SECTION 3
EMPLOYMENT AGREEMENT
This Agreement is made by and between TRIMAS CORPORATION, a Delaware
corporation ("Company") and Xxxxx X. Xxxxxxxx (hereinafter "Executive") MARCH 3,
2003 ("Effective Date"). In order to induce Executive to serve as its Group
President - Fastening Systems Group, Company enters into this Agreement with
Executive to set out the terms and conditions that will apply to Executive's
employment with Company. Executive is willing to accept such employment and
assignment and to perform services on the terms and conditions hereinafter set
forth. It is therefore hereby agreed by and between the parties as follows:
SECTION 1 - EMPLOYMENT.
(a) Company employs Executive as its Group President - Fastening
Systems Group. In this capacity, Executive shall report to the
President and Chief Executive Officer ("CEO"). Executive
accepts employment in accordance with this Agreement and
agrees to devote his full business time and efforts to the
performance of his duties and responsibilities hereunder.
(b) Nothing in this Agreement shall preclude Executive from
engaging in charitable and community affairs, from managing
any passive investment (i.e., an investment with respect to
which Executive is in no way involved with the management or
operation of the entity in which Executive has invested) made
by him in publicly traded equity securities or other property
(provided that no such investment may exceed five percent (5%)
of the equity of any entity, without the prior approval of the
Board of Directors of Company (the "Board")), or from serving,
subject to the prior approval of the Board, as a member of
boards of directors or as a trustee of any other corporation,
association or entity, to the extent that any of the above
activities do not conflict with any provision of this
Agreement.
SECTION 2 - TERM OF EMPLOYMENT. Executive's term of employment under
this Agreement ("Term of Employment") shall commence on the Effective Date and,
subject to the terms hereof, shall terminate on the earlier of: December 31,
2004 ("Initial Period"); or the date that either party terminates Executive's
employment under this Agreement; provided that subsequent to the Initial Period,
the Term of Employment shall automatically renew each January 1 for one year
("Renewal Period"), unless Company delivers to Executive or Executive delivers
to Company written notice at least thirty (30) days in advance of the expiration
of the Initial Period or any Renewal Period, that the Term of Employment shall
not be extended, in which case the Term of Employment shall end at the end of
the Year in which such notice was delivered and shall not be further extended
except by written agreement of Company and Executive. The expiration of the Term
of Employment under this Agreement shall not be a termination of this Agreement
to the extent that other provisions of this Agreement by their terms survive the
Term of Employment. For purposes of this Agreement, the term "Year" shall mean
the twelve-month period commencing on the Effective Date and each anniversary of
the Effective Date.
XXXXXXX 0
XXXXXXX 0 - XXXXXXXXXXXX.
(x) Salary. During the Initial Period, Company shall pay Executive
at the rate of Two Hundred Fifty Thousand Dollars ($250,000)
per annum ("Base Salary"). Base Salary shall be payable in
accordance with the ordinary payroll practices of Company and
shall be subject to all applicable federal, state and local
withholding and reporting requirements. Base Salary may be
adjusted by the CEO during the Term of Employment.
(b) Annual Value Creation Plan ("AVCP"). Executive shall be
eligible to participate in the AVCP, a copy of which has been
provided to Executive, subject to all the terms and conditions
of such plan, as such plan may be modified from time to time.
SECTION 4 - EMPLOYEE BENEFITS.
(a) Employee Retirement Benefit Programs, Welfare Benefit
Programs, Plans and Practices. Company shall provide Executive
with coverage under any retirement benefit programs, welfare
benefit programs, plans and practices, that Company makes
available to its senior executives, in accordance with the
terms thereof, as such programs, plans and practices may be
amended from time to time in accordance with their terms.
(b) Vacation. Executive shall be entitled to twenty (20) business
days of paid vacation each calendar year, which shall be taken
at such times as are consistent with Executive's
responsibilities hereunder. Vacation days shall be subject to
the Company's general policies regarding vacation days, as
such policies may be modified from time to time.
(c) Perquisites. During Executive's employment hereunder, Company
shall provide Executive, subject to review and approval by the
CEO, with such additional perquisites as are generally
available to similarly-situated executives.
(d) Stock Options. Executive shall be eligible to participate in
the TriMas Corporation 2002 Long Term Equity Incentive Plan in
accordance with the terms and conditions of such plan and any
grant agreements thereunder.
SECTION 5 - EXPENSES. Subject to prevailing Company policy or such
guidelines as may be established by the CEO or his delegee, Company will
reimburse Executive for all reasonable expenses incurred by Executive in
carrying out his duties.
