SECTION 3
EMPLOYMENT AGREEMENT
This Agreement is made by and between TRIMAS CORPORATION, a Delaware
corporation ("Company") and Xxxxxx Xxxxxxxx (hereinafter "Executive") February
3, 2003 ("Effective Date"). In order to induce Executive to serve as its Group
President - Industrial Specialties 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 - Industrial
Specialties 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 Eighty Thousand Dollars ($280,000) 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.
11
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/ Xxxxxx Xxxxxxxx
--------------------------- ------------------------------------
Date
18
