AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT CLASS A-1
Exhibit 10.1.1
AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT
CLASS A-1
CLASS A-1
THIS AGREEMENT, amended and restated as of , 2008, between Trinity Industries,
Inc., a Delaware corporation (the “Company”) and (the “Executive”) amends and
restates that certain Executive Severance Agreement entered into between the Company and the
Executive as of
,
.
WITNESSETH
WHEREAS, the Company’s Board of Directors has determined that it is appropriate to reinforce
and encourage the continued attention and dedication of members of the Company’s management,
including the Executive, to their assigned duties without distraction in potentially disturbing
circumstances arising from the possibility of a Change in Control of the Company (as hereinafter
defined); and
WHEREAS, in consideration for the benefits provided under this Agreement, the Executive will
continue to give his or her attention and dedication to his or her duties with the Company; and
WHEREAS, the Company and the Executive wish to amend and restate that certain Executive
Severance Agreement by and between the Company and the Executive which was executed as of the date
stated above in order to revise or clarify certain provisions to carry out the purposes of such
agreement;
NOW, THEREFORE, this Agreement sets forth the severance compensation which the Company agrees
it will pay to the Executive if the Executive’s employment with the Company terminates under one of
the circumstances described herein in connection with a Change in Control of the Company.
1. Term. This Agreement shall terminate, except to the extent that any obligation of the
Company hereunder remains unpaid as of such time, upon the earliest of:
(a) September 9, 2010; provided, however, that, commencing on September 9, 2009 and on each
anniversary date thereafter (each such date, an “Anniversary Date”), the expiration date under this
clause (a) shall automatically be extended for one additional year unless, not later than the
December 31 immediately prior to such Anniversary Date, either party shall have given written
notice that it does not wish to extend this Agreement, but in no event shall the expiration date
under this clause (a) be earlier than the second anniversary of the Effective Date of a Change in
Control.
(b) the termination of the Executive’s employment with the Company based on death, Disability
(as defined in Section 3(b) hereof) or Cause (as defined Section 3(c) hereof); and
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(c) the voluntary resignation of the Executive for any reason other than Good Reason (as
defined in Section 3(d)).
2. Change in Control.
(a) Acceleration of Vesting and Extension of Exercise Rights of Equity Compensation Upon a
Change in Control. In addition to any provisions concerning acceleration of vesting in any
applicable plan or agreement relating to equity-type compensation that may be outstanding between
the Executive and the Company or any subsidiary of the Company (including, without limitation, any
stock option agreement, restricted stock agreement, career share agreement, bridge share agreement,
performance incentive plan agreement, and performance unit plan agreement), and notwithstanding any
provision to the contrary in any such plan or agreement, upon the Effective Date of a Change in
Control all units, stock options, incentive stock options, performance shares, performance awards,
and stock appreciation rights then held by the Executive shall immediately become 100% vested and
exercisable, and the Executive shall become 100% vested in all career shares, bridge shares, and
shares of restricted stock, held by or for the benefit of the Executive.
In addition to any provisions concerning extension of exercise rights in any applicable plan
or agreement relating to equity-type rights or compensation that may be outstanding between the
Executive and the Company or any subsidiary of the Company (including, without limitation, any
stock option agreement, restricted stock agreement, career share agreement, bridge share agreement,
performance incentive plan agreement, and performance unit plan agreement), and notwithstanding any
provision to the contrary in any such plan or agreement, upon the Effective Date of a Change in
Control the Executive’s right to exercise any previously unexercised options or other equity-type
rights shall not terminate until the latest date on which the option or other right granted under
such agreement would expire under the terms of such agreement but for the Executive’s termination
of employment; with respect to any incentive stock option held by the Executive, if not exercised
within three months after termination of employment, such options shall immediately convert to
non-qualified stock options.
(b) Acceleration of Vesting of Retirement and Deferred Compensation Benefits Upon a Change in
Control. In addition to any provisions concerning acceleration of vesting in any applicable plan
or agreement relating to retirement or deferred compensation-type benefits that may be outstanding
between the Executive and the Company (including, without limitation, the Company’s Profit Sharing
Plan, Supplemental Profit Sharing Plan, and Deferred Compensation Plan and Agreement), and
notwithstanding any provision to the contrary in any such plan or agreement, upon the Effective
Date of a Change in Control all accounts, interests, rights, and benefits of the Executive in any
such plan or agreement shall immediately become 100% vested and exercisable; however, such
acceleration shall not apply to the Company’s Pension Plan for Salaried Employees.