SECTION 6 - TERMINATION OF EMPLOYMENT. The respective rights and
responsibilities of the parties to this Agreement notwithstanding, Executive
remains an employee-at-will, and his Term of Employment may be terminated by
either party at any time for any reason by written notice.
SECTION 6(a)
(a) Termination Without Cause or for Good Reason. If Executive's
employment is terminated during the Term of Employment by
Company for any reason other than Cause (as defined in Section
6(c) hereof), Disability (as defined in Section 6(e) hereof)
or death, or if Executive's employment is terminated by
Executive for Good Reason (as defined in Section 6(a)(2)
hereof), then Company shall pay Executive the Severance
Package. Any termination of employment that results from a
notice of nonrenewal given in accordance with Section 2 of
this Agreement shall not be a termination under this Section
6(a) but shall instead be a termination under Section 6(b)
below. Likewise, a termination by Executive without Good
Reason shall be a termination under Section 6(b) below and not
a termination under this Section 6(a).
(1) For purposes of this Agreement, "Severance Package"
shall mean:
(A) Base Salary continuation for twenty-four (24)
months at Executive's annual Base Salary rate
in effect on the date of termination, subject
to all applicable federal, state and local
withholding and reporting requirements. These
salary continuation payments shall be paid in
accordance with usual Company payroll
practices;
(B) A bonus equal to two hundred percent (200%) of
the target bonus opportunity under AVCP,
payable in equal installments over the
twenty-four (24) month period described in
Section 6(a)(1)(A) above, subject to the same
withholding and reporting requirements. In
addition, Executive shall receive the bonus for
the most recently completed bonus term if a
bonus has been declared for such term but not
paid, and a pro rata bonus for the year of
termination through the date of termination
calculated at one hundred percent (100%) of the
bonus opportunity for target performance for
that term, multiplied by a fraction the
numerator of which is the number of days that
Executive was employed during such bonus term
and the denominator of which is 365. The
prorated bonus for the final year shall be paid
in a single sum within ten (10) days of the
termination of Executive's employment with
Company. Any unpaid bonus shall be paid in
accordance with customary practices for payment
of bonuses under AVCP; and
(C) Continuation of benefits under any life, group
medical, and dental insurance benefits
substantially similar to those which Executive
was receiving immediately prior to termination
of employment until the earlier of:
SECTION 6(a)(1)(C)(i)
(i) the end of the twenty-four (24) month period
following Executive's termination of
employment, or
(ii) the date on which Executive becomes eligible to
receive any benefits under any plan or program
of any other employer.
The continuing coverage provided under this
Section 6(a)(1)(C) is subject to Executive's
eligibility to participate in such plans and all
other terms and conditions of such plans,
including without limitation, any employee
contribution requirements and Company's ability
to modify or terminate such plans or coverages.
Company may satisfy this obligation in whole or
in part by paying the premium otherwise payable
by Executive for continuing coverage under
Section 601 et seq. of the Employee Retirement
Income Security Act of 1974, as it may be amended
or replaced from time to time. If Executive is
not eligible for continued coverage under one of
the Company-provided benefit plans noted in this
paragraph (C) that he was participating in during
his employment, Company shall pay Executive the
cash equivalent of the insurance cost for the
duration of the applicable period at the rate of
the Company's cost of coverage for Executive's
benefits as of the date of termination. Any
obligation to pay the cash equivalent of such
cost under this item may be settled, at Company's
discretion, by a lump-sum payment of any
remaining premiums.
(2) For purposes of this Agreement, a termination of
employment by Executive for "Good Reason" shall be a
termination by Executive following the occurrence of
any of the following events unless Company has cured
as provided below:
(A) A material and permanent diminution in
Executive's duties or responsibilities;
(B) A material reduction in the aggregate value of
Base Salary and bonus opportunity; or
(C) A permanent reassignment of Executive to another
primary office, or a relocation of the Company
office that is Executive's primary office, unless
Executive's primary office following such
reassignment or relocation is within thirty-five
(35) miles of Executive's primary office before
the reassignment or relocation or Executive's
permanent residence on the date of the
reassignment or relocation.
SECTION 6(a)(2)(C)
Executive must notify Company of any event
constituting Good Reason within one hundred
twenty (120) days after Executive becomes aware
of such event or such event shall not constitute
Good Reason for purposes of this Agreement
provided that Company shall have fifteen (15)
days from the date of such notice to cure the
Good Reason event. Executive cannot terminate his
employment for Good Reason if Cause exists at the
time of such termination. A termination by
Executive following cure shall not be a
termination for Good Reason. A failure of
Executive to notify Company after the first
occurrence of an event constituting Good Reason
shall not preclude any subsequent occurrences of
such event (or similar event) from constituting
Good Reason.
