EXHIBIT 10.1.1
EXECUTIVE SEVERANCE AGREEMENT
AMENDED AND RESTATED
THIS AGREEMENT, dated as of November 7, 2000, between Trinity
Industries, Inc., a Delaware corporation (the "Company") and ____________ (the
"Executive") amends and restates that certain Executive Severance Agreement
entered into between the Company and the Executive as of ____________.
WITNESSETH
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in potentially disturbing circumstances arising from
the possibility of a Change in Control of the Company (as hereinafter defined);
and
WHEREAS, in consideration for the benefits provided under this
Agreement, the Executive will continue to give his or her attention and
dedication to his or her duties with the Company; and
WHEREAS, the Company and the Executive wish to amend that certain
Executive Severance Agreement by and between the Company and the Executive which
was executed as of the date stated above in order to revise or clarify certain
provisions to carry out the purposes of such agreement;
NOW, THEREFORE, this Agreement sets forth the severance compensation
which the Company agrees it will pay to the Executive if the Executive's
employment with the Company terminates under one of the circumstances described
herein in connection with a Change in Control of the Company.
1. TERM. This Agreement shall terminate, except to the extent that any
obligation of the Company hereunder remains unpaid as of such time, upon the
earliest of:
(i) June 8, 2002; provided, however, that, commencing
on June 8, 2001 and on each anniversary date thereafter (each such
date, an "Anniversary Date"), the expiration date under this clause (i)
shall automatically be extended for one additional year unless, not
later than the December 31 immediately prior to such Anniversary Date,
either party shall have given written notice that it does not wish to
extend this Agreement, but in no event shall the expiration date under
this clause (i) be earlier than the second anniversary of the Effective
Date of a Change in Control.
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(ii) the termination of the Executive's employment
with the Company based on death, Disability (as defined in Section 3(b)
hereof) or Cause (as defined in Section 3(c) hereof); and
(iii) the voluntary resignation of the Executive for
any reason other than Good Reason (as defined in Section 3(d)).
2. CHANGE IN CONTROL.
(a) ACCELERATION OF VESTING AND EXTENSION OF EXERCISE RIGHTS OF EQUITY
COMPENSATION UPON A CHANGE IN CONTROL. In addition to any provisions concerning
acceleration of vesting in any applicable plan or agreement relating to
equity-type compensation that may be outstanding between the Executive and the
Company or any subsidiary of the Company (including, without limitation, any
stock option agreement, restricted stock agreement, career share agreement,
bridge share agreement, performance incentive plan agreement, and performance
unit plan agreement), and notwithstanding any provision to the contrary in any
such plan or agreement, upon the Effective Date of a Change in Control all
units, stock options, incentive stock options, performance shares, performance
awards, and stock appreciation rights then held by the Executive shall
immediately become 100% vested and exercisable, and the Executive shall become
100% vested in all career shares, bridge shares, and shares of restricted stock,
held by or for the benefit of the Executive.
In addition to any provisions concerning extension of exercise rights
in any applicable plan or agreement relating to equity-type rights or
compensation that may be outstanding between the Executive and the Company or
any subsidiary of the Company (including, without limitation, any stock option
agreement, restricted stock agreement, career share agreement, bridge share
agreement, performance incentive plan agreement, and performance unit plan
agreement), and notwithstanding any provision to the contrary in any such plan
or agreement, upon the Effective Date of a Change in Control the Executive's
right to exercise any previously unexercised options or other equity-type rights
shall not terminate until the latest date on which the option or other right
granted under such agreement would expire under the terms of such agreement but
for the Executive's termination of employment; with respect to any incentive
stock option held by the Executive, if not exercised within three months after
termination of employment, such options shall immediately convert to
non-qualified stock options.
(b) ACCELERATION OF VESTING OF RETIREMENT AND DEFERRED COMPENSATION
BENEFITS UPON A CHANGE IN CONTROL. In addition to any provisions concerning
acceleration of vesting in any applicable plan or agreement relating to
retirement or deferred compensation-type benefits that may be outstanding
between the Executive and the Company (including, without limitation, the
Company's Profit Sharing Plan, Supplemental Profit Sharing Plan, and Deferred
Compensation Plan and Agreement), and notwithstanding any provision to the
contrary in any
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such plan or agreement, upon the Effective Date of a Change in Control all
accounts, interests, rights, and benefits of the Executive in any such plan or
agreement shall immediately become 100% vested and exercisable; however, such
acceleration shall not apply to the Company's Pension Plan for Salaried
Employees.
