Exhibit 10.2

 

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Department:
Executive Office

 

Policy Number:

 

Date Issued:
11-17-2006

 

Supersedes Number:
Original

 

Prepared By:
General Counsel/VP Human Resources

 

Approved By:

 

TriMas Compensation Committee

Title:  EXECUTIVE SEVERANCE/CHANGE OF CONTROL POLICY

 

 

Scope:                                                            This policy
applies to the following Executive Officers (“Executives”) of TriMas Corporation
(“TriMas” or the “Company”): President/Chief Executive Officer; Chief Financial
Officer; Vice President - Human Resources; Vice President — Finance and
Treasurer; Corporate Secretary and General Counsel; the Reporting Segment
Presidents, where such positions exist (but, not the business unit presidents);
and such other officers as may be determined by the TriMas Board of Directors
(the “Board”).

Purpose:                                               To detail what
compensation and benefits, if any, are due to an Executive upon an Executive’s
separation of employment with the Company.

Policy:                                                          Executive is an
at-will employee whose employment may be terminated by Executive or TriMas at
any time for any reason. Upon termination, this policy shall govern the rights
and responsibilities of the parties.  In connection with this policy, Executive
will devote full business time and efforts to the performance of Executive’s
duties and responsibilities for the Company; provided that this policy does not
preclude Executive from engaging in charitable and community affairs or 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) to the extent that such activities do not conflict with
the Executive’s duties; and further provided,  that Executive shall not, without
the prior approval of the Board, serve as a director or trustee of any other
corporation, association or entity, or own more than two percent (2%) of the
equity of any publicly traded entity

1. Termination Without Cause or for Good Reason

If the Executive’s employment is terminated by the Company for any reason other
than Cause, Disability or Death, or if employment is terminated by Executive for
Good Reason then the Company shall provide the Executive the following severance
benefits:

       A. President / Chief Executive Officer

(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 withholding and reporting requirements, and paid in accordance with
usual Company payroll practices;

(B)        Payment of accrued, but unused vacation;

(C)        Annual Value Creation Plan (AVCP) bonus payments equal to one (1)
year’s bonus at Executive’s target bonus level in effect on the date of
termination.  The AVCP payments will be paid in equal installments over the
twenty-four month period subject to applicable withholding and reporting
requirements.  In addition, Executive shall receive the AVCP bonus payment for
the most recently completed bonus term if a  bonus has been declared for
Executive but not paid, and a pro rata bonus for the year of termination through
the termination date based on Executive’s target bonus level;

(D)       Any unvested equity awards Executive may have received under the 2002
Long Term Equity Incentive Plan shall immediately vest upon the termination date
and otherwise be exercisable consistent with the terms of such plan. Any
unvested  equity awards Executive may have received under any subsequently
issued equity plan shall immediately vest upon termination in an amount equal to
the number of awards that would have vested as of  the next occurring

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anniversary date of such equity award adjusted pro rata in accordance with the
termination date, and otherwise be exercisable consistent with the terms of such
plan;

(E)         Continuation of medical benefits under Company group benefits
(including health, dental, vision, EAP and prescription plans), as defined by
the plan documents, until the earlier of twenty-four (24) months following
Executive’s termination of employment or date in which Executive becomes
eligible to receive any medical benefits under any plan or program of any other
employer; provided Executive timely elects to continue health care coverage
under COBRA and subject to the Company’s COBRA policies. Executive will be
responsible for payment of the COBRA premium equal to the employee portion of
the premium that Executive would have paid if Executive continued to be a
Company employee and Company will pay the employer portion.   At Company’s
discretion, Company may purchase individual medical policies or pay any
remaining portion of a premium cost under this item through a lump sum or in
monthly payments, provided that Company’s premium obligation shall not exceed
the employer portion of the COBRA premium equivalent in any given month;

(F)         Executive level outplacement services until the earlier of twelve
(12) months following Executive’s termination of employment or date on which
Executive is employed by a subsequent employer; and

(G)  Except for the benefits stated above, Executive’s participation in all
other Company benefits shall cease as of the  termination date and otherwise be
governed by the terms of the plans, if any, applicable to such benefits.