(b) Voluntary Termination by Executive; Expiration of Employment
Term. If Executive terminates his employment with Company
without Good Reason, or if the Employment Term expires
following notice of nonrenewal by either party under Section
2, then Company shall pay Executive his accrued unpaid Base
Salary through the date of termination and the AVCP award for
the most recently completed year if an award has been declared
for such year but not paid. The accrued unpaid Base Salary
amounts payable under this Section 6(b) shall be payable in a
lump sum within ten (10) days of termination of employment.
Any accrued unpaid bonus amounts payable under this Section
6(b) shall be payable in accordance with customary practices
for payment of bonuses under AVCP. No prorated bonus for the
year of termination shall be paid. Any other benefits under
other plans and programs of Company in which Executive is
participating at the time of Executive's termination of
employment shall be paid, distributed, settled, or shall
expire in accordance with their terms, and Company shall have
no further obligations hereunder with respect to Executive
following the date of termination of employment.
(c) Termination for Cause. If Executive's employment is terminated
for Cause, Company shall pay Executive his accrued but unpaid
Base Salary through the date of the termination of employment,
and no further payments or benefits shall be owed. The accrued
unpaid Base Salary amounts payable under this Section 6(c)
shall be payable in a lump sum within ten (10) days of
termination of employment. As used herein, the term "Cause"
shall be limited to:
(1) Executive's conviction of or plea of guilty or nolo
contendere to a crime constituting a felony under the
laws of the United States or any state thereof or any
other jurisdiction in which Company conducts
business;
(2) Executive's willful misconduct in the performance of
his duties to Company;
(3) Executive's willful and continued failure to follow
the instructions of Company's Board or the CEO; or
5
SECTION 6(c)(4)
(4) Executive's willful and/or continued neglect of
duties (other than any such neglect resulting from
incapacity of Executive due to physical or mental
illness);
provided, however, that Cause shall arise under items (3) or
(4) only following ten (10) days written notice thereof from
Company which specifically identifies such failure or neglect
and the continuance of such failure or neglect during such
notice period. Any failure by Company to notify Executive
after the first occurrence of an event constituting Cause
shall not preclude any subsequent occurrences of such event
(or a similar event) from constituting Cause.
(d) Termination Following a Change of Control. In the event
Executive's employment with Company terminates by reason of a
Qualifying Termination (as defined below) within three (3)
years after a Change of Control of Company (as defined below),
then, in lieu of the Severance Package, and subject to the
limitations described in Section 7 below, the Company shall
provide Executive the following termination benefits:
(1) Termination Payments. Company shall pay Executive:
(A) A single sum payment equal to two hundred and
fifty percent (250%) of Executive's annual Base
Salary rate in effect on the date of
termination, subject to all applicable federal,
state and local withholding and reporting
requirements. This single-sum payment shall be
paid within ten (10) days of termination of
employment;
(B) A bonus equal to two hundred and fifty percent
(250%) of the target bonus opportunity under
AVCP. In addition, Executive shall receive the
bonus for the most recently completed bonus
term if a bonus has been declared for such term
but not paid, and a pro rata bonus for the year
of termination through the date of termination
calculated at one hundred percent (100%) of the
bonus opportunity for target performance for
that term, multiplied by a fraction the
numerator of which is the number of days that
Executive was employed during such bonus term
and the denominator of which is 365. The
prorated bonus for the final year shall be paid
as a single sum within ten (10) days of
termination of employment. Any unpaid bonus
shall be paid in accordance with customary
practices for payment of bonuses under AVCP.
All payments under this Section 6(d), however, are
subject to the timing rules, calculations and
adjustments described in Sections 7 and 8.
6
SECTION 6(d)(2)
(2) Benefits Continuation. Executive shall continue to receive
life, group medical and dental insurance benefits
substantially similar to those which Executive was receiving
immediately prior to the Qualifying Termination until the
earlier of:
(A) the end of the thirty (30) month period following
Executive's termination of employment, or
(B) the date on which Executive becomes eligible to
receive any benefits under any plan or program of any
other employer.
The continuing coverage provided under this Section 6(d)(2) is
subject to Executive's eligibility to participate in such
plans and all other terms and conditions of such plans,
including without limitation, any employee contribution
requirements and Company's ability to modify or terminate such
plans or coverages. Company may satisfy this obligation in
whole or in part by paying the premium otherwise payable by
Executive for continuing coverage under Section 601 et seq. of
the Employee Retirement Income Security Act of 1974, as it may
be amended or replaced from time to time. If Executive is not
eligible for continued coverage under one of the
Company-provided benefit plans noted in this paragraph (2)
that he was participating in during his employment, Company
shall pay Executive the cash equivalent of the insurance cost
for the duration of the applicable period at the rate of the
Company's cost of coverage for Executive's benefits as of the
date of termination. Any obligation to pay the cash equivalent
of such cost of coverage under this item may be settled, at
Company's discretion, by a lump-sum payment of any remaining
premiums.
