Exhibit 10.1

 

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Department:

Policy Number:

Executive Office

 

 

 

Date Issued:

Supersedes Number:

12/04/09

09/10/08

 

 

Prepared By:

 

General Counsel

 

 

 

 

 

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; Executive Vice President; Vice President — Finance and Treasurer;
Corporate Secretary and General Counsel; President — Packaging Systems; 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
termination of employment with the Company, which for purposes of this Policy
shall be deemed to constitute “separation from service”, as defined under
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

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 involuntarily 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:

 

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 (“Separation Pay”), provided that the sum of
such amount shall not exceed two (2) times the lesser of:

 

(i)                                          the maximum dollar amount that may
be taken into account under a tax-qualified plan pursuant to Code
Section 401(a)(17) for the year in which the Executive was terminated, or

 

(ii)                                       the sum of the Executive’s annualized
compensation based upon the annual rate of pay for services to the Company for
the taxable year prior to the taxable year in which the termination occurs
(adjusted for any increase during that year that was expected to continue
indefinitely if the Executive had not terminated employment).

 

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The payment in this Section A is intended to be a “separation pay plan due to
involuntary separation from service” under Treasury Regulation
Section 1.409A-1(b)(9)(iii).  In the event that the Executive’s separation pay
is limited by application of (A)(i) or (A)(ii) of this Section, the Committee
shall provide additional true-up payments in accordance with Section 8.B. of
this Policy;

 

(B)        Payment of all accrued, but unused vacation by the next payroll date
following termination of employment;

 

(C)        Payment of the Incentive Compensation Plan (ICP) bonus payment for
the most recently completed bonus term if a bonus has been declared for
Executive but not paid;

 

(D)       Executive’s ICP bonus for the year of termination, based on actual
performance results for the full year and prorated through Executive’s
employment termination date, paid in accordance with the terms of the ICP;

 

(E)        Additional severance benefits equal to Executive’s ICP bonus for the
full year of termination at Executive’s target bonus level in effect on the date
of termination, paid in equal installments over the twenty-four (24) month
period following the date of Executive’s separation from service;

 

(F)         Any unvested equity awards Executive may have received under the
2002 Long Term Equity Incentive Plan or 2006 Long Term Equity Incentive Plan
shall immediately vest upon the employment 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 vest
upon employment 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 to the anniversary of the grant date in the month following
the employment termination date, and otherwise be exercisable consistent with
the terms of such plan.  Any equity awards subject to performance targets shall
be paid only upon attainment of the performance targets in accordance with the
specified payment date under the terms of such plan;

 

(G)        Reimbursement of the employer’s portion of COBRA premiums for medical
benefits under Company group benefits (including health, dental, vision, EAP and
prescription plans), as defined by the plan documents, until the earliest of
(i) the termination of Executive’s COBRA period; (ii) twenty-four (24) months
following Executive’s termination of employment; or (iii) the date on which
Executive becomes eligible to receive any medical benefits under any plan or
program of any other employer; provided that 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 and will be
reimbursed monthly by the Company for the portion of the premium that the
Company would have paid if Executive had continued to be a Company employee.  If
Executive does not become eligible for medical benefits of another employer and
the COBRA period expires before twenty-four (24) months have elapsed, during the
remaining portion of the twenty-four (24) month period, the Company shall
monthly pay Executive an amount equal to the amount that the employer

 

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would have paid for Executive’s coverage if Executive had continued as a Company
employee;

 

(H)       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

 

(I)              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.

 

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 (“Separation Pay”), provided that the sum of
such amount shall not exceed two (2) times the lesser of:

 

(i)                                          the maximum dollar amount that may
be taken into account under a tax-qualified plan pursuant to Code
Section 401(a)(17) for the year in which the Executive was terminated, or

 

(ii)                                       the sum of the Executive’s annualized
compensation based upon the annual rate of pay for services to the Company for
the taxable year prior to the taxable year in which the termination occurs
(adjusted for any increase during that year that was expected to continue
indefinitely if the Executive had not terminated employment).

 

The payment in this Section A is intended to be a “separation pay plan due to
involuntary separation from service” under Treasury Regulation
Section 1.409A-1(b)(9)(iii).  In the event that the Executive’s separation pay
is limited by application of (A)(i) or (A)(ii) of this Section, the Committee
shall provide additional true-up payments in accordance with Section 8.B. of
this Policy;

 

(B)        Payment of accrued, but unused vacation by the next payroll period
following termination;

 

(C)        Payment of the Incentive Compensation Plan (ICP) bonus payment for
the most recently completed bonus term if a  bonus has been declared for
Executive but not paid;

 

(D)       Executive’s ICP bonus for the year of termination, based on actual
performance results for the full year and prorated through Executive’s
employment termination date, paid in accordance with the terms of the ICP;

 