(c) No Other Compensation Paid Prior to Termination of Employment. Except as provided in
paragraphs (a) and (b) of this Section 2, no compensation shall be payable or benefits
provided under this Agreement unless and until (x) there shall have been a Change in Control of the
Company, and (y) the Executive’s employment by the Company is terminated.
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(d) Definition of Change in Control. For purposes of this Agreement, a “Change in Control” of
the Company shall be deemed to have occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power of the
Company’s then-outstanding securities, unless the transaction resulting in a Person becoming
the Beneficial Owner of 30% or more of the combined voting power of the Company’s
then-outstanding securities is approved in advance by the Company’s Board of Directors
(sometimes hereafter referred to as the “Board”), excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (A) of paragraph (iii)
below; or
(ii) the following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on September 9, 2008, constitute the
Board and any new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on September 9, 2008 or whose
appointment, election or nomination for election was previously so approved or recommended;
or
(iii) there is consummated a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity
or any parent thereof) at least 60% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the Company (not including in
the securities Beneficially Owned by such Person any securities acquired directly from the
Company or its Affiliates other than in connection with the acquisition by the Company or
its Affiliates of a business) representing 30% or more of the combined voting power of the
Company’s then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company, or a sale or disposition (whether by reorganization, merger,
consolidation, split-up, spin-off, split-off, combination, subdivision, or other similar
corporate transaction or event) by the Company of all or substantially all of the Company’s
assets (in one transaction or a series of transactions within any period of 24 consecutive
months) other than a sale or disposition by the Company of all or substantially all of the
Company’s assets to an entity, at least 60% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior
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to such sale. However, a sale or disposition by the Company of all or substantially
all of the Company’s assets to an entity (or two or more entities in one transaction or a
series of transactions within any period of 24 consecutive months), at least 60% of the
combined voting power of the voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their ownership of the Company immediately
prior to such sale or disposition shall be considered a Change in Control of the Company for
purposes of this Agreement if the Executive is not offered employment with such entity (or
one of such entities) on terms comparable to those described in Section 3(g) hereof.
The sale or disposition of a subsidiary or a division of the Company, or certain assets of
the Company (or of a subsidiary of the Company), shall not be a Change in Control unless any
such transaction or series of related transactions results in a sale or disposition by the
Company of all or substantially all of the Company’s assets as provided in subparagraph (iv)
above.
For purposes hereof:
“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12
of the Exchange Act.
“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange
Act.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time.
“Person” shall have the meaning given in Section 3(a) (9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its Affiliates,
(iii) an underwriter temporarily holding securities pursuant to an offering of such
securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the Company.
(e) Definition of Effective Date of a Change in Control. For purposes of this Agreement,
“Effective Date of a Change in Control” shall mean the first to occur of (A) the date on which a
Person first becomes the Beneficial Owner of 30% or more of the combined voting power of the
Company’s then outstanding securities as defined in subparagraph (d)(i) above, or (B) the effective
date of the election of one or more directors to the Board which results in the individuals defined
in subparagraph (d)(ii) above ceasing to constitute a majority of the number of directors then
serving, or (C) the effective date of the consummation of a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation as defined in
subparagraph (d)(iii) above, or (D) the effective date of a liquidation or dissolution of the
Company, or a sale or disposition by the Company of all or substantially all of the Company’s
assets, as defined in subparagraph (d)(iv) above.
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3. Termination Following Change in Control.
(a) Compensation Payable Upon Termination. If a Change in Control of the Company shall have
occurred, the Executive shall be entitled to the compensation provided in Section 4 hereof
upon the termination of the Executive’s employment with the Company by the Executive or by the
Company unless such termination is as a result of:
(i) the Executive’s death;
(ii) the Executive’s Disability (as defined in Section 3(b) below;
(iii) the Executive’s termination by the Company for Cause (as defined in Section
3(c) below); or
(iv) the Executive’s decision to terminate employment other than for Good Reason (as
defined in Section 3(d) below).
