Exhibit 10.12


 


TIER I


 


[RETYPE ON ACCURIDE STATIONERY AND DATE]


 


                             ,
2008


 


 


 


 


 


Re:          Severance
and Retention Agreement


 


Dear
                    :


 


Our Board of Directors believes that it is in the best interests of
Accuride Corporation (“Accuride”) and its shareholders to take appropriate
steps to allay any concerns you may have about your future employment
opportunities with Accuride and its “Affiliates” (as defined in Section 2(f)).  Accuride and its Affiliates are collectively
referred to in this Agreement as the “Company.” 
As a result, the Board has decided to offer to you the special package
of benefits described below.


 


Please bear in mind that these benefits are being offered only to a few
selected employees and we accordingly ask that you refrain from discussing this
special program with others.  Please note
that the special benefits package described below will only be effective if you
sign the extra copy of this Severance and Retention Agreement (the “Agreement”)
which is enclosed and return it to me on or before December 31, 2008.  This Agreement supersedes any other severance
or change in control agreements entered into previously by you and Accuride or
any Affiliate, whether written or oral.


 


1.                                      TERM
OF AGREEMENT.


 


This Agreement
is effective immediately and will continue in effect until December 31,
2008 (the “Initial Term”).  This
Agreement will be automatically renewed at the end of the Initial Term for
additional terms commencing on each January 1, and ending on the next
following December 31 (a “Renewal Term”), unless either party serves
notice on the other of its desire not to renew this Agreement or of its desire
to modify this Agreement.  Such notice
must comply with Section 11 and be given at least six months before the
end of the Initial Term or the applicable Renewal Term.  If a Change in Control occurs during the
Initial Term or any Renewal Term, the scheduled expiration date of the Initial
Term or Renewal Term, as the case may be, shall be extended for a term ending
on the 18-month anniversary of the Change in Control.  The expiration of the term of this Agreement
will not reduce or diminish any liabilities that have accrued prior to the
expiration.


 

















 


2.                                      BASIC SEVERANCE BENEFIT.


 


(a)           Entitlement
to Basic Severance Benefit.  The
Basic Severance Benefit described below will be payable to you if you terminate
your employment with the Company for “Good Reason” (as defined in Section 6)
either prior to the commencement of the “Protection Period” (as defined in Section 2(d))
or following the close of the Protection Period.  The Basic Severance Benefit also will be
payable to you if prior to the commencement of the Protection Period or
following the close of the Protection Period, the Company terminates your
employment without “Cause” (as defined in Section 7).  If your employment is terminated by the
Company for Cause, by your voluntary termination without Good Reason, or by
your death or “Disability” (as defined in Section 11(d)), no Basic
Severance Benefit shall be payable under this Agreement either upon that
termination or at any time thereafter (unless you are later reemployed and
covered by a new agreement).


 


(b)           Amount
of Payments.  The Basic Severance
Benefit will equal your annualized base salary at the rate in effect on the
date of your termination of employment minus the sum of any other payments from
the Company under any employment or other agreement, plan, program or policy in
the nature of severance in respect of such termination, payable on or after the
date of such termination.


 


(c)           Timing
of Payments.  Except as provided in Section 4,
the Basic Severance Benefit will be paid in a single lump sum payment within
five business days following the date on which the Release Agreement required
pursuant to Section 8 becomes irrevocable.


 


(d)           Protection
Period.  For purposes of this
Agreement, the term “Protection Period” shall mean the period beginning with
the date on which a Change in Control occurs and ending 18 months after the
Change in Control.


 


(e)           Transfers
to Affiliates.  In order to receive a
Basic Severance Benefit, you must terminate employment with the “Company,”
which, as noted above, refers collectively to Accuride and all of its
Affiliates.  As a result, a transfer to
an Affiliate will not be treated as a termination of employment for purposes of
this Agreement.  For purposes of
determining whether a transfer gives rise to Good Reason for your termination
of employment, a transfer shall be treated the same as a reassignment within
Accuride.


 


(f)            “Affiliate”
Defined.  For purposes of this
Agreement, the term “Affiliate” shall mean (i) any member of a “controlled
group of corporations” (within the meaning of Section 414(b) of the
Internal Revenue Code of 1986 (the “Code”) as modified by Section 415(h) of
the Code) that includes Accuride as a member of the group; and (ii) any
member of a group of trades or businesses under common control (within the
meaning of Section 414(c) of the Code as modified by Section 415(h) of
the Code) that includes Accuride as a member of the group.


 


3.                                      CHANGE IN CONTROL
BENEFITS.


 


(a)           Entitlement to Change in Control Benefits.  If your employment with the Company is
terminated by the Company without Cause during the Protection Period, you will 


 


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receive the “Change in Control Benefits”
described in this Section 3.  The
Change in Control Benefits also will be payable if you terminate your
employment for Good Reason during the Protection Period.


 


The Change in
Control Benefits will not be payable if your employment is terminated for
Cause, if you voluntarily terminate your employment without Good Reason, or if
your employment is terminated by reason of your Disability or your death.  In addition, the Change in Control Benefits will
not be payable if your employment is terminated by you or the Company for any
or no reason prior to or following the Protection Period.


 


In addition,
as noted in Section 2(e), a transfer to an Affiliate will not be treated
as a termination of employment for purposes of this Agreement.


 


(b)           Change
in Control Severance Payment.  If you
are entitled to receive Change in Control Benefits, you will receive a “Change
in Control Severance Payment.”  The “Change
in Control Severance Payment” is a lump sum payment equal to the sum of: (i) 300%
of your annualized base salary as of the date on which a Change in Control
occurs, plus (ii) 300% of the applicable bonus or incentive compensation
paid or payable to you pursuant to the Accuride Incentive Compensation Plan.  The applicable bonus or incentive
compensation amount used for purposes of clause (ii) in the preceding
sentence shall be the greater of the following: 
(i) the incentive compensation to which you would have been
entitled if the year were to end on the day on which the Change in Control
occurs, based upon an annualized figure determined using performance up to that
date; or (ii) the average of the actual incentive compensation paid to you
through the Accuride Incentive Compensation Plan during the three years
preceding the year of your termination. 
The Change in Control Severance Payment shall be reduced by the full
amount of any payments to which you may be entitled due to your termination
pursuant to any other Company severance policy, any agreement between you and
the Company providing for severance, or applicable law.