B.    Executives, Excluding President /Chief Executive Officer

(A)      Base salary continuation for twelve (12) months at Executive’s annual
base salary rate in effect on the date of termination, subject to all applicable
withholding and reporting requirements and  shall be paid in accordance with
usual Company payroll practices;

(B)        Payment of accrued, but unused vacation;

(C)        Annual Value Creation Plan (AVCP) bonus payments equal to one (1)
year bonus at Executive’s target bonus level in effect on the date of
termination.  The AVCP payments will be paid in equal installments over the
twelve month period subject to applicable withholding and reporting
requirements.  In addition, Executive shall receive the AVCP bonus payment for
the most recently completed bonus term if a  bonus has been declared for
Executive but not paid, and a pro rata bonus for the year of termination through
the termination date based on Executive’s target bonus level;

(D)       Any unvested equity awards Executive may have received under the 2002
Long Term Equity Incentive Plan shall immediately vest upon the termination date
and otherwise be exercisable consistent with the terms of such plan. Any
unvested  equity awards Executive may have received under any subsequently
issued equity plan shall immediately vest upon termination in an amount equal to
the number of awards that would have vested as of  the next occurring
anniversary date of such equity award adjusted pro rata in accordance with the
termination date, and otherwise be exercisable consistent with the terms of such
plan;

(E)         Continuation of medical benefits under Company group benefits
(including health, dental, vision, EAP and prescription plans), as defined by
the plan documents, until the earlier of twelve (12) months following
Executive’s termination of employment or date in which Executive becomes
eligible to receive any medical benefits under any plan or program of any other
employer; provided the Executive timely elects to continue health care coverage
under COBRA and subject to the Company’s COBRA policies. Executive will be
responsible for payment of the COBRA premium equal to the employee portion of
the premium that Executive would have paid if Executive continued to be a
Company employee and Company will pay the employer portion.   At Company’s
discretion, Company may purchase individual medical policies or pay any
remaining portion of a premium cost under this item through a lump sum or in
monthly payments, provided that Company’s premium obligation shall not exceed
the employer portion of the COBRA premium equivalent in any given month;

(F)         Executive level outplacement services until the earlier of twelve
(12) months following the Executive’s termination of employment or date on which
the Executive is employed by a subsequent employer; and

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(G)        Except for the benefits stated above, Executive’s participation in
all other Company benefits shall cease as of the  termination date and otherwise
be governed by the terms of the plans, if any, applicable to such benefits.

For purposes of this policy, “Good Reason” means:

·                                          A material and permanent diminution
in Executive’s duties or responsibilities;

·                                          A material reduction in aggregate
value of base salary and bonus opportunity or material reduction in aggregate
value of other benefits provided to Executive by the Company; or

·                                          A permanent reassignment of Executive
to another primary office, or relocation of the Company office of more than 35
miles distance from current office location.

Executive must notify the Company of Executive’s  intention to invoke
termination for Good Reason within one hundred twenty (120) days after the
Executive has knowledge of such event and provide the Company fifteen (15) days
opportunity for cure or such event shall not constitute Good Reason under this
policy.  Executive may not invoke termination for Good Reason if Cause exists at
the time of such termination.

2. Voluntary Termination by Executive

If Executive terminates employment with the Company without Good Reason, then
the Company shall pay Executive his accrued base salary through the date of
termination; earned but unused vacation compensation and the AVCP award for the
most recently completed year if an award has been declared for such year but not
paid.  The accrued salary and vacation time shall be paid the next normal
payroll following termination of employment and the AVCP award paid in
accordance with the terms of the plan. Except for the benefits stated above,
Executive’s participation in all other Company benefits shall cease as of the 
termination date and otherwise be governed by the terms of the plans, if any,
applicable to such benefits.

