IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

James Smith and Jerry Honse, on behalf of 

themselves and all others similarly 

situated, and on behalf of the Triad

Manufacturing, Inc. Employee Stock

Ownership Plans,

Plaintiffs,

v.

GreatBanc Trust Company, the Board of 

Directors of Triad Manufacturing, Inc., 

David Caito, Robert Hardie, Michael 

McCormick, Elizabeth J. McCormick, 

Elizabeth J. McCormick Second 

Amended and Restated Revocable 

Living Trust, Michael K. McCormick 

Second Amended and Restated 

Revocable Living Trust, David M. Caito 

Revocable Trust, and First Amended and 

Restated Robert Hardie Revocable 

Trust,

Defendants.

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Civil Action No.: 1:20-cv-02350

JUDGE RONALD A. GUZMAN

MAGISTRATE JUDGE YOUNG B. KIM

STIPULATION AS TO PROCEEDS OF THE 2015 TRIAD ESOP TRANSACTION IN 

THE POSSESSION OF THE SELLING SHAREHOLDER DEFENDANTS

Plaintiffs James Smith and Jerry Honse (“Plaintiffs”), and Defendants David Caito, Robert 

Hardie, and Michael McCormick (collectively, the “Board Defendants”), Elizabeth McCormick, 

and the Elizabeth J. McCormick Second Amended and Restated Revocable Living Trust (“EJM 

Trust”), the Michael K. McCormick Second Amended and Restated Revocable Living Trust

(“MKM Trust”), the David M. Caito Revocable Trust (“DMC Trust”), and the First Amended and 

Restated Robert Hardie Revocable Trust (“RH Trust”) (collectively with the Board Defendants 

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and Elizabeth J. McCormick, the “Selling Shareholders” or “Selling Shareholder Defendants”), 

hereby submit this joint stipulation as to the traceability of the proceeds of the 2015 Triad ESOP 

Transaction:

RECITALS:

1. On December 28, 2015, the Triad Manufacturing, Inc. Employee Stock Ownership Plan 

(“the ESOP”) purchased 1,830,000 common shares (representing 100% of Triad’s 

outstanding common stock after giving effect to a 500-to-1 stock split) from the Selling 

Shareholder Defendants for aggregate consideration of approximately $106.2 million 

(“the 2015 Triad ESOP Transaction”). As part of the 2015 Triad ESOP Transaction, 

Triad Manufacturing, Inc. (“Triad” or “the Company”) loaned approximately $106.2 

million to the ESOP. The 2015 Triad ESOP Transaction was financed in part by a 

$72.8 million loan from the Selling Shareholder Defendants to the Company (“the 

Seller Notes”). 

2. The First Amended Complaint alleges in Count IV that the Selling Shareholders and 

Board Defendants are “parties in interest” to the ESOP within the meaning of ERISA

§3(14), 29 U.S.C. § 1002(14)” who engaged in prohibited transactions under ERISA 

§ 406(a)(1), 29 U.S.C. § 1006(a)(1). First Amended Complaint (“FAC”), ECF No. 99

at ¶ 186–90.

3. In particular, the FAC alleges that the “ESOP’s purchase of 1.83 million shares of Triad 

common stock from the Selling Shareholders constituted a direct or indirect exchange 

of property between the ESOP and parties in interest in violation of ERISA § 

406(a)(1)(A), 29 U.S.C. § 1106(a)(1)(A),” and that after the 2015 Triad ESOP 

Transaction, “each individual note payment to the Selling Shareholders by Triad 

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constituted another indirect exchange of property between the ESOP and the Selling 

Shareholders in violation of ERISA § 406(a)(1)(A), 29 U.S.C. § 1106(a)(1)(A), as well 

as a transfer of the ESOP assets to the Selling Shareholders in violation of ERISA § 

406(a)(1)(D), 29 U.S.C. § 1106(a)(1)(D).” Id. at ¶ 188–89.

4. The FAC further alleges that the Selling Shareholders and Board Defendants are liable 

as parties in interest for appropriate equitable relief under ERISA § 502(a)(3), 29 

U.S.C. § 1132(a)(3).