(3) Qualifying Termination. For purposes of this Agreement, the
term "Qualifying Termination" means a termination of
Executive's employment with the Company for any reason other
than:
(A) death;
(B) Disability, as defined herein;
(C) Cause, as defined herein; or
(D) A termination by Executive without Good Reason, as
defined herein.
(4) Change of Control Defined. For purposes of this Agreement, a
"Change of Control" means the first of the following events to
occur following the date hereof:
7
SECTION 6(d)(4)(A)
(A) the sale, lease, or transfer in one or a series of related
transactions (i) of eighty percent (80%) or more of the
consolidated assets of the Company and its subsidiaries, or
(ii) of seventy-five percent (75%) or more (appropriately
adjusted for stock splits, combinations, subdivisions, stock
dividends and similar events) of the Capital Stock (as defined
below) of the Company acquired by Heartland Industrial
Partners, L.P. on the closing date under the Stock Purchase
Agreement among the Company, Heartland Industrial Partners,
L.P. and Metaldyne Corporation, dated as of May 17, 2002 (the
"Stock Purchase Agreement"), in either case to any Person
(within the meaning set forth in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934 ("1934 Act") or any
similar successor provision, and the rules, regulations and
interpretations promulgated thereunder) other than an
affiliate of Heartland Industrial Partners, L.P., whether by
way of any merger, consolidation or other business combination
or purchase of beneficial ownership (within the meaning under
Rule 13d-3 of the 0000 Xxx) or otherwise, but not including
(x) sales or transfers which are effected in order to comply
with the preemptive rights provisions of Section 4.05 of the
Metaldyne Shareholders Agreement with respect to the
investment by Heartland Industrial Partners, Inc. in the
Company pursuant to the Stock Purchase Agreement, or (y) sales
or transfers which are effected within one year after the date
of closing under the Stock Purchase Agreement at a price per
share of not greater than $20 plus any interest charged
(appropriately adjusted for stock splits, combinations,
subdivisions, stock dividends and similar events); or
(B) the date on which the individuals who constitute the Company's
Board of Directors on the date of this Agreement, and any new
members of the Company's Board of Directors who are hereafter
designated by the Heartland Entities (as defined below) cease,
for any reason, to constitute at least a majority of the
members of the Board of Directors.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in or other equivalents (however
designated) of such person's capital stock, and any rights (other than
debt securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock. "Heartland
Entities" means Heartland Industrial Partners, L.P., Heartland
Industrial Partners (FF), L.P., Heartland Industrial Partners (E1),
L.P., Heartland Industrial Partners (K1), L.P., Heartland Industrial
Partners (C1), L.P. or any controlled affiliate of any of these
entities.
8
SECTION 6(e)
(e) Disability. In the event that Executive is unable to perform
his duties under this Agreement on account of a disability
which continues for one hundred eighty (180) consecutive days
or more, or for an aggregate of one hundred eighty (180) days
in any period of twelve (12) months, Company may, in its
discretion, terminate Executive's employment hereunder.
Company's obligation to make payments under this Agreement
shall, except for earned but unpaid Base Salary and AVCP
awards, cease on the first to occur of (i) the date that is
six (6) months after such termination or (ii) the date
Executive becomes entitled to benefits under a
Company-provided long-term disability program. For purposes of
this Agreement, "Disability" shall be defined by the terms of
Company's long-term disability policy, or, in the absence of
such policy, as a physical or mental disability that prevents
Executive from performing substantially all of his duties
under this Agreement and which is expected to be permanent.
Company may only terminate Executive on account of Disability
after giving due consideration to whether reasonable
accommodations can be made under which Executive is able to
fulfill his duties under this Agreement. The commencement date
and expected duration of any physical or mental condition that
prevents Executive from performing his duties hereunder shall
be determined by a medical doctor selected by Company. Company
may, in its discretion, require written confirmation from a
physician of Disability during any extended absence.
(f) Death. In the event of Executive's death during the Term of
Employment, all obligations of Company to make any further
payments, other than an obligation to pay any accrued but
unpaid Base Salary to the date of death and any accrued but
unpaid bonuses under AVCP to the date of death, shall
terminate upon Executive's death.
(g) No Duplication of Benefits. Notwithstanding any provision of
this Agreement to the contrary, if Executive's employment is
terminated for any reason, in no event shall Executive be
eligible for payments under more than one subsection of this
Section 6.