(c) NO OTHER COMPENSATION PAID PRIOR TO TERMINATION OF EMPLOYMENT.
Except as provided in paragraphs (a) and (b) of this Section 2, no compensation
shall be payable or benefits provided under this Agreement unless and until (x)
there shall have been a Change in Control of the Company, and (y) the
Executive's employment by the Company is terminated.
(d) DEFINITION OF CHANGE IN CONTROL. For purposes of this Agreement, a
"Change in Control" of the Company shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates) representing 30%
or more of the combined voting power of the Company's then outstanding
securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (A) of paragraph
(iii) below; or
(ii) the following individuals cease for any reason
to constitute a majority of the number of directors then serving:
individuals who, on July 19, 2000, constitute the board of directors of
the Company (sometimes hereafter referred to as the "Board") and any
new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on July 19,
2000 or whose appointment, election or nomination for election was
previously so approved or recommended; or
(iii) there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the Company with
any other corporation, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least 60% of the combined voting power of the securities of the Company
or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the
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Company (not including in the securities Beneficially Owned by such
Person any securities acquired directly from the Company or its
Affiliates other than in connection with the acquisition by the Company
or its Affiliates of a business) representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company, or a sale or
disposition (whether by reorganization, merger, consolidation,
split-up, spin-off, split-off, combination, subdivision, or other
similar corporate transaction or event) by the Company of all or
substantially all of the Company's assets (in one transaction or a
series of transactions within any period of 24 consecutive months)
other than a sale or disposition by the Company of all or substantially
all of the Company's assets to an entity, at least 60% of the combined
voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale. However,
a sale or disposition by the Company of all or substantially all of the
Company's assets to an entity (or two or more entities in one
transaction or a series of transactions within any period of 24
consecutive months), at least 60% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale or disposition shall be considered a
Change in Control of the Company for purposes of this Agreement if the
Executive is not offered employment with such entity (or one of such
entities) on terms comparable to those described in Section 3(g)
hereof. The sale or disposition of a subsidiary or a division of the
Company, or certain assets of the Company (or of a subsidiary of the
Company), shall not be a Change in Control unless any such transaction
or series of related transactions results in a sale or disposition by
the Company of all or substantially all of the Company's assets as
provided in subparagraph (iv) above.
For purposes hereof:
"Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
"Beneficial Owner" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Person" shall have the meaning given in Section 3(a) (9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company or any
of its subsidiaries, (ii) a trustee or other fiduciary holding
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securities under an employee benefit plan of the Company or any of its
Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company.
(e) DEFINITION OF EFFECTIVE DATE OF A CHANGE IN CONTROL. For purposes
of this Agreement, "Effective Date of a Change in Control" shall mean the first
to occur of (A) the date on which a Person first becomes the Beneficial Owner of
30% or more of the combined voting power of the Company's then outstanding
securities as defined in subparagraph (d)(i) above, or (B) the effective date of
the election of one or more directors to the Board which results in the
individuals defined in subparagraph (d)(ii) above ceasing to constitute a
majority of the number of directors then serving, or (C) the effective date of
the consummation of a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation as defined in
subparagraph (d)(iii) above, or (D) the effective date of a liquidation or
dissolution of the Company, or a sale or disposition by the Company of all or
substantially all of the Company's assets, as defined in subparagraph (d)(iv)
above.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) COMPENSATION PAYABLE UPON TERMINATION. If a Change in Control of
the Company shall have occurred, the Executive shall be entitled to the
compensation provided in Section 4 hereof upon the termination of the
Executive's employment with the Company by the Executive or by the Company
unless such termination is as a result of:
(i) the Executive's death;
(ii) the Executive's Disability (as defined in Section 3(b)
below);
(iii) the Executive's termination by the Company for Cause (as
defined in Section 3(c) below); or
(iv) the Executive's decision to terminate employment other
than for Good Reason (as defined in Section 3(d) below).