3. Termination for Cause

If the Company terminates Executive with Cause or if Executive terminates
employment with the Company without Good Reason, then the Company shall pay
Executive his accrued base salary through the date of termination, plus earned
but unused vacation compensation.  Executive shall not be entitled to payment of
any AVCP award, whether declared and unpaid for any prior year,  for any portion
of the year in which the termination occurs or otherwise.  The accrued salary
and vacation time shall be paid within ten (10) days of termination of
employment.  For purposes of this policy,  “Cause” shall mean:

·                                          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 jurisdiction in which the Company conducts business;

·                                          Executive’s willful and continued
misconduct in the performance of his duties to the Company;

·                                          Executive’s willful and continued
failure to follow directions of the Board  (or direct reporting executive); or

·                                          Executive’s willful and/or continued
neglect of duties (other than incapacity due to physical or mental illness).

Cause shall only arise following ten (10) days written notice from the Company
which specifically identifies the failure or neglect and the continuance of the
failure or neglect during the notice

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period.  Failure of the Company to notify Executive after an occurrence will not
preclude the Company from notifying Executive of a subsequent and like event.

4. Termination Following a Change of Control

If Executive’s employment with the Company terminates by reason of a Qualifying
Termination (as defined in this section) within three (3) years after a Change
in Control, then, in place of any other severance payment or other consideration
and subject to all legal requirements, Company shall provide Executive the
following separation benefits:

(A)      Lump sum equal to base salary for thirty six (36) months at Executive’s
annual base salary rate in effect on the date of termination, subject to all
applicable withholding and reporting requirements;

(B)        Lump sum for Annual Value Creation Plan bonus payments equal to three
(3) years’ bonus at the target bonus level in effect on the date of termination,
subject to applicable withholding and reporting requirements.  In addition,
Executive shall receive the AVCP bonus payment for the most recently completed
bonus term if a  bonus has been declared for Executive but not paid, and a pro
rata bonus for the year of termination through the termination date based on
Executive’s target bonus level;

(C)        Any unvested equity awards Executive may have received under any
equity incentive plan shall immediately vest upon termination date and otherwise
be exercisable consistent with the terms of such plan;

(D)       Continuation of medical benefits under Company group benefits
(including health, dental and prescription plans), as defined by the plan
documents, until the earlier of thirty six (36) months following Executive’s
termination of employment or date in which Executive becomes eligible to receive
any medical benefits under any plan or program of any other employer; provided
Executive timely elects to continue health care coverage under COBRA and subject
to the Company’s COBRA policies.  At Company’s discretion, Company may purchase
individual medical policies or pay any remaining portion of a premium cost under
this item through a lump sum or in monthly payments, provided that Company’s
premium obligation shall not exceed the employer portion of the COBRA premium
equivalent in any given month;

(E)         Executive level outplacement services until the earlier of twelve
(12) months following the Executive’s termination of employment or date on which
the Executive is employed by a subsequent employer; and

(F)  Except for the benefits stated above, Executive’s participation in all
other Company benefits shall cease as of the  termination date and otherwise be
governed by the terms of the plans, if any, applicable to such benefits.

Qualifying Termination shall be defined for purposes of this policy a
termination of Executive’s employment with the Company for any reason other
than:

·                                          Death;

·                                          Disability;

·                                          Cause (as defined in this policy); or

·                                          A termination by Executive without
Good Reason, (as defined in this policy).

For purposes of this policy, “Change of Control” shall be defined as follows:

(i)                               “Change of Control,” with the two exceptions
described below, shall have the same meaning as in the Indenture dated as of
June 6, 2002 among the Company, each of the Guarantors named therein and the
Bank of New York, as Trustee, relating to the 9 7/8% Senior Subordinated Notes
due 2012 of Company, as in effect on the adoption of the Policy and regardless
of whether or not such notes or Indenture are hereinafter discharged, defeased
or repaid (the “Indenture”); and all defined terms used in such definition of
Change of Control shall have the

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                                          meanings ascribed thereto under the
Indenture as well; provided that no acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Company or any of its subsidiaries
shall result in a Change of Control hereunder.