5. Under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), “appropriate equitable relief” refers 

to “those categories of relief that were typically available in equity (such as injunction, 

mandamus, and restitution, but not compensatory damages).” Mertens v. Hewitt 

Associates, 508 U.S. 248, 256 (1993). Therefore, an action authorized by this provision 

“generally must seek not to impose personal liability on the defendant, but to restore to 

the plaintiff particular funds or property in the defendant’s possession.” Great–West 

Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 214 (2002).

6. In November 2021, Plaintiffs served written discovery requests on the Selling 

Shareholder Defendants which sought documents and information regarding the 

tracing of the proceeds of the sale of the Triad stock in the 2015 Triad ESOP 

Transaction to the Selling Shareholders’ possession (“Tracing Discovery”).

7. The Selling Shareholders agreed in a discovery meet and confer in February 2022 to 

produce documents in response to Plaintiffs’ Tracing Discovery requests, and later did 

produce certain responsive documents. However, Plaintiffs have sought additional 

Tracing Discovery responsive to the written discovery requests from the Selling 

Shareholders.

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8. In order to avoid a discovery dispute, and in the interest of efficiency and conservation 

of resources, Plaintiffs and the Selling Shareholders have agreed that in lieu of seeking 

additional production of documents responsive to the Tracing Discovery requests, 

Plaintiffs and the Selling Shareholders stipulate and agree as follows:

STIPULATION:

9. The Selling Shareholders represent that they each currently possess – whether in 

segregated accounts, Seller Notes, or real property purchased with the proceeds of the 

2015 Triad ESOP Transaction – particular funds or property traceable to the 2015 Triad 

ESOP Transaction (“Traceable Assets”).

10. Elizabeth McCormick, in her personal capacity and as the Trustee for the EJM Trust,

warrants and represents that she and/or the EJM Trust currently owns or possesses, and 

will continue to own or possess through any eventual date of judgment, Traceable 

Assets in a value of at least $3,750,000 (three million seven hundred and fifty thousand

dollars).

11. Elizabeth McCormick, in her personal capacity and as the Trustee for the EJM Trust, 

further warrants and represents that she and/or the EJM Trust will not in any way 

dissipate or disburse the $3,750,000 (three million seven hundred and fifty thousand

dollars) in Traceable Assets prior to any eventual date of judgment in the matter 

captioned Smith v. GreatBanc Trust Company, et al., Civil Action No. 1:20-cv-02350, 

now pending in the Northern District of Illinois.

12. Michael McCormick, in his personal capacity and as the Trustee for the MKM Trust, 

representsthat he and/or the MKM Trust currently owns or possesses, and will continue 

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to own or possess through any eventual date of judgment, Traceable Assets in a value 

of greater than $3,750,000 (three million seven hundred and fifty thousand dollars).

13. Michael McCormick, in his personal capacity and as the Trustee for the MKM Trust, 

further represents and agrees that he and/or the MKM Trust will not in any way 

dissipate or disburse the $3,750,000 (three million seven hundred and fifty thousand

dollars) in Traceable Assets prior to any eventual date of judgment in the matter 

captioned Smith v. GreatBanc Trust Company, et al., Civil Action No. 1:20-cv-02350, 

now pending in the Northern District of Illinois.

14. David Caito, in his personal capacity and as the Trustee for the DMC Trust, represents 

that he and/or the DMC Trust currently owns or possesses, and will continue to own or

possess through any eventual date of judgment, Traceable Assets in a value of greater 

than $7,500,000 (seven million five hundred thousand dollars).

15. David Caito, in his personal capacity and as the Trustee for the DMC Trust, further 

represents and agrees that he and/or the DMC Trust will not in any way dissipate or 

disburse the $7,500,000 in Traceable Assets prior to any eventual date of judgment in 

the matter captioned Smith v. GreatBanc Trust Company, et al., Civil Action No. 1:20-

cv-02350, now pending in the Northern District of Illinois.

16. Robert Hardie, in his personal capacity and as the Trustee for the RH Trust, represents 

that he and/or the RH Trust currently owns or possesses, and will continue to own or 

possess through any eventual date of judgment, Traceable Assets in a value of greater 

than $7,500,000 (seven million five hundred thousand dollars).

17. Robert Hardie, in his personal capacity and as the Trustee for the RH Trust, further 

represents and agrees that he and/or the RH Trust will not in any way dissipate or 

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disburse the $7,500,000 in Traceable Assets prior to any eventual date of judgment in 

the matter captioned Smith v. GreatBanc Trust Company, et al., Civil Action No. 1:20-

cv-02350, now pending in the Northern District of Illinois.