Notwithstanding the foregoing provisions of this Section 3, if the Executive’s
employment is terminated by the Company other than for Cause or Disability (for purposes of this
paragraph, Cause shall include all of the events set forth in Section 3(c) hereof and the
following: willfully engaging by the Executive in continued misconduct which is materially
injurious to the Company after having been advised in writing of the particular misconduct deemed
by the Company to be materially injurious to the Company and instructed in such writing to cease
any further misconduct of a similar nature) prior to a Change in Control, and it is reasonably
demonstrated that such termination (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with a
Change in Control, then for all purposes of this Agreement, such termination shall be deemed to
have occurred immediately following a Change in Control; in addition, if the Executive’s employment
is terminated by the Company other than for Cause (as defined in this paragraph) or Disability
within 90 days prior to a Change in Control, such termination shall conclusively be deemed to have
occurred following a Change in Control. For further clarification, in the event of a termination
of employment prior to a Change in Control that is treated as having occurred after a Change in
Control, the Executive shall not be entitled to benefits under Section 4 hereof if the
Executive voluntarily terminated his or her employment whether or not for Good Reason.
(b) Disability. If, as a result of the Executive’s incapacity due to physical or mental
illness, the Executive shall have been absent from his or her duties with the Company on a
full-time basis for one year and within thirty days after written Notice of Termination (as
hereinafter defined) is thereafter given by the Company, the Executive shall not have returned to
the full-time performance of the Executive’s duties, the Company may terminate this Agreement for
“Disability.”
(c) Cause. The Company may terminate the Executive’s employment for Cause. For purposes of
this Agreement only, the Company shall have “Cause” to terminate the Executive’s employment
hereunder only on the basis of:
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(i) the willful and continued failure by the Executive to substantially perform the
Executive’s duties with the Company (other than any such failure resulting from the
Executive’s incapacity due to physical or mental illness and other than in respect of any
duties inconsistent with, or more burdensome than, the Executive’s duties with the Company
immediately prior to a Change in Control of the Company);
(ii) misappropriation or embezzlement from the Company or any other act or acts of
dishonesty by the Executive constituting a felony that results, or is intended to result,
directly or indirectly, in gain to or personal enrichment of the Executive at the Company’s
expense;
(iii) the conviction of the Executive of a felony involving the moral turpitude of the
Executive; or
(iv) the refusal of the Executive to accept offered employment after a Change in
Control which complies with the terms and conditions of Section 3(g) hereof.
For purposes of this Section 3(c), no act or failure to act on the part of the Executive
shall be considered “willful” unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the action or omission of the Executive was in the best
interest of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for the purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together with the Executive’s
counsel, to be heard before the Board), finding that the Executive was guilty of conduct set forth
in this Section 3(c) and specifying the particulars thereof in detail.
(d) Good Reason. The Executive may terminate the Executive’s employment for Good Reason at
any time after the Effective Date of a Change in Control of the Company. For purposes of this
Agreement “Good Reason” shall mean the occurrence of any of the following unless the Executive has
given his or her express prior written consent:
(i) a good faith determination by the Executive that there has been a material adverse
change in the Executive’s working conditions or responsibilities relative to the most
favorable working conditions, and responsibilities applicable to the Executive during the 12
month period prior to the Change in Control (including, but not limited to, a significant
reduction in the level of support services, staff, secretarial and other assistance, office
space, and accoutrements);
(ii) the assignment to the Executive by the Company of duties inconsistent with the
Executive’s position, duties, and reporting responsibilities with the Company immediately
prior to a Change in Control of the Company (including, but not limited to, a reduction in
the nature or scope of the Executive’s authority, powers, functions, or duties), or a change
in the Executive’s titles or offices as in effect immediately prior to a Change in Control
of the Company, or any removal of the Executive from or any failure to reelect the Executive
to any of such positions, except in connection with the
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termination of his or her employment for Disability or Cause, or as a result of the
Executive’s death, or by the Executive other than for Good Reason;
(iii) a reduction by the Company in the Executive’s base salary as in effect on the
date hereof or as the same may be increased from time to time during the term of this
Agreement, or the Company’s failure to increase (within 12 months of the Executive’s last
increase in base salary) the Executive’s base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the average percentage
increase in base salary for all officers of the Company effected in the preceding 12 months;
(iv) any action by the Company which would adversely affect the Executive’s
participation in or materially reduce the Executive’s benefits, in the aggregate, under the
Benefit Plans, Incentive Plans, and Securities Plans; “Benefit Plans” include health and
welfare benefit plans in which the Executive is participating at the time of a Change in
Control of the Company (including, without limitation, the Company’s pension plans, group
life insurance plan, and medical, dental, accident and disability plans); “Incentive Plans”
include incentive compensation plans in which the Executive is participating at the time of
a Change in Control of the Company (including, without limitation, the Company’s annual
incentive compensation plan and the three-year Performance Incentive Plan); and “Securities
Plans” include any plan or arrangement to receive securities of the Company in which the
Executive is participating at the time of a Change in Control of the Company (including,
without limitation, the Company’s Stock Option Plan, and any other plan or arrangement to
receive and exercise stock options, stock appreciation rights, career shares, bridge shares,
restricted stock or grants thereof).