(ii)                            Paragraph (2) of the Change of Control
definition in the Indenture regarding liquidation or dissolution shall be
excluded from the definition applied herein to conform with Section 409A of the
Internal Revenue Code of 1986, as amended (“Code”).

(iii)                         To conform with Code Section 409A, the following
provision shall control over the “Continuing Director” provision set forth in
paragraph (4) of the Change of Control definition in the Indenture:  A Change of
Control shall occur on the first day on which a majority of the members of the
Board of Directors (“Board”) are not continuing Directors.  As of the date of
determination, a “Continuing Director” means any member of the Board who (a) has
been a member of the Board throughout the immediately preceding twelve (12)
months, or (b) was nominated for election, or elected to the Board with the
approval of the Continuing Directors who were members of the Board at the time
of such nomination or election, or designated as a Director under the
Stockholders Agreement.

5. Disability

If Executive is determined to be disabled under Section 223(d) of the Social
Security Act, or any successor provision, and Executive is entitled to receive a
disability benefit under such Act, or if Executive is unable to engage in any
substantial activity due to medically determinable physical or medical
impairment expected to result in death or to last for a continuous period of not
less than twelve (12) months, or if due to any medically determinable physical
or mental impairment expected to result in death or last for a continuous period
not less than twelve (12) months, Executive has received income replacement
benefits for a period of not less than three (3) months under a
Company-sponsored accident and health plan, Company’s obligation to make
payments shall, except for earned but unpaid base salary and AVCP bonus 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.  Executive’s outstanding equity
awards shall become 100% vested in the event of a disability termination
hereunder.  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 Executive’s job related duties.  The
commencement date and expected duration of any physical or mental condition that
prevents Executive from performing job related duties 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.
Except for the benefits stated above, Executive’s participation in all other
Company benefits shall cease as of the date above on which Company’s obligation
to make payments ceases and otherwise be governed by the terms of the plans, if
any, applicable to such benefits.

6. Death

If Executive’s employment terminates due to Executive’s death, 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.  Executive’s outstanding equity awards shall become 100% vested in the
event Executive’s employment is terminated due to death. In accordance with
Company guidelines, Executive’s qualified dependents shall continue to receive
medical benefits under Company group benefits (including health, dental, vision,
EAP and prescription plans), as defined by the plan documents, for a period of
thirty-six (36) months; provided a timely election to

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continue health care coverage under COBRA is made and subject to Company’s COBRA
policies. Executive’s qualified dependents will be responsible for payment of
the COBRA premium equal to the employee portion of the premium that Executive
would have paid if Executive continued to be a Company employee and Company will
pay the employer portion.   At Company’s discretion, Company may purchase
individual medical policies or pay any remaining portion of a premium cost under
this item through a lump sum or in monthly payments, provided that Company’s
premium obligation shall not exceed the employer portion of the COBRA premium
equivalent in any given month. Except for the benefits stated above, Executive’s
participation in all other Company benefits shall cease as of the date of death
and otherwise be governed by the terms of the plans, if any, applicable to such
benefits.

7. Non-Competition; Non-Solicitation; Confidentiality

In consideration of the benefits provided under this policy, Executive shall
comply with the following:

(a)                                  Acceptance of employment under this Policy
and performance relative to this Policy 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 Policy, the rights conferred hereunder, and any
payment hereunder, while Executive  is employed by Company and for the duration
of (i) any severance payments provided hereunder to Executive following the
termination of Executive’s employment with Company, or (ii) twenty four (24)
months following the termination of Executive’s employment with the Company if
no severance payment is payable hereunder upon such termination (“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 one (1) year period prior
to the date of employment 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

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                                                other confidential information
of 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
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 of these materials, 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)                                  Although Executive and Company consider the
restrictions contained in this Policy 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 Policy is an unenforceable
restriction against Executive, the provisions of this Policy 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 Policy 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)                                    In order to receive any of the benefits
described in this Policy, Executive shall be required to execute an agreement
pursuant to which Executive releases any claims Executive may have against
Company and agrees to the continuing enforceability of the restrictive covenants
of this Policy.