 


Except as
otherwise provided in Section 4, the Change in Control Severance Payment
will be paid in one lump sum within five business days following the date on
which the Release Agreement required pursuant to Section 8 becomes
irrevocable.


 


(c)           Equity
Awards.  If you are entitled to
receive Change in Control Benefits, you also may be entitled to receive a
benefit pursuant to the Accuride Corporation 2005 Incentive Award Plan.  Refer to the Accuride Corporation 2005
Incentive Award Plan for more details regarding the impact of a Change in
Control on awards made pursuant to that Plan.


 


(d)           Welfare
Benefits.  If you are entitled to
receive Change in Control Benefits, the Company shall arrange to provide you,
for an 18-month period following your termination of employment, with
disability, accident, dental and group health insurance benefits substantially
similar to those which you were receiving immediately prior to your
termination.  The cost to you of a
particular type of benefit (e.g.,
dental insurance) shall be not more than the cost to you of that particular
benefit immediately prior to your termination. 
The Company may provide the health insurance benefit described under
this Section by paying a portion of the premiums you are required to pay
for continued health insurance coverage under the Company’s health insurance
plan pursuant to COBRA.  The amount paid
by the Company will be equal to 


 


3

















 


the difference between the total COBRA premium and the amount you were
required to pay for health insurance immediately prior to your termination.


 


Your right to
receive continued health insurance benefits pursuant to COBRA shall commence
upon the termination of your employment and shall not be extended by your
rights under this Agreement.


 


Your right to receive all forms of welfare
benefits described under this paragraph (d) shall terminate as soon
as you become eligible to receive health care benefits, without exclusion for
preexisting conditions, from any other employer.


 


(e)           Outplacement
Services.  If you are entitled to
receive Change in Control Benefits, the Company will provide you with senior
executive outplacement services.  The
Company will select the firm to provide outplacement services.  The senior executive outplacement services
shall be provided at a time, and on a schedule, designated by the Company.  Nevertheless, in no event will the senior
outplacement services continue beyond December 31 of the second calendar
year following the calendar year in which your Separation from Service occurs.


 


(f)            Financial
Planning Benefits.  If you are
entitled to receive Change in Control Benefits, the Company also will provide
you with a tax and financial planning services stipend.  The stipend will be in an amount determined
pursuant to Company policies and will be based on your officer classification
as of the date on which the Change in Control occurs.  The stipend shall be paid at the same time
as, and along with, the Change in Control Severance Payment.


 


(g)           Mayo
Executive Physical Program.  If you
are entitled to receive Change in Control Benefits, the Company will, for a
period of 12 months following your termination of employment, continue to allow
you to participate in the Mayo Executive Physical Program and cover all
regularly authorized expenses associated therewith, including, without
limitation, travel, meals, lodging and fees. 
In order to be reimbursed, all such expenses must be submitted promptly
and no reimbursements will be made following the December 31 of the second
calendar year following the calendar year in which your Separation from Service
occurs.


 


(h)           Retirement
and Savings Plan.  If you are
entitled to receive Change in Control Benefits, the Company shall make a
payment to you equal to 110% of the amount of any forfeitures that you
experience as a result of your termination of employment under any of the
Company’s pension or profit sharing plans. 
If you experience a forfeiture under the Accuride Retirement Plan, the
amount of the Company’s payment shall be equal to 110% of your unvested “Cash
Balance Account” (as defined in the Accuride Retirement Plan, as it may be
amended from time to time).  The
additional 10% payment provided for in this paragraph is to compensate you for
the loss of the opportunity to defer taxes through a rollover of the forfeited
amounts.  Except as otherwise provided in
Section 4, the payment called for by this paragraph (h) shall be
paid within 30 days following your termination of employment.


 


(i)            No
Allowance in Lieu of Benefits.  You
may not elect to receive cash or any other allowance in lieu of any welfare
benefits provided by this Section.


 


4

















 


4.                                      COMPLIANCE
WITH SECTION 409A; REQUIRED DELAY IN PAYMENTS.


 


(a)           409A
Compliance Strategy.  The Company
intends that the Basic Severance Benefit provided pursuant to Section 2
will comply with the short-term deferral exception to the requirements of Section 409A
of the Code, as described in Treas. Reg. § 1.409A-1(b)(4).  The Company also intends that the Change in
Control Severance Payment provided by Section 3(b), the financial planning
stipend provided by Section 3(f), and the retirement and savings plan
forfeiture payment provided by Section 3(h) (collectively the “Cash
Change in Control Payments”) will comply with the short-term deferral
exception.  In order to meet the
requirements of the short-term deferral exception, despite any other provision
of this Agreement to the contrary, the Basic Severance Benefit and all Cash
Change in Control Payments due pursuant to this Agreement shall be paid at the
times stated in Section 2 or Section 3 and in no event later than March 15
of the year following the year in which your Separation from Service
occurs.  Payments may be delayed only in
accordance with regulations issued pursuant to Section 409A.  The Company intends that the Welfare Benefits
provided by Section 3(d), the Outplacement Services provided by Section 3(e) and
the right to continued participation in the Mayo Executive Physical Program
provided by Section 3(g) will comply with the exception to Section 409A
for reimbursements and certain other separation payments, as described in
Treas. Reg. § 1.409A-1(b)(9)(v)(B).  The
Company has concluded that the gross-up payment provided under Section 10(f) and
the reimbursement payments the Company has agreed to make pursuant to Section 20
may be subject to the requirements of Section 409A.  To ensure that the payments under Section 10(f) and
Section 20 comply with Section 409A, the payments are payable at a
specified time or pursuant to a fixed schedule within the meaning of Treas.
Reg. § 1.409A-3(i)(1)(iv).