Notwithstanding the foregoing provisions of this Section 3, if the
Executive's employment is terminated by the Company other than for Cause or
Disability (for purposes of this paragraph, Cause shall include all of the
events set forth in Section 3(c) hereof and the following: willfully engaging by
the Executive in continued misconduct which is materially injurious to the
Company after having been advised in writing of the particular misconduct deemed
by the Company to be materially injurious to the Company and instructed in such
writing to cease any further misconduct of a similar nature) prior to a Change
in Control, and it is reasonably demonstrated that such termination (i) was at
the request of a third party who has
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taken steps reasonably calculated to effect a Change in Control or (ii)
otherwise arose in connection with a Change in Control, then for all purposes of
this Agreement, such termination shall be deemed to have occurred immediately
following a Change in Control; in addition, if the Executive's employment is
terminated by the Company other than for Cause (as defined in this paragraph) or
Disability within 90 days prior to a Change in Control, such termination shall
conclusively be deemed to have occurred following a Change in Control. For
further clarification, in the event of a termination of employment prior to a
Change in Control that is treated as having occurred after a Change in Control,
the Executive shall not be entitled to benefits under Section 4 hereof if the
Executive voluntarily terminated his or her employment whether or not for Good
Reason.
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his or her
duties with the Company on a full-time basis for one year and within thirty days
after written Notice of Termination (as hereinafter defined) is thereafter given
by the Company, the Executive shall not have returned to the full-time
performance of the Executive's duties, the Company may terminate this Agreement
for "DISABILITY."
(c) CAUSE. The Company may terminate the Executive's employment for
CAUSE. For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness and other than in respect of any duties
inconsistent with, or more burdensome than, the Executive's duties with
the Company immediately prior to a Change in Control of the Company);
(ii) misappropriation or embezzlement from the Company or any
other act or acts of dishonesty by the Executive constituting a felony
that results, or is intended to result, directly or indirectly, in gain
to or personal enrichment of the Executive at the Company's expense;
(iii) the conviction of the Executive of a felony involving
the moral turpitude of the Executive; or
(iv) the refusal of the Executive to accept offered employment
after a Change in Control which complies with the terms and conditions
of Section 3(g) hereof.
For purposes of this Section 3(c), no act or failure to act on the part of the
Executive shall be considered "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that the action or
omission of the Executive was in the best interest of
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the Company. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for the purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board), finding that the Executive was guilty of
conduct set forth in this Section 3(c) and specifying the particulars thereof in
detail.
(d) GOOD REASON. The Executive may terminate the Executive's employment
for Good Reason at any time after the Effective Date of a Change in Control of
the Company. For purposes of this Agreement "GOOD REASON" shall mean the
occurrence of any of the following unless the Executive has given his or her
express prior written consent:
(i) a good faith determination by the Executive that there has
been a material adverse change in the Executive's working conditions or
responsibilities relative to the most favorable working conditions, and
responsibilities applicable to the Executive during the 12 month period
prior to the Change in Control (including, but not limited to, a
significant reduction in the level of support services, staff,
secretarial and other assistance, office space, and accoutrements);
(ii) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, and reporting
responsibilities with the Company immediately prior to a Change in
Control of the Company (including, but not limited to, a reduction in
the nature or scope of the Executive's authority, powers, functions, or
duties), or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal
of the Executive from or any failure to reelect the Executive to any of
such positions, except in connection with the termination of his or her
employment for Disability or Cause, or as a result of the Executive's
death, or by the Executive other than for Good Reason;
(iii) a reduction by the Company in the Executive's base
salary as in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement, or the Company's
failure to increase (within 12 months of the Executive's last increase
in base salary) the Executive's base salary after a Change in Control
of the Company in an amount which at least equals, on a percentage
basis, the average percentage increase in base salary for all officers
of the Company effected in the preceding 12 months;
(iv) any action by the Company which would adversely affect
the Executive's participation in or materially reduce the Executive's
benefits, in the aggregate, under the Benefit Plans, Incentive Plans,
and Securities Plans; "Benefit Plans" include health and welfare
benefit plans in which the Executive is participating at the time of a
Change in
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Control of the Company (including, without limitation, the
Company's pension plans, group life insurance plan, and medical,
dental, accident and disability plans); "Incentive Plans" include
incentive compensation plans in which the Executive is participating at
the time of a Change in Control of the Company (including, without
limitation, the Company's annual incentive compensation plan and the
three-year Performance Incentive Plan); and "Securities Plans" include
any plan or arrangement to receive securities of the Company in which
the Executive is participating at the time of a Change in Control of
the Company (including, without limitation, the Company's Stock Option
Plan, and any other plan or arrangement to receive and exercise stock
options, stock appreciation rights, career shares, bridge shares,
restricted stock or grants thereof).
