a)(iii), Executive shall have no further rights to anycompensation or any other benefits under this Agreement. b. Disability or Death. (i) The Employment Term and Executive's employment hereunder shallterminate upon Executive's death and may be terminated by the Company ifExecutive becomes physically or mentally incapacitated and is therefore unablefor 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'sduties (such incapacity is hereinafter referred to as "Disability"). (ii) Upon termination of Executive's employment hereunder foreither 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 deathor Disability, except as set forth in this Section 7(b)(ii), Executive shallhave no further rights to any compensation or any other benefits under thisAgreement. c. By the Company Without Cause or Resignation by Executive forGood Reason. (i) The Employment Term and Executive's employment hereunder maybe terminated by the Company without Cause or by Executive's resignation forGood 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 orAnnual Bonus, when due hereunder or a reduction in the Base Salary or TargetAnnual Bonus from the levels set 4forth in Sections 3 and 4, respectively (other than any across the boardreduction in Base Salary and/or Annual Bonus of 15% or less which similarlyaffects the four other highest paid executive officers of the Company as of thedate hereof, to the extent they are then employed by the Company) (B) anysubstantial and sustained diminution in Executive's title, authority orresponsibilities from those described in Section 2 hereof or (C) any relocationof Executive's principal place of employment by more than 50 miles from theCompany's current offices in Gastonia, North Carolina, without Executive'sconsent; provided that either of the events described in clauses (A) and (B) ofthis Section 7(c)(ii) shall constitute Good Reason only if the Company fails tocure such event within 30 days after receipt from Executive of written notice ofthe 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 itsoccurrence or Executive's knowledge thereof, unless Executive has given theCompany written notice thereof prior to such date. (iii) If Executive's employment is terminated by the Companywithout Cause (other than by reason of death or Disability) or if Executiveresigns 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 5 (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 t ...