 


(b)           Delay
in Payments.  Prior to making any
payments pursuant to this Agreement, the Accuride Compensation Committee will
determine, on the basis of any regulations, rulings or other available guidance
and the advice of counsel, whether the short-term deferral exception, the
separation pay exception or any other exception to the requirements of Section 409A
is available.  If the Compensation
Committee concludes that no exception is available, no payments will be made
prior to your Separation from Service. 
In addition, if you are a “Specified Employee” (as defined in paragraph (d)),
and the Compensation Committee concludes that no exception to the requirements
of Section 409A is available, no payments shall be made to you prior to
the first business day following the date which is six months after your
Separation from Service.  Any amounts
that would have been paid during the six months following your Separation from
Service will be paid on the first business day following the expiration of the
six month period without interest thereon. 
The provisions of this paragraph apply to all amounts due pursuant to
this Agreement, other than amounts that do not constitute a deferral of
compensation within the meaning of Treas. Reg. §1.409A-1(b) or other
amounts or benefits that are not subject to the requirements of Section 409A.


 


(c)           Separation
from Service Defined.  For purposes
of this Agreement, the term “Separation from Service” means (1) the
termination of your employment with Accuride and all Affiliates due to death,
retirement or other reasons, or (2) a permanent reduction in the level of
bona fide services you provide to Accuride and all Affiliates to an amount that
is no more than 20% of the average level of bona fide services you provided to
Accuride and all 


 


5

















 


Affiliates in the immediately preceding 36 months (or the entire time
period during which you provided services to Accuride and all Affiliates if you
have been providing such services for less than 36 months), with the level of
bona fide service calculated in accordance with Treas. Reg. §
1.409A-1(h)(1)(ii).  Your employment
relationship is treated as continuing while you are on military leave, sick
leave, or other bona fide leave of absence (if the period of such leave does
not exceed six months, or if longer, so long as your right to reemployment with
Accuride or an Affiliate is provided either by statute or contract).  If your period of leave exceeds six months
and your right to reemployment is not provided either by statute or by
contract, the employment relationship is deemed to terminate on the first day
immediately following the expiration of such six month period.  Whether a termination of employment has
occurred will be determined based on all of the facts and circumstances and in
accordance with regulations issued by the United States Treasury Department
pursuant to Section 409A of the Code if the Company concludes that Section 409A
is applicable.


 


(d)           Specified
Employee Defined.  For purposes of
this Agreement, the term “Specified Employee” means certain officers and highly
compensated employees of the Company as defined in Treas. Reg.
§ 1.409A-1(i), and as determined in accordance with such procedures as may
be adopted from time to time by Accuride. 
The identification date for determining whether any employee is a
Specified Employee during any calendar year shall be the September 1
preceding the commencement of such calendar year.


 


(e)           Miscellaneous
Payment Provisions.  If payment is
not made, in whole or in part, due to a dispute between you and the Company, the
payments shall be made in accordance with Treas. Reg. §1.409A-3(g), as
applicable.


 


(f)            Ban
on Acceleration or Deferral.  Under
no circumstances may the time or schedule of any payment made or benefit
provided pursuant to this Agreement be accelerated or subject to a further
deferral except as otherwise permitted or required pursuant to regulations and
other guidance issued pursuant to Section 409A of the Code.


 


(g)           No
Elections.  You do not have any right
to make any election regarding the time or form of any payment due under this
Agreement.


 


(h)           Compliant
Operation and Interpretation.  This
Agreement shall be operated in compliance with Section 409A or an
exception thereto and each provision of this Agreement shall be interpreted, to
the extent possible, to comply with Section 409A or to qualify for an
exception thereto.


 


5.                                      CHANGE
IN CONTROL DEFINED.


 


“Change in
Control” means and includes each of the following:


 


(a)           A
transaction or series of transactions (other than an offering of Stock to the
general public through a registration statement filed with the Securities and
Exchange Commission) whereby any “person” or related “group” of “persons” (as
such terms are used in Sections 13(d) and 14(d)(2) of the Exchange
Act) (other than Accuride, any of its Affiliates, an employee benefit plan
maintained by Accuride or any of its Affiliates, or a “person” that, prior to
such transaction, directly or indirectly controls, is controlled by, or is
under common control 


 


6

















 


with, Accuride) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of securities of
Accuride possessing more than 35% of the total combined voting power of
Accuride’s securities outstanding immediately after such acquisition; or


 


(b)                                 During
any period of two consecutive years, individuals who, at the beginning of such
period, constitute the Board of Directors together with any new director(s) (other
than a director designated by a person who shall have entered into an agreement
with Accuride to effect a transaction described in paragraphs (a) or (c) of
this Section 5) whose election by the Board of Directors or nomination for
election by Accuride’s stockholders was approved by a vote of a majority of the
directors then still in office who either were directors at the beginning of
the two-year period or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority thereof; or


 


(c)                                  The
consummation by Accuride (whether directly involving Accuride or indirectly
involving Accuride through one or more intermediaries) of (x) a merger,
consolidation, reorganization, or business combination or (y) a sale or
other disposition of all or substantially all of Accuride’s assets in any
single transaction or series of related transactions or (z) the
acquisition of assets or stock of another entity, in each case other than a
transaction:


 


(i)            Which
results in Accuride’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by
being converted into voting securities of Accuride or the person that, as a
result of the transaction, controls, directly or indirectly, Accuride or owns,
directly or indirectly, all or substantially all of Accuride’s assets or
otherwise succeeds to the business of Accuride (Accuride or such person, the “Successor
Entity”)) directly or indirectly, at least a majority of the combined voting
power of the Successor Entity’s outstanding voting securities immediately after
the transaction, and


 


(ii)           After
which no person or group beneficially owns voting securities representing 50%
or more of the combined voting power of the Successor Entity; provided,
however, that no person or group shall be treated for purposes of this Section 5(c)(ii) as
beneficially owning 50% or more of the combined voting power of the Successor
Entity solely as a result of the voting power held in Accuride prior to the
consummation of the transaction; or


 


(d)                                 Accuride’s
stockholders approve a liquidation or dissolution of Accuride.