(h) Payments Not Compensation. Any participation by Executive in,
and any terminating distributions and vested rights under,
Company-sponsored retirement or savings plans, regardless of
whether such plans are qualified or nonqualified for tax
purposes, shall be governed by the terms of those respective
plans. For purposes of determining benefits and the amounts to
be paid to Executive under such plans, any salary continuation
or severance benefits other than salary or bonus accrued
before termination shall not be compensation for purposes of
accruing additional benefits under such plans.
(i) Executive's Duty to Provide Materials. Upon the termination of
the Term of Employment for any reason, Executive or his estate
shall surrender to Company all correspondence, letters, files,
contracts, mailing lists, customer lists, advertising
material, ledgers, supplies, equipment, checks, and all other
materials and records of
9
SECTION 7(b)(3)
any kind that are the property of Company or any of its
subsidiaries or affiliates, that may be in Executive's
possession or under his control, including all copies of any
of the foregoing.
SECTION 7 - CAP ON PAYMENTS.
(a) General Rules. The Internal Revenue Code (the "Code") may
place significant tax burdens on Executive and Company if the
total payments made to Executive due to a Change of Control
exceed prescribed limits. For example, if Executive's "Base
Period Income" (as defined below) is $100,000, Executive's
limit or "Cap" is $299,999. If Executive's "Total Payments"
exceed the Cap by even $1.00, Executive is subject to an
excise tax under Section 4999 of the Code of 20% of all
amounts paid to Executive in excess of $100,000. In other
words, if Executive's Cap is $299,999, Executive will not be
subject to an excise tax if Executive receives exactly
$299,999. If Executive receives $300,000, Executive will be
subject to an excise tax of $40,000 (20% of $200,000). In
order to avoid this excise tax and the related adverse tax
consequences for Company, by signing this Agreement, Executive
will be agreeing that, subject to the exception noted below,
the present value of Executive's Total Payments will not
exceed an amount equal to Executive's Cap.
(b) Special Definitions. For purposes of this Section, the
following specialized terms will have the following meanings:
(1) "Base Period Income". "Base Period Income" is an
amount equal to Executive's "annualized includable
compensation" for the "base period" as defined in
Sections 280G(d)(1) and (2) of the Code and the
regulations adopted thereunder. Generally,
Executive's "annualized includable compensation" is
the average of Executive's annual taxable income from
Company for the "base period," which is the five
calendar years prior to the year in which the Change
of Control occurs. These concepts are complicated and
technical and all of the rules set forth in the
applicable regulations apply for purposes of this
Agreement.
(2) "Cap" or "280G Cap". "Cap" or "280G Cap" shall mean
an amount equal to 2.99 times Executive's "Base
Period Income." This is the maximum amount which
Executive may receive without becoming subject to the
excise tax imposed by Section 4999 of the Code or
which Company may pay without loss of deduction under
Section 280G of the Code.
(3) "Total Payments". The "Total Payments" include any
"payments in the nature of compensation" (as defined
in Section 280G of the Code and the
10
SECTION 7(b)(3)
regulations adopted thereunder), made pursuant to
this Agreement or otherwise, to or for Executive's
benefit, the receipt of which is contingent on a
Change of Control and to which Section 280G of the
Code applies.
(c) Calculating the Cap and Adjusting Payments. If Company
believes that these rules will result in a reduction of the
payments to which Executive is entitled under this Agreement,
it will so notify Executive as soon as possible. Company will
then, at its expense, retain a "Consultant" (which shall be a
law firm, a certified public accounting firm, and/or a firm of
recognized executive compensation consultants) to provide an
opinion or opinions concerning whether Executive's Total
Payments exceed the limit discussed above. Company will select
the Consultant. At a minimum, the opinions required by this
Section must set forth the amount of Executive's Base Period
Income, the present value of the Total Payments and the amount
and present value of any excess parachute payments. If the
opinions state that there would be an excess parachute
payment, Executive's payments under this Agreement will be
reduced to the extent necessary to eliminate the excess.
