EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of January, 1997, between
Johnstown America Industries, Inc., a Delaware corporation (the "Company"), and
(the "Executive").
WHEREAS, the Company, through its wholly owned subsidiaries, is
engaged in the business of manufacturing equipment for the transportation
industry including rail road freight cars, wheel-end components and air suspen
sion and static seating for medium and heavy-duty trucks, and complex iron
castings for a variety of industries including trucking, automotive,
agricultural, construc tion and industrial machinery (such business hereinafter
referred to as the "Business"); and
WHEREAS, the Executive, as a result of train ing, expertise and
personal application over the years, has acquired and will continue to acquire
considerable and unique expertise and knowledge which are of substan tial value
to the Company in the conduct, management and operation of its Business; and
WHEREAS, the Executive currently serves as
, and the Company desires to contin
ue the employment and service of the Executive in such capacities and is willing
to provide the Executive with certain benefits in the event of the termination
of the Executive's employment with the Company; and
WHEREAS, the Company considers it essential to the best interests
of its shareholders to ▇▇▇▇▇▇ the continuous employment of key management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined below) exists and that such possi
bility, and the uncertainty and questions which it may raise among management,
may result in the departure or distraction of management personnel to the
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appro-
priate steps should be taken to reinforce and encourage
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the continued attention and dedication of members of the Company's management,
including the Executive, to their assigned duties without distraction in the
face of poten tially disturbing circumstances arising from the possi bility of a
Change in Control; and
WHEREAS, the parties hereto desire to terminate the prior
severance agreement between the parties hereto dated January 1, 1996 (the
"Severance Agreement");
NOW THEREFORE, in consideration of the contin ued employment of
the Executive by the Company and the benefits to be derived by the Executive
hereunder, and of the Executive's agreement to continued employment by the
Company as provided herein, the parties mutually agree as follows:
1. Employment; Prior Severance Agreement.
(a) The Company hereby agrees to continue
to employ the Executive, and the Executive hereby agrees to continue to serve
the Company, on the terms and condi tions set forth herein.
(b) The parties hereto agree, effective
as of the date hereof, to terminate the Severance Agree
ment.
2. Term. The employment of the Executive by the Company pursuant
to this Agreement will continue as of the date hereof (the "Effective Date") and
shall expire on the second anniversary of the Effective Date (the "Term"),
unless extended, as set forth below, or otherwise terminated pursuant to the
provisions of this Agreement; provided, however, that commencing on the first
anniversary from the Effective Date and on each anniversary thereafter, the Term
of this Agreement shall automatically be extended for one additional year
unless, not later than 90 days prior to such anniversary, the Executive or the
Company shall have given notice in writing that he or it does not wish to extend
this Agree ment; and provided further, if a Change in Control shall have
occurred during the Term, this Agreement shall continue in effect and the Term
shall be extended until at least the later of the second anniversary of such
Change in Control or, if such Change in Control shall be caused by the
shareholder approval of a merger or consol-
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idation described in Section 6(d)(iii)(C) hereof, the second anniversary of the
consummation of such merger or consolidation.
3. Position and Duties. The Executive shall serve as of the
Company and as an officer of such of the Company's subsidiaries as shall be
reason ably requested by the Company and shall have such respon sibilities,
duties and authority as are customarily associated with such offices, including
but not limited to, those he may have as of the date hereof. The Execu tive
shall devote such time to the performance of his duties as is necessary to
satisfactorily perform his responsibilities and duties.
4. Place of Performance. In connection with the Executive's
employment by the Company, the Executive shall be based at the offices of the
Company in Chicago, Illinois, except for required travel on the Company's
business to the extent consistent with Company practices prior to the date
hereof. The Company shall pay all expenses related to such office facilities (or
comparable office facilities selected by the Executive), including, without
limitation, rent, salaries, equipment, utilities and other operating costs and
expenses.
5. Compensation and Related Matters. As com pensation and
consideration for the performance by the Executive of the Executive's duties,
responsibilities and covenants pursuant to this Agreement, the Company will pay
the Executive and the Executive agrees to accept in full payment for such
performance the amounts and bene fits set forth below.
(a) Salary. During the period of the
Executive's employment hereunder, the Company shall pay to the Executive an
annual base salary at a rate of $ commencing on the date hereof or such higher
rate as may from time to time be determined by the Board, such salary to be paid
in substantially equal install ments no less frequently than monthly. This
salary may be increased from time to time by the Company in its sole discretion.