 


The
Compensation Committee shall determine whether a Change in Control of Accuride
has occurred under the above definition, and the date of the occurrence of such
Change in Control and any incidental matters relating thereto.


 


6.                                      GOOD
REASON DEFINED.


 


(a)                                  Definition
of Good Reason.  For purposes of this
Agreement, “Good Reason” means a termination of your employment with the
Company following the occurrence of one or more of the following circumstances
(without your prior express written consent):


 


(i)            a
material diminution in your total annual compensation;


 


7

















 


(ii)           a
material diminution in your authority, duties or responsibilities;


 


(iii)          a
material change in the geographic location of your principal office; or


 


(iv)          any
other action or inaction that constitutes a material breach by the Company of
this Agreement.


 


(b)                                 Notice
of Termination.  If you elect to
terminate your employment for Good Reason, you must provide the Company with a
Notice of Termination (in compliance with Section 11) which sets forth the
existence of the Good Reason condition described in paragraphs (i) through
(iv) above within 60 days of the initial existence of the condition.


 


(c)                                  Opportunity
to Cure.  Notwithstanding anything to
the contrary, the existence of one of the circumstances described in paragraphs
(i) through (iv) above will not constitute Good Reason if, within 30
days after you give the Company Notice of Termination which sets forth the
existence of the Good Reason condition described in paragraphs (i) through
(iv), the Company has fully corrected such condition.


 


7.                                      CAUSE
DEFINED.


 


For purposes
of this Agreement, “Cause” shall mean (a) your continued willful failure,
neglect or refusal to perform your duties with respect to the Company or its
Affiliates which continues beyond ten days after a written demand for
substantial performance is delivered to you by the Company; (b) conduct by
you involving (i) dishonesty, fraud, or breach of trust in connection with
your employment or (ii) conduct which would be a reasonable basis for an
indictment for a felony or for a misdemeanor involving moral turpitude; (c) your
willful and continued failure or refusal to follow material directions of the
Board or any other act of insubordination by you; or (d) willful
malfeasance or willful misconduct by you which is injurious to the Company,
monetarily or otherwise.


 


8.                                      RELEASE
AGREEMENT.


 


In order to
receive the Basic Severance Benefit or any Change in Control Benefits, you must
execute, in a timely manner, a release of any known or unknown claims that you
may have against the Company.  The
release shall be in a form reasonably requested by the Company.  If you are not yet 40 years old on the date
on which the Release Agreement must be signed, you will be given 21 days to
consider whether to sign the Release Agreement. If you are 40 or over, in
accordance with federal law, you will be given 21 or 45 days, depending on the
circumstances, to consider whether to sign the Release Agreement.  In any event, you may revoke the Release
Agreement during the seven day period following your delivery of a signed
Release Agreement.  These rules will
be described in greater detail at the appropriate time.  If you fail to sign the Release Agreement
within the prescribed time period, or if you revoke the Release Agreement, you
will not be entitled to receive any Basic Severance Benefit or any Change in
Control Benefits.  The Release Agreement
to which this Section 8 refers will be provided to you on your termination
date and in no event later than ten days following your termination date.


 


8

















 


9.                                      COMPETITION.


 


(a)           Covenant Not to Compete.  If you terminate employment with the Company
or if your employment is terminated by the Company and then you compete with
the Company, the Company may suffer irreparable harm and damage.  Accordingly, you agree that, unless you
receive the express prior written consent of the Company, you will not be
employed as an owner, partner, employee, consultant, or in any other capacity
by, and you will not become a shareholder in, a seller, distributor or
manufacturer of commercial vehicle components or otherwise compete with the
Company, directly or indirectly, during the “Restriction Period” in the “Restricted
Area.”


 


(b)           Restricted
Area.  For this purpose, the “Restricted
Area” means the United States of America. 
If a court of competent jurisdiction determines that the United States
of America is a larger area than necessary to protect the Company’s business
interests, the parties agree that the Restricted Area will be the largest of
the following areas that the court determines to be reasonable:  the United States of America east of the
Mississippi River; all states in which you performed services while employed by
the Company; the State of Indiana; the County of Vanderburgh; or the City of
Evansville.


 


(c)           Restriction
Period.  For this purpose, the “Restriction
Period” begins on the effective date of your termination of employment for
whatever reason and ends at the end of the 24th month thereafter, or if a court
of competent jurisdiction concludes that 24 months is longer than necessary to
protect the Company’s business interests, then the parties agree that the
restriction period will end at the end of the longest of the following number
of months that the court determines to be reasonable:  23, 22, 21, 20, 19, 18, 17, 16, 15, 14, 13,
12, 11, 10, 9, 8, 7, 6, 5, 4, or 3.


 


(d)           Competition.  You will be considered to be competing with
the Company if you are performing any services in the commercial vehicle
component industry of the type and nature that are required to be performed by
or for the Company.  You will not be
considered to be competing with the Company for purposes of this Section 9
if you acquire stock representing less than 1% of the outstanding stock of any
publicly traded corporation.


 


(e)           Non-Solicitation
Covenants.  For a period of two years
from the date of the termination of this Agreement and your employment with the
Company, or, if a court determines that two years is unreasonable, one year
from the date of the termination of this Agreement and your employment with the
Company, you agree that you will not (directly or indirectly through
others):  (i) contact, solicit,
contract with, or attempt to contract with any entity engaged in the commercial
vehicle component industry with which the Company has contracts at the time of
the termination of this Agreement, or (ii) solicit or attempt to solicit
away from the Company any officer, employee or agent of the Company.