(v) a relocation of the Company's principal executive offices
to a location outside of Dallas County, Texas, or the Executive's
relocation to any place other than the location at which the Executive
performed the Executive's duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company;
(vi) any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at
the time of a Change in Control of the Company;
(vii) any material breach by the Company of any provision of
this Agreement;
(viii) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company;
(ix) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 3(e) below, and for purposes of this
Agreement, no such purported termination shall be effective; or
(x) voluntary resignation by the Executive, or termination of
employment by reason of the Executive's death or Disability, at any
time during either:
(A) the 90-day period beginning on the Effective Date
of a Change in Control; or
(B) the 30-day period beginning on the 365th day
after the Effective Date of a Change in Control.
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(e) NOTICE OF TERMINATION. Any termination by the Company pursuant to
Section 3(b) 3(c) or 3(d) shall be communicated by a Notice of Termination. For
purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement, no
such purported termination by the Company shall be effective without such Notice
of Termination.
(f) DATE OF TERMINATION. "DATE OF TERMINATION" shall mean (a) if this
Agreement is terminated by the Company for Disability, thirty days after Notice
of Termination is given to the Executive (provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period), (b) if the Executive's employment is terminated by
the Company for any other reason, the date on which a Notice of Termination is
given, or (c) if the Executive terminates his or her employment for Good Reason,
the date on which a Notice of Termination is given.
(g) CONTINUED EMPLOYMENT AFTER CHANGE IN CONTROL. If a Change in
Control has occurred, the Executive shall not be treated as having terminated
employment for purposes of this Agreement, and therefore will not be entitled to
any benefits under this Agreement after such Change in Control, if (i) the unit,
division, or subsidiary for which the Executive primarily provides services is
spun-off, sold, or otherwise disposed of, (ii) such transaction (x) was approved
by a vote of at least two-thirds (2/3) of the directors of the Company who
satisfy the requirements of subparagraph (d)(ii) of Section 2 above, and (y) did
not originate with an unsolicited offer (as determined by the Board in good
faith), and (iii) the Executive is offered employment in writing with the
purchasing or continuing entity, and (iv) such purchasing or continuing entity
enters into a written agreement with the Company and the Executive, which is
approved by a vote of at least 2/3 of the directors of the Company who satisfy
the requirement of sub-paragraph (d)(ii) of Section 2 hereof, which expressly,
absolutely, and unconditionally assumes and agrees to perform this Agreement in
the same manner and to the same extent that a successor to all or substantially
all of the business and/or assets of the Company would be required as provided
in Section 7 hereof (except that subparagraph (d)(x) of Section 3 shall not be
applicable to any such Executive), and it shall be conclusively presumed for
purposes of such agreement that a Change in Control has occurred with respect to
the Executive.
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. The Company
may terminate the Executive's employment at any time; however, if (a) during the
two-year period beginning on the Effective Date of a Change in Control, the
Company shall terminate the Executive's employment other than pursuant to
Section 3(b) or 3(c) or if the Executive shall terminate his or her employment
for Good Reason or (b) during any period of time after a Change in Control has
occurred but prior to either the Effective Date of a Change in Control or the
date on which the Board (or shareholders of the Company, if applicable) takes
any action which has the effect of rescinding or nullifying the Change in
Control (or on the date a Change of
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Control is rescinded or nullified without the necessity of any such action), the
Company shall terminate the Executive's employment other than pursuant to
Section 3(b) or 3(c) or if the Executive shall terminate his or her employment
for Good Reason other than pursuant to Section 3(d)(x), then as severance pay:
(i) The Company shall pay to the Executive in a lump sum, in
cash, on or before the fifth day following the Date of Termination, an
amount equal to three (3.0) times the sum of (A) the Executive's base
salary as in effect immediately prior to the Change in Control or, if
higher, in effect immediately prior to the Date of Termination, plus
the annual allowance for the Executive under the Company's Executive
Perquisite Program, and (B) the greater of (i) the average bonus (under
all Company bonus plans for which the Executive is eligible) earned
with respect to the three most recently completed full fiscal years
(or, if the Executive has not been employed for at least three full
fiscal years, all of completed full fiscal years during which he or she
has been employed), or (ii) the target bonus (under all Company bonus
plans for which the Executive is eligible) for the fiscal year in which
the Change in Control occurs.