Executive will be allowed to choose the payment that should be
reduced or eliminated, but the payment Executive chooses to
reduce or eliminate must be a payment determined by such
Consultant to be includable in Total Payments. Executive's
decision shall be in writing and delivered to Company within
thirty (30) days of Executive's receipt of such opinions. If
Executive fails to so notify Company, Company will decide
which payments to reduce or eliminate. If the Consultant
selected to provide the opinions referred to above so requests
in connection with the opinion required by this Section, a
firm of recognized executive compensation consultants selected
by Company shall provide an opinion, upon which such
Consultant may rely, as to the reasonableness of any item of
compensation as reasonable compensation for services rendered
before or after the Change of Control. If Company believes
that Executive's Total Payments will exceed the limitations of
this Section, it will nonetheless make payments to Executive,
at the times stated above, in the maximum amount that it
believes may be paid without exceeding such limitations. The
balance, if any, will then be paid after the opinions called
for above have been received. If the amount paid to Executive
by Company is ultimately determined, pursuant to the opinion
referred to above or by the Internal Revenue Service, to have
exceeded the limitation of this Section, the excess will be
treated as a loan to Executive by Company and shall be
repayable on the ninetieth (90th) day following demand by
Company, together with interest at the lowest "applicable
federal rate" provided in Section 1274(d) of the Code. If it
is ultimately determined, pursuant to the opinion referred to
above or by the Internal Revenue Service, that a greater
payment should have been made to Executive, Company shall pay
Executive the amount of the deficiency, together with interest
thereon from the date such amount should have been paid to the
date of such payment, at the rate set forth above, so that
Executive will have received or be entitled to receive the
maximum amount to which Executive is entitled under this
Agreement.
11
SECTION 7(d)
(d) Effect of Repeal. In the event that the provisions of Sections
280G and 4999 of the Code are repealed without succession,
this Section shall be of no further force or effect.
(e) Exception. The Consultant selected pursuant to Section 7(c)
will calculate Executive's "Uncapped Benefit" and Executive's
"Capped Benefit." The limitations of Section 7(a) will not
apply to Executive if Executive's Uncapped Benefit is at least
one hundred and five percent (105%) of Executive's Capped
Benefit. For this purpose, Executive's "Uncapped Benefit" is
the amount to which Executive would be entitled pursuant to
Section 6(d), without regard to the limitations of Section
7(a). Executive's "Capped Benefit" is the amount to which
Executive would be entitled pursuant to Section 6(d) after the
application of the limitations of Section 7(a).
SECTION 8 - TAX GROSS-UP.
(a) Gross-Up Payment. If the Cap imposed by Section 7(a) does not
apply to Executive because of the exception provided by
Section 7(e), Company will provide Executive with a "Gross-Up
Payment" if an excise tax is imposed on Executive pursuant to
Section 4999 of the Code. Except as otherwise noted below,
this Gross-Up Payment will consist of a single lump sum
payment in an amount such that after payment by Executive of
the "total presumed federal and state taxes" and the excise
taxes imposed by Section 4999 of the Code on the Gross-Up
Payment (and any interest or penalties actually imposed),
Executive would retain an amount of the Gross-Up Payment equal
to the remaining excise taxes imposed by Section 4999 of the
Code on Executive's Total Payments (calculated before the
Gross-Up Payment). For purposes of calculating Executive's
Gross-Up Payment, Executive's actual federal and state income
taxes will not be used. Instead, Company will use Executive's
"total presumed federal and state taxes." For purposes of this
Agreement, Executive's "total presumed federal and state
taxes" shall be conclusively calculated using a combined tax
rate equal to the sum of the maximum marginal federal and
applicable state income tax rates. The state tax rate for
Executive's principal place of residence will be used and no
adjustments will be made for the deduction of state taxes on
the federal return, any deduction of federal taxes on a state
return, the loss of itemized deductions or exemptions, or for
any other purpose.
(b) Calculations. All determinations concerning whether a Gross-Up
Payment is required pursuant to Section 8(a) and the amount of
any Gross-Up Payment (as well as any assumptions to be used in
making such determinations) shall be made by the Consultant
selected pursuant to Section 7(c). The Consultant shall
provide Executive and Company with a written notice of the
amount of the excise taxes that Executive is required to pay
and the amount of the Gross-Up Payment. The notice from the
Consultant shall include any necessary calculations in support
of its conclusions. All fees and expenses of the Consultant
shall be paid by Company. Any Gross-Up
12
SECTION 8(b)
Payment shall be made by Company within fifteen (15) days
after the mailing of such notice. As a general rule, the
Consultant's determination shall be binding on Executive and
Company. The application of the excise tax rules of Section
4999, however, is complex and uncertain and, as a result, the
Internal Revenue Service may disagree with the Consultant
concerning the amount, if any, of the excise taxes that are
due. If the Internal Revenue Service determines that excise
taxes are due, or that the amount of the excise taxes that are
due is greater than the amount determined by the Consultant,
the Gross-Up Payment will be recalculated by the Consultant to
reflect the actual excise taxes that Executive is required to
pay (and any related interest and penalties). Any deficiency
will then be paid to Executive by Company within fifteen (15)
days of the receipt of the revised calculations from the
Consultant. If the Internal Revenue Service determines that
the amount of excise taxes that Executive paid exceeds the
amount due, Executive shall return the excess to Company
(along with any interest paid to Executive on the overpayment)
immediately upon receipt from the Internal Revenue Service or
other taxing authority. Company has the right to challenge any
excise tax determinations made by the Internal Revenue
Service. If Company agrees to indemnify Executive from any
taxes, interest and penalties that may be imposed upon
Executive (including any taxes, interest and penalties on the
amounts paid pursuant to Company's indemnification agreement),
Executive must cooperate fully with Company in connection with
any such challenge. Company shall bear all costs associated
with the challenge of any determination made by the Internal
Revenue Service and Company shall control all such challenges.