 


(f)            Reformation
of Covenants.  The parties agree that
the scope of any provision of this Section may be modified by a judge in
any proceeding to enforce this Agreement, so that such provision can be
enforced to the maximum extent permitted by law.  If any court of competent jurisdiction
determines that any portion of this Section is invalid or 


 


9

















 


unenforceable, the remainder of this Section will not thereby be
affected and will be given full effect, without regard to invalid portions.


 


(g)                                 Breach
of Covenants.  If you breach the
covenant not to compete contained in paragraph (a) or the non-solicitation
covenant contained in paragraph (e), you agree that in addition to (and
without limiting) any other remedy or right the Company may have:  (i) the Company will have the right to
an injunction against you issued by a court of competent jurisdiction enjoining
such breach; and (ii) if you are to receive any payments or benefits
pursuant to Sections 2 or 3 or any other provision of this Agreement in
the future, the Company has the right to forfeit any future benefits to which
you are entitled to compensate the Company for injury by reason of such
breach.  You and the Company agree that
the foregoing remedies are reasonable and necessary for the protection of the
Company’s goodwill and recognize that in the event of a breach of the foregoing
restrictions, it will be impossible to ascertain or estimate the entire or
exact cost, damage or injury that the Company may sustain by reason of such
breach.


 


10.                               CAP
ON PAYMENTS.


 


(a)                                  General
Rules.  The Code places significant
tax burdens on you and the Company if the total payments made to you due to a
Change in Control exceed prescribed limits. 
For example, if your “Base Period Income” (as defined below) is
$500,000, your limit or “Cap” is $1,499,999. 
If your “Basic Payments” exceed the Cap by even $1.00, you are subject
to an excise tax under Section 4999 of the Code of 20% of all amounts paid
to you in excess of $500,000.  In other
words, if your Cap is $1,499,999, you will not be subject to an excise tax if
you receive exactly $1,499,999.  If you
receive $1,500,000, you will be subject to an excise tax of $200,000 (20% of
$1,000,000).  In order to avoid this
excise tax and the related adverse tax consequences for the Company, by signing
this Agreement you agree that your Basic Payments will not exceed an amount
equal to your Cap unless the exception described in paragraph (e), below,
applies.


 


(b)                                 Special
Definitions.  For purposes of this
Section, the following specialized terms will have the following meanings:


 


(i)            “Base
Period Income.”  “Base Period Income”
is an amount equal to your “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, your “annualized includable compensation” is the average of your
annual taxable income from the Company for the “base period,” which is the five
calendar years prior to the year in which the Change in 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.


 


(ii)           “Basic
Payments.”  The “Basic Payments”
include any “payments in the nature of compensation” (as defined in Section 280G
of the Code and the regulations adopted thereunder), made pursuant to this
Agreement or otherwise, to you or for your benefit, the receipt of which is
contingent on a Change in Control and to which Section 280G of the Code
applies.


 


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(iii)          “Cap”
or “280G Cap.”  “Cap” or “280G Cap”
shall mean an amount equal to 2.99 times your “Base Period Income.”  This is the maximum amount which you may
receive without becoming subject to the excise tax imposed by Section 4999
of the Code or which the Company may pay without loss of deduction under Section 280G
of the Code.


 


(c)                                  Calculating
the Cap.  If the Company believes
that these rules will result in a reduction of the payments to which you
are entitled under this Agreement, it will so notify you as soon as
possible.  The 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 a determination concerning whether your Basic Payments
exceed the limit discussed above (the “Determination”).  The Company will select the Consultant.


 


At a minimum,
the Determination required by this Section must set forth the amount of
your Base Period Income, the value of the Basic Payments and the amount and
present value of any excess parachute payments.


 


If the
Determination states that there would be an excess parachute payment, your
Basic Payments will be reduced to the extent necessary to eliminate the
excess.  In making such reduction,
Accuride first will reduce the amount of your payments under this Agreement
and, if necessary, any other payments to which you are entitled under any other
arrangement that do not constitute “non-qualified deferred compensation” that
is subject to Section 409A of the Code. 
Accuride will reduce the amount of any Basic Payments payable to you
that are subject to Section 409A of the Code only to the extent reductions
in addition to those described in the preceding sentence are necessary to avoid
an excess parachute payment.  If
necessary, any Basic Payments which are subject to Section 409A of the
Code shall be reduced proportionally to avoid an excess parachute payment.


 


If the
Consultant selected to provide the Determination so requests, a firm of recognized
executive compensation consultants selected by the Company (which may, but is
not required to be, the Consultant) 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 in
Control.


 


If the Company
believes that your Basic Payments will exceed the limitations of this Section,
it will nonetheless make payments to you, 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 the amount
paid to you by the Company is ultimately determined, pursuant to the Determination
or by the Internal Revenue Service, to have exceeded the limitation of this
Section, you must repay the excess promptly on demand of the Company.  If it is ultimately determined, pursuant to
the Determination or by the Internal Revenue Service, that a greater payment
should have been made to you, the Company shall pay you the amount of the
deficiency, together with interest thereon from the date such amount should
have been paid to the date of such payment, at the rate set forth above, so
that you will have received or be entitled to receive the maximum amount to
which you are entitled under this Agreement.


 


11

















 


As a general
rule, the Determination shall be binding on you and the Company.  Section 280G and the excise tax rules of
Section 4999, however, are complex and uncertain and, as a result, the
Internal Revenue Service may disagree with the Consultant’s conclusions.  If the Internal Revenue Service determines
that the Cap is actually lower than calculated by the Consultant, the Cap will
be recalculated by the Consultant.  Any
payment over that revised Cap will then be repaid by you to the Company.  If the Internal Revenue Service determines
that the actual Cap exceeds the amount calculated by the Consultant, the
Company shall pay you any shortage.


 


The Company
has the right to challenge any determinations made by the Internal Revenue
Service.  If the Company agrees to
indemnify you from any taxes, interest and penalties that may be imposed upon
you (including any taxes, interest and penalties on the amounts paid pursuant
to the Company’s indemnification agreement), you must cooperate fully with the
Company in connection with any such challenge. 
The Company shall bear all costs associated with the challenge of any
determination made by the Internal Revenue Service and the Company shall
control all such challenges.