(g)                                 Executive will be required to surrender to
Company all correspondence, documents, supplies, files, 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 are in the possession or under
control of the Executive.

8. Miscellaneous provisions

A.            Payments Not Compensation

Any participation by Executive in, and any terminating distributions and vesting
rights (other than previously defined) under, Company sponsored retirement or
savings plans, regardless of whether such plans are qualified or non-qualified
for tax purposes, shall be governed by the terms of those respective plans.  Any
salary continuation or severance benefits shall not be considered compensation
for purposes of accruing additional benefits under such plans.

B.            Timing of Payments

Notwithstanding any provision of this policy, if any amount payable under this
policy is subject to Code Section 409(A), then the payment of such amount shall
be restructured or delayed, as necessary, in a manner that preserves as far as
practically possible the form and timing of the benefit and ensures the amount
is paid in compliance with Section 409(A).  Any delayed payments shall be
aggregated and paid in a lump sum as of the first day of the first permissible
month of distribution.  Provided, however, that the Company

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does not by operation of this requirement assume responsibility for compliance
with Section 409(A).  The Executive is responsible for any additional tax,
interest or penalties under Section 409(A) arising out of payments under this
Policy.

C.            Payment Process and Taxation Requirements

All payments made under this Policy will follow the legal and tax payment
requirements outlined within the Appendix (A) of this Policy.

D.            Notices.

All notices or communications hereunder shall be in writing, addressed as
follows:

To Company:                        TriMas Corporation
39400 Woodward Ave., Suite 130
Bloomfield Hills, MI  48304
Attn: Vice President, Human Resources

                                                with a copy to:

TriMas Corporation

39400 Woodward Ave., Suite 130

Bloomfield Hills, MI 48304

Attn: General Counsel

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.

       E.  Separability; Legal Fees

If any provision of this Policy shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the remaining provisions 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 Policy,
Company shall reimburse Executive for all reasonable legal fees and expenses
incurred by Executive if Executive prevails in the dispute resolution process. 
If Executive does not prevail, Executive and Company shall be responsible for
their respective legal fees and expenses.

       F.  ERISA Provisions

This Policy constitutes a “top hat” plan maintained primarily for a group of
management or highly compensated employees and is exempted from most, but not
all of the provisions of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”).  To the extent that ERISA applies, the ERISA provisions are
set forth on Appendix B to the Policy.

G.  Dispute Resolution Governing Law

Any and all disputes arising under this Policy must be resolved in accordance
with the TriMas Dispute Resolution Policy process, as set forth in the ERISA
attachment on Appendix B to the Plan. To the extent not preempted by Federal
law, this Policy and all disputes related to it shall be governed by Michigan
law, without regard to conflict of law principles.

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H.  Amendments and Termination

This Policy may be amended or terminated at any time by the Compensation
Committee; provided, however, that no amendment or termination may adversely
affect any Executive without the Executive’s prior written consent. 
Notwithstanding the foregoing, the Compensation Committee may amend or terminate
the Policy at any time following twelve (12) months’ written notice to any
adversely affected Executive.

 

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APPENDIX A
APPLICATION OF GOLDEN PARACHUTE LIMITATIONS

1.             Cap on Payments.

(a)                                       General Rules. 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.  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 regulations adopted thereunder), made pursuant to this Policy 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 Policy will be reduced to the
Cap. 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

 