(v) a relocation of the Company’s principal executive offices to a location outside of
Dallas County, Texas, or the Executive’s relocation to any place other than the location at
which the Executive performed the Executive’s duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company’s business to an extent
substantially consistent with the Executive’s business travel obligations at the time of a
Change in Control of the Company;
(vi) any failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled at the time of a Change in Control of the
Company;
(vii) any material breach by the Company of any provision of this Agreement;
(viii) any failure by the Company to obtain the assumption of this Agreement by any
successor or assign of the Company;
(ix) any purported termination of the Executive’s employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section 3(e)
below, and for purposes of this Agreement, no such purported termination shall be effective;
or
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(x) voluntary resignation by the Executive, or termination of employment by reason of
the Executive’s death or Disability, at any time during either:
(A) the 90-day period beginning on the Effective Date of a Change in Control; or
(B) the 30-day period beginning on the 365th day after the Effective
Date of a Change in Control.
(e) Notice of Termination. Any termination by the Company pursuant to Section 3(b),
3(c) or 3(d) shall be communicated by a Notice of Termination. For purposes of
this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate those
specific termination provisions in this Agreement relied upon and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated. For purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice of Termination.
(f) Date of Termination. “Date of Termination” shall mean (a) if this Agreement is terminated
by the Company for Disability, thirty days after Notice of Termination is given to the Executive
(provided that the Executive shall not have returned to the performance of the Executive’s duties
on a full-time basis during such 30-day period), (b) if the Executive’s employment is terminated by
the Company for any other reason, the date on which a Notice of Termination is given, or (c) if the
Executive terminates his or her employment for Good Reason, the date on which a Notice of
Termination is given.
(g) Continued Employment After Change in Control. If a Change in Control has occurred, the
Executive shall not be treated as having terminated employment for purposes of this Agreement, and
therefore will not be entitled to any benefits under this Agreement after such Change in Control,
if (i) the unit, division, or subsidiary for which the Executive primarily provides services is
spun-off, sold, or otherwise disposed of, (ii) such transaction (x) was approved by a vote of at
least two-thirds (2/3) of the directors of the Company who satisfy the requirements of subparagraph
(d)(ii) of Section 2 above, and (y) did not originate with an unsolicited offer (as
determined by the Board in good faith), and (iii) the Executive is offered employment in writing
with the purchasing or continuing entity, and (iv) such purchasing or continuing entity enters into
a written agreement with the Company and the Executive, which is approved by a vote of at least 2/3
of the directors of the Company who satisfy the requirement of subparagraph (d)(ii) of Section
2 hereof, which expressly, absolutely, and unconditionally assumes and agrees to perform this
Agreement in the same manner and to the same extent that a successor to all or substantially all of
the business and/or assets of the Company would be required as provided in Section 8 hereof
(except that subparagraph (d)(x) of Section 3 shall not be applicable to any such
Executive), and it shall be conclusively presumed for purposes of such agreement that a Change in
Control has occurred with respect to the Executive.