18. Selling Shareholder Defendants will not assert at summary judgment or trial that 

Plaintiffs do not seek “appropriate equitable relief” under ERISA § 502(a)(3), 29 

U.S.C. § 1132(a)(3), on the grounds that Plaintiffs have failed to prove that there are 

Traceable Assets up to the stipulated amount in possession of the Selling Shareholder 

Defendants. For the avoidance of doubt, Selling Shareholder Defendants are not hereby 

waiving any other defenses or affirmative defenses that they may have to Plaintiffs’ 

claims.

19. In the event of a judgment in this matter, Plaintiffs would not dispute, and would agree 

that to the extent permitted by law, that each of the Selling Shareholders would be

entitled to write down the value of the Seller Notes as an offset in any liability judgment

against them on Counts II, IV, or V in the FAC, in consideration of the Board 

Defendants’ agreement to simultaneously write down the loan between the Company 

and the ESOP for an equivalent amount as any write-down to the Seller Notes. For the 

avoidance of doubt, the amount of any such an offset would be applicable only to the 

individual Selling Shareholders’ liability for violations of ERISA § 404 (breach(es) of 

fiduciary duty), § 406 (prohibited transaction(s)) or § 405 (co-fiduciary liability). For 

the avoidance of doubt, the offset may not be applied to liability for ERISA § 410 or 

ERISA § 502(g).

20. For the avoidance of doubt, Michael McCormick, David Caito and Robert Hardie, in 

their capacity as members of the Board of Directors of Triad Manufacturing, Inc., each 

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agrees on behalf of the Board, that in the event of a judgment in this matter wherein

any Selling Shareholder writes down the value of a Seller Note to satisfy their personal 

liability, Triad will write down the loan between the Company and the ESOP for an 

equivalent amount as any write-down to the Seller Notes.

21. To the extent that Messrs. McCormick, Caito, or Hardie are no longer serving on the 

Board of Directors of Triad Manufacturing, Inc. at the time of any judgment in this 

matter, if any one of them remains in service on the Board, each of them agrees that 

this Stipulation shall bind their respective successors on the Board. 

22. In consideration of the Recitals, representations, warranties and agreements stated 

herein, Plaintiffs agree to forego pursuing the production of additional documents from 

the Selling Shareholders responsive to the Tracing Discovery requests.

IT IS SO STIPULATED.

 Dated: August 24, 2022

/s/ Mary J. Bortscheller

COHEN MILSTEIN SELLERS & TOLL 

PLLC

Michelle C. Yau (admitted pro hac vice) 

Mary J. Bortscheller, Illinois Bar: 6304457 

Daniel R. Sutter (admitted pro hac vice) 

Laura Older Rockmore (admitted pro hac 

vice) 

1100 New York Ave. NW ● Fifth Floor 

Washington, DC 20005 

Tel: (202) 408-4600 / Fax: (202) 408-4699

myau@cohenmilstein.com 

mbortscheller@cohenmilstein.com 

dsutter@cohenmilstein.com 

lorockmore@cohenmilstein.com

Carol V. Gilden, Illinois Bar: 6185530 

190 South LaSalle Street, Suite 1705 

Chicago, IL 60603

/s/ Matthew D. Grabell

FORDHARRISON, LLP

Matthew D. Grabell, Illinois Bar: 6312929

271 – 17th Street, NW, Suite 1900 

Atlanta, GA 30363

Tel: (404) 888-3820 

mgrabell@fordharrison.com

Benjamin P. Fryer (admitted pro hac vice)

6000 Fairview Road, Suite 1200 

Charlotte, NC 28210

Tel: (980) 282-1900 / Fax: (980) 282-1949

bfryer@fordharrison.com

Counsel for Selling Shareholder Defendants 

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Tel: (312) 357-0370 / Fax: (312) 357-0369 

cgilden@cohenmilstein.com 

FEINBERG, JACKSON, WORTHMAN &

WASOW, LLP

Nina Wasow (admitted pro hac vice)

Dan Feinberg (admitted pro hac vice)

2030 Addison Street ● Suite 500

Berkeley, CA 94704

Tel: (510) 269-7998

Fax: (510) 269-7994

nina@feinbergjackson.com

dan@feinbergjackson.com

Counsel for Plaintiffs

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