(ii) For a period of THIRTY-SIX (36) MONTHS subsequent to the
Executive's Date of Termination, the Company shall at its expense
continue on behalf of the Executive and his or her dependents and
beneficiaries, all medical, dental, vision, health, and life insurance
benefits, which were being provided to the Executive at the time of
termination of employment. The benefits provided in this Section 4(ii)
shall be no less favorable to the Executive, in terms of amounts and
deductibles and costs to him, than the coverage in effect immediately
prior to the Change in Control (or, if more favorable to the Executive,
immediately prior to the Notice of Termination). The Company's
obligation hereunder to provide a benefit shall terminate if the
Executive obtains comparable coverage under a subsequent employer's
benefit plan. For purposes of the preceding sentence, benefits will not
be comparable during any waiting period for eligibility for such
benefits or during any period during which there is a preexisting
condition limitation on such benefits. The Company also shall pay a
lump sum equal to the amount of any additional income tax payable by
the Executive and attributable to the benefits provided under this
subparagraph (ii) at the time such tax is imposed upon the Executive.
In the event that the Executive's participation in any such coverage is
barred under the general terms and provisions of the plans and programs
under which such coverage is provided, or any such coverage is
discontinued or the benefits thereunder are materially reduced, the
Company shall provide or arrange to provide the Executive with benefits
substantially similar to those which the Executive was entitled to
receive under such coverage immediately prior to the Notice of
Termination. At the end of the period of coverage set forth above, the
Executive shall have the option to have assigned to him at no cost to
the Executive and with no apportionment of prepaid premiums, any
assignable insurance owned by the Company and relating specifically to
the Executive, and the Executive shall be entitled to
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all health and similar benefits that are or would have been made
available to the Executive under law (including continuation coverage
under COBRA).
(iii) In the event that, and to the extent that, the Company
is unable to provide for acceleration of vesting in accordance with
paragraph (a) of Section 2 hereof, as a result of the provisions in
existence prior to a Change in Control of any plan or agreement, the
Company shall provide in lieu thereof a lump-sum cash payment equal to
the difference between the total value of such outstanding units, stock
options, incentive stock options, performance shares, performance
awards, stock appreciation rights, career shares, bridge shares, and
shares of restricted stock (the "stock rights") as of the Executive's
Date of Termination and the total value of the stock rights in which
the Executive is vested as of the Executive's Date of Termination. The
value of such accelerated vesting in the Executive's stock rights shall
be determined by the Board in good faith based on a valuation performed
by an independent consultant selected by the Board.
(iv) In the event that, and to the extent that, the Company is
unable to provide for the extension of the expiration date of such
options as a result of the provisions in existence prior to a Change in
Control of any plan or agreement, the Company shall provide in lieu
thereof a lump-sum cash payment equal to the value of such extension
the Company is unable to provide; such values of such accelerated
vesting and exercisability shall be determined by the Board in good
faith based on a valuation performed by an independent consultant
selected by the Board.