The additional Gross-Up Payments called for by the preceding
paragraph shall not be made until Company has either exhausted
its (or Executive's) rights to challenge the determination or
indicated that it intends to concede or settle the excise tax
determination. Executive must notify Company in writing of any
claim or determination by the Internal Revenue Service that,
if upheld, would result in the payment of excise taxes in
amounts different from the amount initially specified by the
Consultant. Such notice shall be given as soon as possible but
in no event later than fifteen (15) days following Executive's
receipt of notice of the Internal Revenue Service's position.
SECTION 9 - NOTICES. All notices or communications hereunder shall be
in writing, addressed as follows:
To Company: TriMas Corporation
c/o Heartland Industrial Partners, L.P.
00 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
13
SECTION 9
with a copy to: R. Xxxxxxx Xxxxxxx, Esq.
McDonald, Hopkins, Xxxxx &
Xxxxx Co., L.P.A.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
To Executive:
---------------------------------
---------------------------------
---------------------------------
with a copy to:
---------------------------------
---------------------------------
---------------------------------
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third (3rd) business day
after the actual date of mailing shall constitute the time at which notice was
given.
SECTION 10 - SEPARABILITY; LEGAL FEES. If any provision of this
Agreement shall be declared to be invalid or unenforceable, in whole or in part,
such invalidity or unenforceability shall not affect the remaining provisions
hereof which shall remain in full force and effect. In the event of a dispute by
Company, Executive or others as to the validity or enforceability of, or
liability under, any provision of this Agreement, Company shall reimburse
Executive for all reasonable legal fees and expenses incurred by him in
connection with such dispute if Executive substantially prevails in the dispute
and if Executive has not substantially prevailed in such dispute one-half (1/2)
the amount of all reasonable legal fees and expenses incurred by him in
connection with such dispute except to the extent Executive's position is found
by a tribunal of competent jurisdiction to have been frivolous.
SECTION 11 - ASSIGNMENT AND ASSUMPTION. This contract shall be binding
upon and inure to the benefit of the heirs and representatives of Executive and
the assigns and successors of Company, but neither this Agreement nor any rights
or obligations hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation of the laws of
intestate succession) or by Company, except that Company may assign this
Agreement to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or business of Company.
SECTION 12 - AMENDMENT. This Agreement may only be amended by written
agreement of the parties hereto.
14
SECTION 13
SECTION 13 - NON-COMPETITION; NON-SOLICITATION; CONFIDENTIALITY.
(a) Executive represents that acceptance of employment under this
Agreement and performance under this Agreement are not in
violation of any restrictions or covenants under the terms of
any other agreements to which Executive is a party.
(b) Executive acknowledges and recognizes the highly competitive
nature of the business of Company and accordingly agrees that,
in consideration of this Agreement, the rights conferred
hereunder, and any payment hereunder, during the Term of
Employment and for the two (2) year period following the
termination of Executive's employment with Company, for any
reason ("Non-Compete Term"), Executive shall not engage,
either directly or indirectly, as a principal for Executive's
own account or jointly with others, or as a stockholder in any
corporation or joint stock association, or as a partner or
member of a general or limited liability entity, or as an
employee, officer, director, agent, consultant or in any other
advisory capacity in any business other than Company or its
subsidiaries which designs, develops, manufacturers,
distributes, sells or markets the type of products or services
sold, distributed or provided by Company or its subsidiaries
during the two (2) year period prior to the date of
termination (the "Business"); provided that nothing herein
shall prevent Executive from owning, directly or indirectly,
not more than five percent (5%) of the outstanding shares of,
or any other equity interest in, any entity engaged in the
Business and listed or traded on a national securities
exchanges or in an over-the-counter securities market.
(c) During the Non-Compete Term, Executive shall not (i) directly
or indirectly employ or solicit, or receive or accept the
performance of services by, any active employee of Company or
any of its subsidiaries who is employed primarily in
connection with the Business, except in connection with
general, non-targeted recruitment efforts such as
advertisements and job listings, or directly or indirectly
induce any employee of Company to leave Company, or assist in
any of the foregoing, or (ii) solicit for business (relating
to the Business) any person who is a customer or former
customer of Company or any of its subsidiaries, unless such
person shall have ceased to have been such a customer for a
period of at least six (6) months.