 


You must
notify the Company in writing of any claim or determination by the Internal
Revenue Service that, if upheld, would result in the payment of excise
taxes.  Such notice shall be given as
soon as possible but in no event later than 15 days following your receipt of
notice of the Internal Revenue Service’s position.


 


(d)           Effect
of Repeal or Inapplicability.  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.  Moreover, if the provisions of
Sections 280G and 4999 of the Code do not apply to impose the excise tax to
payments under this Agreement, then the provisions of this Section shall
not apply.


 


(e)           Exception.  The Consultant selected pursuant to this Section will
calculate your “Uncapped Benefit” and your “Capped Benefit.”  The limitations of paragraphs (a), (b) and
(c) of this Section 10 will not apply to you and you will be entitled
to receive the gross-up payments provided by paragraph (f), if your
Uncapped Benefit is at least 120% of your Capped Benefit.  For this purpose, your “Uncapped Benefit” is
the amount to which you will be entitled pursuant to Section 2 or Section 3,
as applicable, without regard to the limitations of paragraphs (a), (b) and
(c) of this Section 10.  Your “Capped
Benefit” is the amount to which you will be entitled pursuant to Sections 2 or
3, as applicable, after the application of the limitations of
paragraphs (a), (b) and (c) of this Section 10.


 


(f)            Excise
and Income Tax Gross-Up.  As provided
in paragraph (e), if your Uncapped Benefit is at least 120% of your Capped
Benefit, the Company will provide you with the special gross up payment called
for by this paragraph (f).  The special
gross up payment will equal the sum of (i) an amount equal to the total
excise tax imposed on you (including the excise taxes on any excise tax
reimbursements due pursuant to this paragraph and the excise taxes on any
federal, state and local tax reimbursements due pursuant to the next clause);
and (ii) an amount equal to the federal, state and local taxes imposed on
you with respect to the excise tax reimbursements due to you pursuant to the
preceding clause and the federal, state and local tax reimbursements due to you
pursuant to this clause.  For purposes of
determining the amount of 


 


12

















 


the gross-up payment, you will be deemed to pay federal, state and
local income taxes at your actual marginal rate of federal, state and local
income taxation in the calendar year that the payment or benefit to which the
excise tax relates is to be made or provided, net of the maximum reduction in
federal income taxes that could be obtained by deducting such state and local
taxes.  You shall be responsible for
paying the actual taxes.  If the Company
so requests, you shall provide to the Company within thirty days following
receipt of such request by the Company, a copy of your state and federal income
tax returns for the year in which you remit the excise tax described in this
paragraph.  Your failure to provide your
tax returns to the Company in accordance with the preceding sentence will result
in your forfeiture of the gross-up payment, if any, to which you are entitled
under this Section 10.  The gross up
payments called for by this paragraph (f) shall be made on or before December 31
of the calendar year following the calendar year in which you remit the taxes
referred to in this paragraph (f).


 


11.                               TERMINATION NOTICE AND PROCEDURE.


 


Any
termination by the Company or you of your employment shall be communicated by
written Notice of Termination to you if such Notice of Termination is delivered
by the Company and to the Company if such Notice of Termination is delivered by
you, all in accordance with the following procedures:


 


(a)           The
Notice of Termination shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances alleged to provide a basis for termination.


 


(b)           Any
Notice of Termination by the Company shall be in writing signed by the
President of the Company or a member of the Board who is not a Company employee,
specifying in detail the basis for such termination.


 


(c)           If
the Company shall furnish a Notice of Termination for Cause and you in good
faith notify the Company that a dispute exists concerning such termination
within the 15 day period following your receipt of such notice, you may elect
to continue your employment during such dispute.  If it is thereafter determined that Cause did
exist, your “Termination Date” shall be the earlier of (i) the date on
which the dispute is finally determined, either by mutual written agreement of
the parties or pursuant to the alternative dispute resolution provisions of Section 19
or (ii) the date of your death.  If
it is thereafter determined that Cause did not exist, your employment shall
continue as if the Company had not delivered its Notice of Termination and
there shall be no Termination Date arising out of such notice.


 


(d)           If
the Company shall furnish a Notice of Termination by reason of Disability and
you in good faith notify the Company that a dispute exists concerning such
termination within the 15-day period following your receipt of such notice, you
may elect to continue your employment during such dispute.  The dispute relating to the existence of a
Disability shall be resolved by the opinion of the licensed physician selected
by the Company; provided, however, that if you do not accept the opinion of the
licensed physician selected by the Company, the dispute shall be resolved by
the opinion of a licensed physician who shall be selected by you; provided
further, however, that if the Company does not accept the opinion of the
licensed physician selected by you, the dispute shall be finally resolved by
the opinion of a 


 


13

















 


licensed physician selected by the licensed physicians selected by the
Company and you, respectively.  If it is
thereafter determined that a Disability did exist, your Termination Date shall
be the earlier of (i) the date on which the dispute is resolved or (ii) the
date of your death.  If it is thereafter
determined that a Disability did not exist, your employment shall continue as
if the Company had not delivered its Notice of Termination and there shall be
no Termination Date arising out of such notice. 
For purposes of this Agreement, “Disability” shall mean your inability
to perform your customary duties for the Company due to a physical or mental
condition that is considered to be of long-lasting or indefinite duration.


 


(e)           If
you in good faith furnish a Notice of Termination for Good Reason and the
Company notifies you that a dispute exists concerning the termination within
the 15-day period following the Company’s receipt of such notice, you may elect
to continue your employment during such dispute.  If it is thereafter determined that Good
Reason did exist, your Termination Date shall be the earlier of (i) the
date on which the dispute is finally determined, either by mutual written
agreement of the parties or pursuant to the alternative dispute resolution
provisions of Section 19, (ii) the date of your death, or (iii) one
day prior to the 18-month anniversary of a Change in Control, and your payments
hereunder shall reflect events occurring after you delivered Notice of
Termination.  If it is thereafter
determined that Good Reason did not exist, your employment shall continue after
such determination as if you had not delivered the Notice of Termination
asserting Good Reason.