(v) the Company shall pay to the Executive and, if applicable,
to his or her beneficiaries, in cash, on or before the fifth day
following the Date of Termination, a lump sum representing the present
value of the excess of (A) the benefit (expressed as a life annuity
commencing at age 65 or such earlier date as of which the actuarial
equivalent of such annuity is greatest) that the Executive would have
accrued under the provisions of the Company's Pension Plan for Salaried
Employees in effect immediately prior to the Change in Control had the
Executive continued to be employed for an additional thirty-six months
following the Date of Termination at the annual rate of compensation
(exclusive of the annual allowance for the Executive under the
Company's Executive Perquisite Program) taken into account under clause
(i) hereof (taking such thirty-six months into account both for vesting
and for benefits), over (B) the benefit actually accrued by the
Executive under such plan. For purposes hereof, "present value" shall
be determined using a per annum discount rate as established from time
to time for the Company's Pension Plan for Salaried Employees and
"actuarial equivalent" shall be determined using the same assumptions
utilized under such plan. In addition, with respect to the benefits
attributable to the additional thirty-six months, the benefit under (A)
above shall be calculated without regard to the limitations of Section
415 and Section
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401(a)(17) of the Internal Revenue Code of 1986, as amended (the
"Code"), and such amount shall be paid without regard to any vesting
requirement in such plan.
(vi) The Executive shall have the election to receive cash for
some or all of his unexercised stock options, and the Executive may
elect to exercise such right by a written notice to the Company with
respect to all or any portion of such options at any time, and from
time to time, during the thirty-day period beginning on the Date of
Termination. If the Executive elects to exercise such right, the
Company shall pay to the Executive in a lump sum, in cash, on or before
the fifth day following such election an amount equal to (A) the fair
market value of a share of the Company's common stock on (x) the Date
of Termination or (y) at the election of the Executive, any other date
selected by the Executive which occurred within 180 days prior to the
Date of Termination, as set forth in the Executive's notice to the
Company, multiplied by (B) the number of shares subject to options for
which such election is made, minus (C) the aggregate purchase price for
such shares under the applicable stock option(s). Any options not
cashed out pursuant to this paragraph shall continue in effect in
accordance with this Agreement.
The foregoing payments shall be subject to withholding of federal,
state and local income, FICA and similar taxes, if required by law.
5. GROSS-UP PAYMENT.
(a) TOTAL PAYMENTS. Whether or not the Executive becomes entitled to
the payments under Section 4 hereof, if any of the payments or benefits received
or to be received by the Executive in connection with a Change in Control or the
Executive's termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
Person whose actions result in a Change in Control or any Person affiliated with
the Company or such Person) (such payments or benefits, excluding the Gross-Up
Payment, being hereinafter referred to as the "Total Payments") would be subject
to the excise tax imposed under Section 4999 of the Code (the "Excise Tax"), the
Company shall pay to the Executive an additional amount (the "Gross-Up Payment")
such that the net amount retained by the Executive, after deduction of any
Excise Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the
Total Payments. For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rates of taxation in the state and locality of the residence of the
Executive on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.
(b) DETERMINATION BY ACCOUNTANT. All determinations required to be made
under this Section 5, including whether a Gross-Up Payment is required and the
amount of such Gross-Up
12
Payment, shall be made by the independent accounting firm which served as the
Company's auditor immediately prior to the Change in Control (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the Company
and the Executive within fifteen (15) business days after the Date of
Termination, if applicable, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is also serving as accountant or auditor
for the individual, entity, or group effecting the Change in Control, the
Executive may appoint another nationally recognized public accounting firm to
make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder), by giving written notice of such
appointment to the Company within five (5) business days after the Date of
Termination. All fees and expenses of the Accounting Firm shall be borne solely
by the Company and it shall be the Company's obligation to cause the Accounting
Firm to take any actions required hereby.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with an opinion that he or she has
substantial authority not to report any Excise Tax on his or her federal income
tax return. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that a Gross-Up Payment which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 5(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) NOTIFICATION REQUIRED. The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten (10) business days
after the Executive knows of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the
thirty-(30) day period following the date on which he or she gives such notice
to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the Executive
in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
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(iii) cooperate with the Company in good faith in order to
effectively contest such claim,
(iv) permit the Company to participate in any proceedings
relating to such claim, provided, however, that the Company shall bear
and pay directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for
any Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions
of this Section 5(c), the Company shall control all proceedings taken
in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed
and sue for a refund, or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) REPAYMENT. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 5(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
14
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTS.
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the Date of Termination, or
otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any other agreement, contract, plan or
arrangement with the Company.
