EXHIBIT 10.26
EMPLOYMENT AGREEMENT
This Agreement is made by and between TRIMAS CORPORATION, a Delaware
corporation ("Company") and Xxxxxx X. Xxxxxx (hereinafter "Executive") June 6,
2002 ("Effective Date"). In order to induce Executive to serve as its Vice
President Human Resources, 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 Vice President Human Resources. 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.
Section 3. COMPENSATION.
(a) Salary. During the Initial Period, Company shall pay Executive at
the rate of One Hundred Ninety-five Thousand Dollars ($195,000) 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.
(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
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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)(l)(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:
(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)(l)(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
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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.
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.
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(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 contendre 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
(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
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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.
(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:
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(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.
(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
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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 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 $~0,000, 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.
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(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
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
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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.
(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
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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 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
do Heartland Industrial Partners, L.P.
00 Xxxxxxxx Xxxxxx, x Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
with a copy to: R. Xxxxxxx Xxxxxxx, Esq.
McDonald, Hopkins, Xxxxx &
Xxxxx Co., L.P.A.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
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To Executive: Xxxxx X. Xxxxxx
000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
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.
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 six (6) month 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
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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 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 Executives 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
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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.
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. SECTIONS 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
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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. 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
Date
EXECUTIVE
Date
Xxxxxx X. Xxxxxx
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