(E)         Additional severance benefits equal to Executive’s ICP bonus for the
full year of termination at Executive’s target bonus level in effect on the date
of termination, paid in equal

 

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installments over the twelve (12) month period following the date of Executive’s
separation from service;

 

(F)         Any unvested equity awards Executive may have received under the
2002 Long Term Equity Incentive Plan or 2006 Long Term Equity Incentive Plan
shall immediately vest upon the employment 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 vest
upon employment 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 to the anniversary of the grant date in the month following
the employment termination date and otherwise be exercisable consistent with the
terms of such plan.  Any equity awards subject to performance targets shall be
paid only upon attainment of the performance targets in accordance with the
specified payment date under the terms of such plan;

 

(G)        Reimbursement of the employer’s portion of COBRA premiums for medical
benefits under Company group benefits (including health, dental, vision, EAP and
prescription plans), as defined by the plan documents, until the earliest of
(i) termination of Executive’s COBRA period; (ii) twelve (12)  months following
Executive’s termination of employment, or (iii) the date on 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 and will be reimbursed
monthly by the Company for the portion of the premium that the Company would
have paid if Executive had continued to be a Company employee; provided,
however, that statutory COBRA coverage in excess of twelve (12) months shall not
include any reimbursement for the employer’s portion;

 

(H)       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

 

(I)            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 the
Executive’s base compensation; 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 in writing of Executive’s intention to invoke
termination for Good Reason within ninety (90) days after the initial existence
of such event and provide the

 

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Company thirty (30) days opportunity after written notice has been received from
the Executive 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.  Additionally, Executive must terminate
employment within one (1) year following the initial existence of one (1) or
more of the events listed above in order for the termination to be considered
for “Good Reason.”

 

2. Voluntary Termination by Executive

 

If Executive terminates employment with the Company without Good Reason, the
Company shall pay Executive his or her accrued base salary through the date of
termination; earned but unused vacation compensation and the ICP 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 by the next normal
payroll date following termination of employment, and the ICP award shall be
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, the Company shall pay Executive
his or her accrued base salary through the date of termination, plus earned but
unused vacation compensation.  Executive shall not be entitled to payment of any
ICP 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 failure or
refusal to perform his or her duties to the Company and failure to cure such
breach within thirty (30) days following written notice thereof from the
Company;

 

·                                          Executive’s willful failure or
refusal to follow directions of the Board  (or direct reporting executive) and
failure to cure such breach within thirty (30) days following written notice
thereof from the Board; or

 

·                                          Executive’s breach of fiduciary duty
to the Company for personal profit.

 

Any failure by the Company or a Subsidiary to notify an Executive after the
first occurrence of an event constituting Cause shall not preclude any
subsequent occurrence of such event (or similar event) from constituting Cause.

 

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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, 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)      If employment termination occurs within two (2) years following a
Change in Control, a lump sum payment equal to Executive’s 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, payable within sixty (60) days following Executive’s termination
of employment.  If employment termination occurs during the third year following
a Change in Control, base salary continuation for thirty-six (36) months at
Executive’s annual base salary rate in effect at employment termination, subject
to all applicable withholding and reporting requirements.

 

(B)        If employment termination occurs within two (2) years following a
Change in Control, a lump sum payment equal to 300% of Executive’s Incentive
Compensation Plan (ICP) bonus  for the full year of termination at the target
bonus level in effect on the date of termination, subject to applicable
withholding and reporting requirements.  In addition, Executive shall receive a
lump sum payment of Executive’s ICP bonus payment for the most recently
completed bonus term if a bonus has been declared for Executive but not paid. 
Executive will also receive Executive’s ICP bonus for the year of termination,
based on actual performance results for the full year and prorated through
Executive’s employment termination date, paid in accordance with the terms of
the ICP.  All lump sum payments shall be made within sixty (60) days following
Executive’s termination of employment.  If employment termination occurs during
the third year following a Change in Control, the amount of payments under this
paragraph (B) shall be the same as for termination within two (2) years
following a Change in Control, subject to applicable withholding and reporting
requirements, but the payments shall be made in equal installments over a
thirty-six (36) month period;

 

(C)        Any unvested equity awards Executive may have received under any
equity incentive plan shall immediately vest upon the termination date and
otherwise be exercisable consistent with the terms of such plan; provided,
however, that any equity awards subject to performance targets shall be paid
only upon attainment of the performance targets in accordance with the specified
payment date under the terms of such plan;

 

(D)       Reimbursement of the employer’s portion of COBRA premiums under
Company group benefits (including health, dental and prescription plans), as
defined by the plan documents, until the earliest of (i) the termination of
Executive’s COBRA period; (ii) thirty-six (36)) months following Executive’s
termination of employment, or (iii) the date on 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 and will be reimbursed monthly by the Company for
the portion of the premium that the Company would have paid if Executive had
continued to be a Company employee.  If Executive does not become eligible for
medical benefits of another

 

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employer and the COBRA period expires before thirty-six (36) months have
elapsed, during the remaining portion of the thirty-six (36) month period, the
Company shall monthly pay Executive an amount equal to the amount that the
employer would have paid for Executive’s coverage if Executive had continued as
a Company employee;

 

(E)         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

 

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

 

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

 

·                                          Death;

·                                          “Disability (as defined in this
Policy);

·                                          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 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 Section 409A”).