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                                                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 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 1(c) of Appendix A will calculate Executive’s “Uncapped
Benefit” and Executive’s “Capped Benefit.”  The limitations of Section 1(a) of
Appendix A shall not apply to Executive’s benefit if the Company reasonably
determines that the amount of the Uncapped Benefit that would be retained by
Executive, after payment of all applicable taxes by Executive, including excise
tax (but not the amount of any excise tax arising from any payment under
Section 2 of Appendix A), exceeds the Capped Benefit, after payment by Executive
of all applicable taxes.  If the after tax amount of the Uncapped Benefit that
would be retained by Executive is equal to or less than the after tax amount of
the Capped Benefit that would be retained by Executive, then payments to
Executive shall be adjusted, as necessary, so Executive’s Capped Benefit is not
exceeded, as provided in Section 1(a) of Appendix A.  For this purpose,
Executive’s “Uncapped Benefit” is the amount to which Executive would be
entitled pursuant to Section 4 of the Policy, without regard to the limitations
of Section 1(a) of Appendix A.  Executive’s “Capped Benefit” is the amount to
which Executive would be entitled pursuant to Section 4 of the Policy after the
application of the limitations of Section 1(a) of Appendix A.  In making this
determination the Company shall use Executive’s total presumed taxes.  “Total
presumed taxes” means all federal, state and local income taxes, excise taxes
and employment taxes. Executive’s total presumed taxes shall be conclusively
calculated using a combined tax rate equal to the sum of the maximum marginal
federal and applicable state and local income tax rates and employment and
excise 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.

2.             Payment of Excise Tax.

If the Cap imposed by Section 1(a) of Appendix A does not apply to Executive
because of the exception provided by Section 1(e) of Appendix A, Company shall
pay Executive an amount, in addition to the payments otherwise due hereunder,
that is calculated to equal the amount of excise tax that Executive will incur
under Section 4999 of the Code in connection with Total Payments and this
payment under Section 2 of Appendix A.  This amount will be calculated by the
Consultant and will paid by Company, less applicable tax withholdings, as soon
as possible after the amount of the Uncapped Benefit is determined.  No
adjustment shall be required if the actual amount of the excise tax is more or
less than the amount calculated by the Consultant.  The Executive shall not be
entitled to any tax “gross up” payments pursuant to this provision.

 

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APPENDIX B
ERISA ATTACHMENT TO TRIMAS CORPORATION
EXECUTIVE SEVERANCE/CHANGE OF CONTROL POLICY

The TriMas Corporation Executive Severance/Change of Control Policy (the
“Policy”), is intended to constitute an unfunded plan maintained primarily for
the purpose of providing benefits for a select group of management or highly
compensated employees under Sections 201(2), 301(a)(3) and 401(a)(1) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”). 
Notwithstanding any contrary provisions in the Policy, the Policy is subject to
the provisions set forth below.

1.             Plan Administrator and Named Fiduciary.  The Plan Administrator
and Named Fiduciary of the Plan for purposes of ERISA shall be TriMas
Corporation, or any successor thereto.  The address of the Plan Administrator is
39400 Woodward Avenue, Suite 130, Bloomfield Hills, MI  48304.  The Plan
Administrator shall have absolute discretion to administer the Plan, including
but not limited to questions of construction, interpretation and eligibility
under the Plan.

2.             Claims Procedure.  Claims for benefits under the Policy shall be
processed in accordance with the TriMas Corporation Alternative Dispute
Resolution Policy (the “ADR Policy”), subject, however, to the modifications
described below.

(a)           Mediation.  If an Executive is unable to resolve a dispute over
benefits under the Policy through internal human resource channels, he or she
must request mediation of the dispute.  The decision of the mediator shall be
delivered to the Executive electronically or by mail within 90 days after the
Executive’s request for mediation, unless circumstances require an extension. 
The need for an extension shall be communicated to the Executive before the
expiration of the initial 90 day period.  The extension may not exceed 90 days.

If the mediator denies the Executive’s claim for benefits, the mediator shall
provide, in written or electronic form, a notice of a claim denial, which sets
forth:

(1)                                  the specific reasons for the denial;

(2)                                  reference to specific provisions of the
Policy upon which the denial is based;

(3)                                  a description of any additional material or
information necessary for the Executive to perfect his or her claim, along with
an explanation of why such material or information is necessary; and

(4)                                  an explanation of claim review procedures
under the Policy and the time limits applicable to such procedures.