7. SUCCESSOR TO THE COMPANY.
(a) The Company 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 the Company by written agreement in form and
substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place. Any failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment for Good Reason. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 7 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such devisee, legatee or other designee, to executor or
administrator of the Executive's estate.
8. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
15
If to the Company:
Trinity Industries, Inc.
P. O. Box 568887
Dallas, Texas 75356-8887
Attention: President
If to the Executive:
Name
Address
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
9. MISCELLANEOUS. 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 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 set forth expressly in this Agreement. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas.
10. VALIDITY. The invalidity or unenforceability of any provisions 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.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. LEGAL FEES AND EXPENSES. The Company shall pay, upon written demand
therefor by the Executive, all legal fees and expenses which the Executive may
reasonably incur as a result of any dispute or contest (regardless of the
outcome thereof) by or with the Company or others regarding the validity or
enforceability of, or liability under, any provision hereof (including as a
result of any contest about the amount of any payments pursuant to Sections 4 or
5), plus in each case interest at the "applicable Federal rate" (as defined in
Section 1274(d) of the Code). In any action brought by the Executive for damages
or to enforce any provisions hereof, he or she shall be entitled to seek both
legal and equitable relief and remedies, including, without
16
limitation, specific performance of the Company's obligations hereunder, in his
or her sole discretion.
13. CONTINUATION OF SALARY DURING DISPUTE. In the event of any dispute
or contest by or with the Company or others regarding the validity or
enforceability of, or liability under, any provision hereof (including as a
result of any contest about the amount of any payments pursuant to Sections 4 or
5), and upon written demand by the Executive, the Company shall continue to pay
the Executive his or her base salary as in effect immediately prior to the date
of the Change in Control. Said periodic payments shall be made in accordance
with the Company's normal payroll practices. Payments shall continue until final
resolution of such dispute or contest either by an agreement between the
Executive and the Company or final order of a court with proper jurisdiction. In
the event that the Company substantially prevails in such dispute, the Executive
shall be obligated to repay to the Company all amounts he or she has received
under this Section 13 (after taxes applicable thereto) plus interest at the
"applicable Federal rate" (as defined in Section 1274(d) of the Code).
14. CONFIDENTIALITY. The Executive shall retain in confidence any and
all confidential information known to the Executive concerning the Company and
its business so long as such information is not otherwise publicly disclosed.
15. MODIFICATION. No change or modification of this Agreement shall be
valid or binding upon the parties unless the change or modification is in
writing and signed by the parties.
* * * * *
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TRINITY INDUSTRIES, INC.
By:
-------------------------------
Name:
Title:
EXECUTIVE
By:
-------------------------------
Name:
Title:
ADDENDUM TO EXECUTIVE SEVERANCE AGREEMENT
DATED NOVEMBER 7, 2000
16. SUBSIDIARIES. In this Agreement, there are numerous references to
the Executive's employment by and duties with the Company, payment of benefits
and compensation by the Company, and termination of employment with the
Company. The parties to this Agreement acknowledge that the Executive may be
employed, currently or at some time in the future, by a subsidiary of the
Company. As used in this Agreement, a subsidiary means an entity which is at
least 80% owned, directly or indirectly, by the Company. It is the parties'
intention that transfer of the Executive's employment from the Company to a
subsidiary or from one subsidiary to another subsidiary will not constitute a
termination of employment with the Company for any reason hereunder unless
otherwise specifically provided herein. In addition, unless otherwise
specifically provided herein (including Section 3(g)), "termination of
employment with the Company" shall mean termination of employment with the
Company and all of its subsidiaries, and "termination of employment by Company"
shall mean termination of employment by the entity which actually employs the
Executive. Other references to employment by the Company, duties with the
Company, and salary and benefits shall include employment, duties, salary, and
benefits with respect to the entity which actually employs the Executive.
However, with respect to the definition of Change in Control of the Company,
except as otherwise specifically provided herein, references to the Company
shall mean only the Company, and the obligations under Sections 4 and 5 herein
shall be obligations of the Company.
The foregoing Addendum has been executed as of November 7, 2000.
TRINITY INDUSTRIES, INC.
By:
-----------------------------------
Name: Michael G. Fortado
Title: Vice President, General Counsel
and Corporate Secretary
EXECUTIVE
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------