 

(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

 

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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’s employment is terminated after it is determined that the
Executive is disabled (a) 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 (b) 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 (c) 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, then all obligations of the
Company to make any further payments, except for earned but unpaid base salary
and accrued but unpaid ICP bonus awards, shall terminate 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.  The earned but
unpaid base salary shall be paid by the next normal payroll payment date
following termination of the Executive’s employment, and the ICP award shall be
paid in accordance with the terms of such plan.  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 ICP 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.  The accrued but unpaid base
salary shall be paid by the next normal payroll date following termination of
employment, and the accrued but unpaid ICP award shall be paid in accordance
with the terms of such plan.  In accordance with Company guidelines, Executive’s
qualified dependents shall be reimbursed for the employer portion of COBRA
premiums for Company group medical benefits (including health, dental, vision,
EAP and prescription plans), as defined by the plan documents, for a period

 

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not to exceed thirty-six (36)  months; provided a timely election to continue
health care coverage under COBRA is made and subject to Company’s COBRA
policies  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, manufactures,
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.

 

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(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 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.

 

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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

 

Each of the payments under this Policy either is intended to comply with the
requirements of Section 409A and the regulations thereunder or qualify for an
exception to compliance with Section 409A.  Notwithstanding any provision of
this Policy, if any amount payable under this Policy is not exempt from Code
Section 409A, the payment of such amount shall not be made prior to, and shall,
if necessary, be deferred to and paid on the later of (i) the earliest date on
which the Executive experiences a “separation from service” (within the meaning
of Treasury Regulation 1.409A-1(h) and, (ii) if the Executive is a “specified
employee” (within the meaning of Treasury Regulation 1.409A-1(i)) on the later
of (a) the date of the Executive’s separation from service, (b) the first day of
the seventh month following the Executive’s separation from service, or (c) the
date of the Executive’s death, if earlier, with any delayed payments being
aggregated and paid in a lump sum.  Provided, however, that the Company does not
by operation of this requirement assume responsibility for compliance with
Section 409A.  The Executive will be responsible for any additional tax,
interest or penalties under Section 409A arising out of payments under this
Policy.

 

C.            Payment Process and Taxation Requirements

 

All payments made under this Policy will be subject to all applicable Federal,
state, and local tax withholding and reporting requirements.

 

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: 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

 

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(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.  Any reimbursements shall occur by
March 15th of the year following the date on which the dispute resolution
concludes and shall not be payable if not exempt from or in compliance with Code
Section 409A.

 

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.

 

H.  Amendments and Termination; Code Section 409A

 

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, and any
termination shall comply with Code Section 409A.  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.  Further, this Policy shall be construed and administered in such
manner as shall be necessary to effect compliance with Code Section 409A and
shall be subject to unilateral amendment by the Company in such manner as the
Company may deem necessary or appropriate to effect such compliance.

 

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I.  Code Section 162(m)

 

Notwithstanding anything contrary in this Policy, to the extent any benefit
covered under this Policy is intended to be exempt from the application of Code
Section 162(m) as “performance based compensation” (as defined in 162(m) and the
regulations thereunder), then such performance-based compensation shall only be
paid to the Executive upon death, Disability or a Change in Control.

 

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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
continuing Executive’s employment with the Company after the effective date of
this Policy, Executive will be agreeing that 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. All reductions to Executive’s

 

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payments under this Section 1(c) will first be made to amounts not subject to
Code Section 409A before any amounts subject to Code Section 409A are reduced. 
If the Consultant selected to provide the opinions referred to above so requests
in connection with the opinion required by this Section, a firm of recognized
executive compensation consultants selected by Company shall provide an opinion,
upon which such Consultant may rely, as to the reasonableness of any item of
compensation as reasonable compensation for services rendered before or after
the Change of Control.  If Company believes that Executive’s Total Payments will
exceed the limitations of this Section, it will nonetheless make payments to
Executive, at the times stated above, in the maximum amount that it believes may
be paid without exceeding such limitations. The balance, if any, will then be
paid after the opinions called for above have been received.  If 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 used to determine the present value of the
Total Payments, so that Executive will have received or be entitled to receive
the maximum amount to which Executive is entitled under this Agreement.  Payment
of any deficiency and interest determined under this Section 1(c) shall be made
by the last day of the calendar year in which is received either the opinions
called for above or the Internal Revenue Service determination that a deficiency
exists.

 

(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.

 

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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.

 

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(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 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

 

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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.

 

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