Exhibit 10.1


 


	
  

  	
  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 


 


17

















 


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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