 


(f)            If
you submit a Notice of Termination for Good Reason, and the Company
successfully contests the grounds you set forth in such Notice of Termination,
at the Company’s discretion you may be deemed to have voluntarily terminated
your employment other than for Good Reason regardless of whether you elect to
continue employment pending resolution of the dispute regarding your Notice of
Termination.


 


(g)           If
the Company submits a Notice of Termination for Cause, and you successfully
contest the grounds set forth in such Notice of Termination, the Company will
be deemed to have terminated you other than by reason of Disability or Cause if
you do not elect to continue employment pending resolution of the dispute
regarding your Notice of Termination.


 


(h)           For
purposes of this Agreement, a transfer from Accuride to one of its Affiliates
or a transfer from an Affiliate to Accuride or another Affiliate shall not be
treated as a termination of employment. 
Such a transfer may, however, in certain circumstances, provide you with
Good Reason to terminate employment pursuant to Section 6.


 


12.                               NO MITIGATION.


 


The Basic
Severance Benefit, the Change in Control Benefits (except as otherwise provided
in Section 3(d)) and the other payments or benefits provided pursuant to
this Agreement will be payable without regard to whether you look for or obtain
alternative employment following your termination of employment with the
Company.


 


14

















 


13.                               SUCCESSORS.


 


Accuride will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of Accuride or any of its Affiliates to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Accuride
or any Affiliate would be required to perform it if no such succession had
taken place.  Failure of Accuride to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to the
compensation described in this Agreement to which you would be entitled
hereunder as if you terminate your employment for Good Reason following a
Change in Control, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the
Termination Date.  As used in this
Agreement, “Accuride” shall mean Accuride as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law or otherwise.


 


14.                               BINDING
AGREEMENT; ASSIGNMENT.


 


This Agreement
shall inure to the benefit of and be enforceable by you and your personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  If
you should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.  Except as provided in the preceding sentence,
no rights of any kind under this Agreement shall, without the written consent
of Accuride, be transferable or assignable by you, your spouse, or any other
person, or be subject to alienation, encumbrance, garnishment, attachment,
execution, or levy of any kind, voluntary or involuntary.


 


15.                               NOTICE.


 


For purposes
of this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth on the first page of this Agreement, provided that all notices to
Accuride shall be directed to the attention of the President of the Company or
a member of the Board who is not a Company employee with a copy to the
Secretary of Accuride, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.


 


16.                               MISCELLANEOUS.


 


No provision
of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by you and the
President of the Company or a member of the Board who is not a Company
employee.  No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other 


 


15

















 


party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement.  Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law.  The
obligations of the Company that arise prior to the expiration of this Agreement
shall survive the expiration of the term of this Agreement.


 


17.                               VALIDITY.


 


The invalidity
or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.


 


18.                               COUNTERPARTS.


 


This Agreement
may be executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.


 


19.                               ALTERNATIVE
DISPUTE RESOLUTION.


 


(a)           Mediation.  Unless otherwise provided herein (such as in
Sections 10 and 11(d)), any and all disputes arising under, pertaining to
or touching upon this Agreement or the statutory rights or obligations of
either party hereto, shall, if not settled by negotiation, be subject to
non-binding mediation before an independent mediator selected by the parties
pursuant to Section 19(d). 
Notwithstanding the foregoing, both you and Accuride may seek
preliminary judicial relief if such action is necessary to avoid irreparable
damage during the pendency of the proceedings described in this Section 19.  Any demand for mediation shall be made in
writing and served upon the other party to the dispute, by certified mail,
return receipt requested, at the business address of Accuride, or at your last
known residence address, respectively. 
The demand shall set forth with reasonable specificity the basis of the
dispute and the relief sought.  The
mediation hearing will occur at a time and place convenient to the parties in
Evansville, Indiana, within 30 days of the date of selection or appointment of
the mediator.


 


(b)           Arbitration.  In the event that the dispute is not settled
through mediation, the parties shall then proceed to binding arbitration before
a single independent arbitrator selected pursuant to Section 19(d).  The mediator shall not serve as
arbitrator.  TO THE EXTENT ALLOWABLE
UNDER APPLICABLE LAW, ALL DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT
DISCRIMINATION, BREACH OF CONTRACT OR POLICY, OR EMPLOYMENT TORT COMMITTED BY
ACCURIDE OR A REPRESENTATIVE OF ACCURIDE, INCLUDING CLAIMS OF VIOLATIONS OF
FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL BE RESOLVED
PURSUANT TO THIS POLICY AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR
WITHOUT A JURY TRIAL.  The arbitration
hearing shall occur at a time and place convenient to the parties in
Evansville, Indiana, within 30 days of selection or appointment of the
arbitrator.  If Accuride has adopted a
policy that is applicable to arbitrations with executives, the arbitration
shall be conducted in accordance with said policy to the extent 


 


16

















 


that the policy is consistent with this Agreement and the Federal
Arbitration Act, 9 U.S.C. §§ 1-16. 
If no such policy has been adopted, the arbitration shall be governed by
the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association (“AAA”) in effect on the date of the first
notice of demand for arbitration.  The
arbitrator shall issue written findings of fact and conclusions of law, and an
award, within 15 days of the date of the hearing unless the parties otherwise
agree.


 


(c)           Damages.  In cases of breach of contract or policy,
damages shall be limited to contract damages. 
In cases of discrimination claims prohibited by statute, the arbitrator
may direct payment consistent with the applicable statute.  In cases of employment tort, the arbitrator
may award punitive damages if proved by clear and convincing evidence.  The arbitrator may award attorneys’ fees to
the prevailing party and assess costs against the non-prevailing party, only in
accordance with Section 20 of this Agreement.  Issues of procedure, arbitrability, or
confirmation of award shall be governed by the Federal Arbitration Act, 9
U.S.C.  §§ 1-16, except that Court
review of the arbitrator’s award shall be that of an appellate court reviewing
a decision of a trial judge sitting without a jury.