(d) Executive shall not at any time (whether during or after his
employment with Company) disclose or use for Executive's own
benefit or purposes or the benefit or purposes of any other
person, firm, partnership, joint venture, association,
corporation or other business organization, entity or
enterprise other than Company and any of its subsidiaries, any
trade secrets, information, data, or other confidential
information of the Company, including but not limited to,
information relating to customers, development programs,
costs, marketing, trading, investment, sales activities,
promotion, credit and financial data, financing methods, plans
or the business and affairs of Company generally, or of any
subsidiary of Company, unless
15
SECTION 13(d)
required to do so by applicable law or court order, subpoena
or decree or otherwise required by law, with reasonable
evidence of such determination promptly provided to Company.
The preceding sentence of this paragraph (d) shall not apply
to information which is not unique to Company or which is
generally known to the industry or the public other than as a
result of Executive's breach of this covenant. Executive
agrees that upon termination of employment with Company for
any reason, Executive will return to Company immediately all
memoranda, books, papers, plans, information, letters and
other data, and all copies thereof or therefrom, in any way
relating to the business of Company and its subsidiaries,
except that Executive may retain personal notes, notebooks and
diaries. Executive further agrees that Executive will not
retain or use for Executive's account at any time any trade
names, trademark or other proprietary business designation
used or owned in connection with the business of Company or
its subsidiaries.
(e) It is expressly understood and agreed that although Executive
and Company consider the restrictions contained in this
Section 13 to be reasonable, if a final judicial determination
is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement
is an unenforceable restriction against Executive, the
provisions of this Agreement shall not be rendered void but
shall be deemed amended to apply as to such maximum time and
territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable.
Alternatively, if any tribunal of competent jurisdiction finds
that any restriction contained in this Agreement is
unenforceable, and such restriction cannot be amended so as to
make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained
herein.
(f) As a condition to the receipt of any benefits described in
this Agreement, Executive shall be required to execute an
agreement pursuant to which Executive releases any claims he
may have against Company and agrees to the continuing
enforceability of the restrictive covenants of this Agreement.
(g) This Section 13 will survive the termination of this
Agreement.
SECTION 14 - REMEDIES. Executive acknowledges and agrees that Company's
remedies at law for a breach or threatened breach of any of the provisions of
Section 13 would be inadequate and, in recognition of this fact, Executive
agrees that, in the event of such a breach or threatened breach, in addition to
any remedies at law, Executive shall forfeit all payments otherwise due under
this Agreement and shall return any Severance Package payment made. Moreover,
Company, without posting any bond, shall be entitled to seek equitable relief in
the form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.
16
SECTION 13(d)
SECTION 15- SURVIVORSHIP. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 15 are in addition to the survivorship provisions of
any other section of this Agreement.
SECTION 16 - GOVERNING LAW; REVENUE AND JURISDICTION. If any judicial
or administrative proceeding or claim relating to or pertaining to this
Agreement is initiated by either party hereto, such proceeding or claim shall
and must be filed in a state or federal court located in Xxxxx County, Michigan
and such proceeding or claim shall be governed by and construed under Michigan
law, without regard to conflict of law and principals.
SECTION 17 - DISPUTE RESOLUTION. Any dispute related to or arising
under this Agreement shall be resolved in accordance with the TriMas Dispute
Resolution Policy in effect at the time such dispute arises. The TriMas Dispute
Resolution Policy in effect at the time of this Agreement is attached to this
Agreement.
SECTION 18 - EFFECT ON PRIOR AGREEMENTS. This Agreement contains the
entire understanding between the parties hereto and supersedes in all respects
any prior or other agreement or understanding, both written and oral, between
Company, any parent, subsidiary or affiliate of Company or any predecessor of
Company or parent, subsidiary, or affiliate of any predecessor of Company and
Executive.
SECTION 19 - WITHHOLDING. Company shall be entitled to withhold from
payment any amount of withholding required by law.
SECTION 20 - SECTION HEADINGS AND CONSTRUCTION. The headings of
sections in this Agreement are provided for convenience only and will not effect
its construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding section or sections of this Agreement unless
otherwise specified. All words used in this Agreement will be construed to be of
such gender or number as circumstances require.
SECTION 21 - COUNTERPARTS. This Agreement may be executed in one (1) or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same Agreement.
17
Intending to be legally bound hereby, the parties have executed this
Agreement on the dates set forth next to their names below.
COMPANY
TRIMAS CORPORATION
By: /s/ Xxxxx X. Xxxxx
------------------------------ ------------------
Date
Its: President & CEO
------------------
EXECUTIVE
/s/ Xxxxx X. Xxxxxxxx
------------------------------ -----------------------------------
Date
------------------
18