4. Severance Compensation upon Termination of Employment. The Company may terminate the
Executive’s employment at any time; however, if (a) during the two-year period beginning on the
Effective Date of a Change in Control, the Company shall terminate the Executive’s employment other
than pursuant to Section 3(b) or 3(c) or if the Executive shall terminate his or
her employment for Good Reason or (b) during any period of time after a
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Change in Control has occurred but prior to either the Effective Date of a Change in Control
or the date on which the Board (or shareholders of the Company, if applicable) takes any action
which has the effect of rescinding or nullifying the Change in Control (or on the date a Change of
Control is rescinded or nullified without the necessity of any such action), the Company shall
terminate the Executive’s employment other than pursuant to Section 3(b) or 3(c) or
if the Executive shall terminate his or her employment for Good Reason other than pursuant to
Section 3(d)(x), then as severance pay:
(a) The Company shall pay to the Executive in a lump sum, in cash, on or before the fifth day
following the Date of Termination, an amount equal to three (3.0) times the sum of (A) the
Executive’s base salary as in effect immediately prior to the Change in Control or, if higher, in
effect immediately prior to the Date of Termination, plus the annual allowance for the Executive
under the Company’s Executive Perquisite Program, and (B) the greater of (i) the average bonus
(under all Company bonus plans for which the Executive is eligible) earned with respect to the
three most recently completed full fiscal years (or, if the Executive has not been employed for at
least three full fiscal years, all of completed full fiscal years during which he or she has been
employed), or (ii) the target bonus (under all Company bonus plans for which the Executive is
eligible) for the fiscal year in which the Change in Control occurs.
(b) For a period of thirty-six (36) months subsequent to the Executive’s Date of Termination,
the Company shall at its expense continue on behalf of the Executive and his or her dependents and
beneficiaries, all medical, dental, vision, health, and life insurance benefits, which were being
provided to the Executive at the time of termination of employment. The benefits provided in this
Section 4(b) shall be no less favorable to the Executive, in terms of amounts and
deductibles and costs to him, than the coverage in effect immediately prior to the Change in
Control (or, if more favorable to tile Executive, immediately prior to the Notice of Termination).
The Company’ s obligation hereunder to provide a benefit shall terminate if the Executive obtains
comparable coverage under a subsequent employer’s benefit plan. For purposes of the preceding
sentence, benefits will not be comparable during any waiting period for eligibility, for such
benefits or during any period during which there is a preexisting condition limitation on such
benefits. The Company also shall pay a lump sum equal to the amount of any additional income tax
payable by the Executive and attributable to the benefits provided under this subparagraph (b) at
the time such tax is imposed upon the Executive. In the event that the Executive’s participation
in any such coverage is barred under the general terms and provisions of the plans and programs
under which such coverage is provided, or any such coverage is discontinued or the benefits
thereunder are materially reduced, the Company shall provide or arrange to provide the Executive
with benefits substantially similar to those which the Executive was entitled to receive under such
coverage immediately prior to the Notice of Termination. At the end of the period of coverage set
forth above, the Executive shall have the option to have assigned to him at no cost to the
Executive and with no apportionment of prepaid premiums, any assignable insurance owned by the
Company and relating specifically to the Executive, and the Executive shall be entitled to all
health and similar benefits that are or would have been made available to the Executive under law
(including continuation coverage under COBRA).
(c) The Company shall pay to the Executive and, if applicable, to his or her beneficiaries, in
cash, on or before the fifth day following the Date of Termination, a lump sum representing the
present value of the excess of (i) the benefit (expressed as a life annuity
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commencing at age 65 or such earlier date as of which the actuarial equivalent of such annuity
is greatest) that the Executive would have accrued under the provisions of the Company’s Pension
Plan for Salaried Employees in effect immediately prior to the Change in Control had the Executive
continued to be employed for an additional thirty-six months following the Date of Termination at
the annual rate of compensation (exclusive of the annual allowance for the Executive under the
Company’s Executive Perquisite Program) taken into account under clause (a) hereof (taking such
thirty-six months into account both for vesting and for benefits), over (ii) the benefit actually
accrued by the Executive under such plan. For purposes hereof, “present value” shall be determined
using a per annum discount rate as established from time to time for the Company’s Pension Plan for
Salaried Employees and “actuarial equivalent” shall be determined using the same assumptions
utilized under such plan. In addition, with respect to the benefits attributable to the additional
thirty-six months, the benefit under (i) above shall be calculated without regard to the
limitations of Section 415 and Section 401(a)(17) of the Internal Revenue Code of 1986, as amended
(the “Code”), and such amount shall be paid without regard to any vesting requirement in such plan.
The foregoing payments shall be subject to withholding of federal, state and local income,
FICA and similar taxes, if required by law.