Any such claim denial notice shall be written in a manner that may be understood
without legal or actuarial counsel.

(b)           Arbitration.

(1)                                  An Executive whose claim for benefits has
been wholly or partially denied by the mediator may request arbitration of such
denial.  The request for arbitration must be in written or electronic form, and
delivered to the Plan Administrator within 60 days following the denial of the
claim by the mediator.

The request should set forth the reasons why the Executive believes the denial
of his or her claim is incorrect.  The Executive shall be entitled to submit
such issues, comments, documents, or records as the Executive shall consider
relevant to a determination of the claim, without regard to whether such
information was submitted to or considered by the

 

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mediator. Prior to submitting such request, the Executive shall be provided,
upon request and free of charge, reasonable access to, and copies of, such
documents, records, and other information that are relevant to the claim.

(2)                                  The Executive may, at all stages of review,
be represented by counsel, legal or otherwise, of his or her choice, provided
that the fees and expenses of the Executive’s counsel shall be borne by the
Executive.

(3)                                  The Plan Administrator’s decision with
respect to any such review shall be delivered electronically or in writing to
the Executive no later than 60 days following receipt by the Plan Administrator
of the Executive’s request, unless special circumstances, such as the need to
hold a hearing, require an extension of time for processing.  If an extension is
needed, the Plan Administrator shall, before the end of the initial review
period, give the Executive written notice of the special circumstances requiring
the extension and the date by which he or she expects a decision will be
rendered. In any event, the Plan Administrator must provide the Executive with
written or electronic notification of the decision on review no later than 120
days after receipt of the Executive’s request.

In the case of an adverse benefit determination by the arbitrator, the
notification shall set forth the information described in Section (a)(1) and (2)
above, a statement that the Executive is entitled to receive, upon request and
at no charge, reasonable access to, and copies of, all documents, records, and
other information relevant to the claim, a description of any voluntary appeal
procedure offered by the Policy, and the Executive’s right to obtain information
about the appeals procedure.

(c)           Time Limits Affecting Jurisdiction.  The Plan Administrator shall
not entertain a claim or a request for review unless it is filed timely in the
manner specified by subsection (c) above, which is a condition precedent to
obtaining review by the Plan Administrator.  The period of time within which the
benefit determination, or an appeal of a benefit determination, is required to
be made shall begin at the time the claim or appeal is filed and without regard
to whether all the information necessary to make a determination accompanies the
filing.  If the period of review is extended because of the Executive’s failure
to submit all necessary information, the period for making the determination
shall be tolled from the date the notice of extension is sent to the Executive
to the date on which the Executive responds to the request.

(d)           TriMas Alternative Dispute Resolution Policy Process.  An
arbitrator selected pursuant to the ADR Policy, as modified above, shall not
have jurisdiction or authority to change, add to or subtract from any of the
provisions of the Policy.  The arbitrator’s sole authority shall be to interpret
or apply the provisions of the Policy, and the arbitrator shall have the power
to compel attendance of witnesses at the hearing.  The arbitrator shall be
appointed upon mutual agreement of the Corporation and the Executive pursuant to
the arbitration rules referenced above.  Once an Executive commences arbitration
proceedings, the Executive shall not be permitted to terminate the arbitration
proceedings without the express written consent of the Corporation.  Any court
having jurisdiction may enter a judgment based upon such arbitration.  All
decisions of the arbitrator shall be final and binding on the Executive and the
Corporation without appeal to any court.  The costs of the arbitration shall be
split equally between the parties.

3.             Non-alienation of Benefits.  Except in so far as this provision
may be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge collateralization, or attachment of any benefits under the Policy shall
be valid or recognized by the Corporation.

This ERISA Attachment to the TriMas Corporation Executive Severance/Change in
Control Policy has been executed as of __________, 2006.

TRIMAS CORPORATION

 

 

 

By:

 

 

 

 

 

 

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