 


(d)           Selection
of Mediators or Arbitrators.  The
parties shall select the mediator or arbitrator from a panel list made
available by the AAA.  If the parties are
unable to agree to a mediator or arbitrator within 10 days of receipt of a
demand for mediation or arbitration, the mediator or arbitrator will be chosen
by alternatively striking from a list of five mediators or arbitrators obtained
by Accuride from AAA.  You shall have the
first strike.


 


20.                               EXPENSES
AND INTEREST.


 


If a good
faith dispute shall arise with respect to the enforcement of your rights under
this Agreement or if any arbitration or legal proceeding shall be brought in
good faith to enforce or interpret any provision contained herein, or to
recover damages for breach hereof, and you are the prevailing party, you shall
recover from the Company any reasonable attorneys’ fees and necessary costs and
disbursements incurred as a result of such dispute or legal proceeding, and
prejudgment interest on any money judgment obtained by you calculated at the
rate of interest announced by Citibank from time to time as its prime rate from
the date that payments to you should have been made under this Agreement.  Any reimbursement of fees, costs and
disbursements to which you are entitled pursuant to this Section 20 shall
be paid by the Company, if at all, on or before December 31 of the
calendar year following the year in which you incurred the fees, costs and
disbursements for which you are entitled to reimbursement.  The fees, costs and disbursements reimbursed
in one calendar year will not affect the fees, costs and disbursements eligible
for reimbursement by the Company in a different calendar year.  The right to reimbursement under this Section 20
is not subject to liquidation or exchange for any other benefit.  It is expressly provided that the Company
shall in no event recover from you any attorneys’ fees, costs, disbursements or
interest as a result of any dispute or legal proceeding involving the Company
and you.


 


21.                               PAYMENT OBLIGATIONS
ABSOLUTE.


 


Accuride’s
obligation to pay you the compensation and to make the arrangements in
accordance with the provisions herein shall be absolute and unconditional and
shall not be 


 


17

















 


affected by any circumstances; provided, however, that the Company may
apply amounts payable under this Agreement to any debts owed to the Company by
you on your Termination Date.  All
amounts payable by the Company in accordance with this Agreement shall be paid
without notice or demand.  If the Company
has paid you more than the amount to which you are entitled under this
Agreement, the Company shall have the right to recover all or any part of such
overpayment from you or from whomsoever has received such amount.


 


22.                               ENTIRE
AGREEMENT.


 


This Agreement
sets forth the entire agreement between you and the Company concerning the
subject matter discussed in this Agreement and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether written or oral, by any officer, employee or representative
of the Company.  Any prior agreements or
understandings with respect to the subject matter set forth in the aforementioned
agreements are hereby terminated and canceled.


 


23.                               STATUTORY
REFERENCES.


 


All references
to sections of the Securities Exchange Act of 1934 or the Code shall be deemed
also to refer to any successor provisions to such sections.  All references to sections of the final
regulations issued pursuant to Section 409A shall be deemed also to refer
to any successor provisions of such regulations or rulings or other guidance
that clarify such regulations.


 


24.                               DEFINITIONS.


 


A number of
terms have been defined throughout this Agreement.  These defined terms are identified by the
capitalization of the first letter of each word or the first letter of each
substantive word of a phrase.  Whenever
these terms are capitalized they shall be given the defined meaning.


 


25.                               PARTIES.


 


This Agreement
is an agreement between you and Accuride. 
In certain cases, though, obligations imposed upon Accuride may be
satisfied by an Accuride Affiliate.  Any
payment made or action taken by an Accuride Affiliate shall be considered to be
a payment made or action taken by Accuride for purposes of determining whether
Accuride has satisfied its obligations under this Agreement.


 


26.                               NO
RIGHTS IN ANY PROPERTY OF COMPANY.


 


The
undertakings of the Company constitute merely the unsecured promise of the
Company to make payments as provided for herein.  No property of the Company shall, by reason
of this Agreement, be held in trust for you, your spouse or any other person,
and neither you nor your spouse or any other person shall have, by reason of
this Agreement, any rights, title or interest of any kind in any property of
the Company.


 


18

















 


27.                               NOT AN EMPLOYMENT
AGREEMENT.


 


Nothing in
this Agreement shall be construed as an offer or commitment by the Company to
continue your employment with the Company for any period of time.


 


28.                               FACILITY
OF PAYMENT.


 


If the Company
shall find that any person to whom any amount is payable hereunder is unable to
care for his affairs, any payment due (unless a prior claim therefore shall
have been made by a duly appointed guardian, committee, or other legal
representative) may be paid to any person deemed by the Company to have
incurred expense for such person otherwise entitled to payment, in such manner
and proportions as the Company may determine.


 


29.                               GOVERNING
LAW.


 


This Agreement
shall be construed in accordance with and governed by the laws of the State of
Indiana.  Venue for any cause of action
arising under this Agreement shall be in Vanderburgh County, Indiana, USA.


 


30.                               AMENDMENTS.


 


This Agreement
may be amended at any time by a written agreement executed by the Company and
you.  No amendment that will result in a
violation of Section 409A of the Code, or any other provision of
applicable law, may be made to this Agreement and any such amendment shall be
void ab initio.


 


If you would
like to participate in this special benefits program, please sign and return
the extra copy of this letter which is enclosed.


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  David K. Armstrong

  
	
   

  	
  Senior Vice President/Chief Financial Officer and General Counsel

  
	
   

  	
  Accuride Corporation

  



 


19

















 


ACCEPTANCE


 


 


I hereby accept the offer to participate in this special benefit
program and I agree to be bound by all of the provisions noted above.