5. Gross-Up Payment.
(a) Total Payments. Whether or not the Executive becomes entitled to the payments
under Section 4 hereof, if any of the payments or benefits received or to be received by
the Executive in connection with a Change in Control or the Executive’s termination of employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with
the Company, any Person whose actions result in a Change in Control or any Person affiliated with
the Company or such Person) (such payments or benefits, excluding the Gross-Up Payment, being
hereinafter referred to as the “Total Payments”) would be subject to the excise tax imposed under
Section 4999 of the Code (the “Excise Tax”), the Company shall pay to the Executive an additional
amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction
of any Excise Tax on the Total Payments and any federal, state and local income and employment
taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes
of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal
income taxes at the highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates
of taxation in the state and locality of the residence of the Executive on the Date of Termination,
net of the maximum reduction in federal income taxes which could be obtained from deduction of such
state and local taxes.
(b) Determination By Accountant. All determinations required to be made under this
Section 5, including whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by the independent accounting firm which served as the Company’s auditor
immediately prior to the Change in Control (the “Accounting Firm”), which shall provide detailed
supporting calculations both to the Company and the Executive within fifteen (15) business days
after the Date of Termination, if applicable, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is also serving as accountant or auditor for the individual,
entity, or group effecting the Change in Control, the Executive may appoint another nationally
recognized public accounting firm to make the determinations
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required hereunder (which accounting firm shall then be referred to as the Accounting Firm
hereunder), by giving written notice of such appointment to the Company within five (5) business
days after the Date of Termination. All fees and expenses of the Accounting Firm shall be borne
solely by the Company and it shall be the Company’s obligation to cause the Accounting Firm to take
any actions required hereby.
If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall
furnish the Executive with an opinion that he or she has substantial authority not to report any
Excise Tax on his or her federal income tax return. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that a Gross-Up Payment which will not have been made by the Company
should have been made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to Section 5(c)
and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) Notification Required. The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the payment by the Company
of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than
ten (10) business days after the Executive knows of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the thirty-(30) day period following the date on
which he or she gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any” information reasonably requested by the Company relating to
such claim,
(ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order to effectively contest such
claim,
(iv) permit the Company to participate in any proceedings relating to such claim,
provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax
or income tax, including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 5(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
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forgo any and all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and xxx for a refund, or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and xxx for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax,
including interest or penalties with respect thereto, imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing authority.
(d) Repayment. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 5(c), the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 5(c)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c),
a determination is made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to contest such denial
of refund prior to the expiration of thirty days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.
6. Six Month Delay.
(a) To the extent (i) any payment or payments to which the Executive becomes entitled under
this Agreement, or any agreement or plan referenced herein, in connection with the Executive’s
termination of employment with the Company constitute deferred compensation subject to Section 409A
of the Code, and (ii) the Executive is deemed at the time of such termination of employment to be a
“specified employee” under Section 409A of the Code, then such payment or payments shall not be
made or commence until the earliest of (A) the expiration of the six (6) month period measured from
the date of the Executive’s “separation from service” (as such term is defined in final Treasury
Regulations issued under Section 409A of the Code and any other guidance issued thereunder) with
the Company; (B) the date the Executive becomes “disabled” (as defined in Section 409A of the
Code); or (C) the date of the Executive’s death following such separation from service. Upon the
expiration of the applicable deferral period, any payments which would have otherwise been made
during that period (whether in a single sum or in installments) in the absence of this Section
6 shall be paid to the Executive or the Executive’s beneficiary in one lump sum.
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(b) To the extent that any payment or payments referenced in Section 6(a) above become
subject to the six month delay due to the Executive’s status as a specified employee, any such
payment shall be paid into the Trinity Industries, Inc. Severance Benefits Trust, under agreement
dated as of September 9, 2008, on the date on which the Executive would have received such payment
without application of this Section 6, and shall be paid to the Executive at the time the
Executive becomes entitled to such payment or payments under this Section 6.
(c) The Executive has reviewed with the Executive’s own tax advisors the tax consequences of
this Agreement and the transactions contemplated hereby. The Executive is relying solely on his or
her tax advisors and not on any statements or representations of the Company or any of its agents
and understands that the Executive (and not the Company) shall be responsible for the Executive’s
own tax liability that may arise as a result of this Agreement or the transactions contemplated
hereby, except as otherwise specifically provided in this Agreement.
7. No Obligation To Mitigate Damages; No Effect on Other Contracts.
(a) The Executive shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of
any payment provided for under this Agreement be reduced by any compensation earned by the
Executive as the result of employment by another employer after the Date of Termination, or
otherwise.
(b) The provisions of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable, or in any way diminish the Executive’s existing rights, or rights
which would accrue solely as a result of the passage of time, under any other agreement, contract,
plan or arrangement with the Company.
8. Successor to the Company.
(a) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company by written agreement in form and substance satisfactory to the Executive, expressly,
absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such succession had taken
place. Any failure of the Company to obtain such agreement prior to the effectiveness of any such
succession shall be a material breach of this Agreement and shall entitle the Executive to
terminate the Executive’s employment for Good Reason. As used in this Agreement, “Company” shall
mean the Company as hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section 8 or which
otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal and legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
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accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other
designee or, if there be no such devisee, legatee or other designee, to executor or administrator
of the Executive’s estate.
9. Notice. For purposes of this Agreement, notices and all other communications provided for
in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Trinity Industries, Inc.
P. O. Xxx 000000
Xxxxxx, Xxxxx 00000-0000
Attention: President
P. O. Xxx 000000
Xxxxxx, Xxxxx 00000-0000
Attention: President
If to the Executive:
(Home Address)
or such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
10. Miscellaneous. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
11. Validity. The invalidity or unenforceability of any provisions of this Agreement shall
not affect the validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
12. Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one and the same
instrument.
13. Legal Fees and Expenses. The Company shall pay, upon written demand therefor by the
Executive, all legal fees and expenses which the Executive may reasonably incur as a result of any
dispute or contest (regardless of the outcome thereof) by or with the Company or others regarding
the validity or enforceability of, or liability under, any provision hereof (including as a result
of any contest about the amount of any payments pursuant to Sections 4 or 5), plus in each
case interest at the “applicable Federal rate” (as defined in Section 1274(d) of the Code). In any
action brought by the Executive for damages or to enforce any provisions hereof, he or she shall be
entitled to seek both legal and equitable relief and remedies, including, without
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limitation, specific performance of the Company’s obligations hereunder, in his or her sole
discretion.
14. Continuation of Salary During Dispute. In the event of any dispute or contest by or with
the Company or others regarding the validity or enforceability of, or liability under, any
provision hereof (including as a result of any contest about the amount of any payments pursuant to
Sections 4 or 5), and upon written demand by the Executive, the Company shall continue to
pay the Executive his or her base salary as in effect immediately prior to the date of the Change
in Control. Said periodic payments shall be made in accordance with the Company’s normal payroll
practices. Payments shall continue until final resolution of such dispute or contest either by an
agreement between the Executive and the Company or formal order of a court with proper
jurisdiction. In the event that the Company substantially prevails in such dispute, the Executive
shall be obligated to repay to the Company all amounts he or she has received under this
Section 14 (after taxes applicable thereto) plus interest at the “applicable Federal rate”
(as defined in Section 1274(d) of the Code).
15. Confidentiality. The Executive shall retain in confidence any and all confidential
information known to the Executive concerning the Company and its business so long as such
information is not otherwise publicly disclosed.
16. Modification. No change or modification of this Agreement shall be valid or binding upon
the parties unless the change or modification is in writing and signed by the parties.
17. Subsidiaries. In this Agreement, there are numerous references to the Executive’s
employment by and duties with the Company, payment of benefits and compensation by the Company, and
termination of employment with the Company. The parties to this Agreement acknowledge that the
Executive may be employed, currently or at some time in the future, by a subsidiary of the Company.
As used in this Agreement, a subsidiary means an entity which is at least 80% owned, directly or
indirectly, by the Company. It is the parties’ intention that transfer of the Executive’s
employment from the Company to a subsidiary or from one subsidiary to another subsidiary will not
constitute a termination of employment with the Company for any reason hereunder unless otherwise
specifically provided herein. In addition, unless otherwise specifically provided herein
(including Section 3(g)), “termination of employment with the Company” shall mean
termination of employment with the Company and all of its subsidiaries, and “termination of
employment by Company” shall mean termination of employment by the entity which actually employs
the Executive. Other references to employment by the Company, duties with the Company, and salary
and benefits shall include employment, duties, salary, and benefits with respect to the entity
which actually employs the Executive. However, with respect to the definition of Change in Control
of the Company, except as otherwise specifically provided herein, references to the Company shall
mean only the Company, and the obligations under Sections 4 and 5 herein shall be
obligations of the Company.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| TRINITY INDUSTRIES, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | Chairman and President | |||||
| EXECUTIVE | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
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