Compensation of the Executive by salary pay ments shall not be deemed exclusive
and shall not prevent the Executive from participating in any other compensa
tion or benefit plan of the Company or any of the Com pany's subsidiaries or
affiliates. The salary payments
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(including any increased salary payments) hereunder shall not in any way limit
or reduce any other obligation of the Company hereunder or under any other
compensation or benefit plan or agreement under which the Executive is entitled
to receive payments or other benefits from the Company or any of the Company's
subsidiaries or affili ates, and no other compensation, benefit or payment
hereunder or under any other compensation or benefit plan or agreement under
which the Executive is entitled to receive payments or other benefits from the
Company shall in any way limit or reduce the obligation of the Company to pay
the Executive's salary hereunder.
(b) Bonus. During the term of the Execu-
tive's employment hereunder, the Executive shall participate in all management
incentive plans made generally available to executives of the Company in
comparable positions (the "Bonus Plans"). Subject to this Agreement and to the
rules and regulations governing the Bonus Plans which are communicated in
writing to the Executive from time to time, the Executive agrees that the actual
award of any cash bonus pursuant to a Bonus Plan may, pursuant to the terms of
such plan, be subject to the achievement of certain financial goals by the
Company and/or certain personal performance goals established for the Executive
with respect to any period for which a cash bonus may be paid pursuant to a
Bonus Plan (in each case such goals having been established by the Board or a
com mittee thereof).
(c) Expenses. The Executive shall be
entitled to receive prompt reimbursement for all reasonable travel and
entertainment expenses or other out-of-pocket business expenses incurred by the
Executive during the Term in fulfilling the Executive's duties and respon-
sibilities hereunder, including all expenses of travel and living expenses while
away from home on business or at the request of and in the service of the
Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.
(d) Other Benefits. The Executive shall
be entitled to participate in or receive benefits under any employee benefit
plan, arrangement or perquisite made available by the Company at any time during
his employment hereunder to its executive employees (collectively
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the "Benefit Plans"), including without limitation each retirement, thrift and
profit sharing plan, group life insurance and accident plan, medical and dental
insurance plans, and disability plan, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans, arrangements
and perquisites; provided, however, that such a change may be made to a plan in
which executives of the Company participate, including termination of any such
plan, arrangement or perquisite, if it does not result in a proportionately
greater reduction in the rights of or benefits to the Executive as compared with
any other executive of the Company or is required by law or a technical change.
Nothing paid to the Executive under any plan, arrangement or perquisite
presently in effect or made available in the future shall be deemed to be in
lieu of the salary payable to the Executive pursuant to paragraph (a) of this
Section 5. Any payments or benefits payable to the Executive under this Section
5 in respect of any year during which the Executive is employed by the Company
for less than the entire such year shall, unless otherwise provided in the
applicable plan or arrangement, be prorated in accordance with the number of
days in such year during which he is so employed.
(e) Vacations. During his employment
hereunder, the Executive shall be entitled to paid vacation in each calendar
year, determined in accordance with the Company's vacation policy. The Executive
shall also be entitled to all paid holidays and personal days given by the
Company to its executive employees.
6. Termination. The Executive's employment
hereunder may be terminated under the following circumstances:
(a) Death. The Executive's employment
hereunder shall terminate upon his death.
(b) Disability. If, in the written opinion of a
qualified physician selected by the Company, the Executive shall become unable
to perform his duties hereunder due to physical or mental illness which contin
ues for one year, the Company may terminate the Executive's employment
hereunder.
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(c) Cause. The Company may terminate the
Executive's employment hereunder for Cause. For purposes of this Agreement, the
Company shall have "Cause" to terminate the Executive's employment hereunder
upon:
(i) the willful and continuous neglect
or refusal to perform the Executive's duties or responsibilities, or the
willful taking of actions (or willful failures to take actions) which materially
impair the Executive's ability to perform his duties or responsibilities which
in each case continues after being brought to the attention of the Executive
(other than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination (as defined in subsection (e) hereof); or
(ii) any act by the Executive which
constitutes gross negligence or willful misconduct in the performance of his
duties hereunder, or the conviction of the Executive for any felony, in each
case which is materially and manifestly injurious to the Company and which is
brought to the attention of the Executive in writing not more than thirty days
from the date of its discovery by the Company or the Board.
For purposes of this subsection
(c), no act, or failure to act, on the Executive's part shall be considered
"willful" unless done, or omitted to be done, by him not in good faith or
without reasonable belief that his action or omission was in the best interest
of the Company. Notwithstanding the foregoing, the Executive shall not be deemed
to have been terminated for Cause without (1) reasonable written notice to the
Executive specifying in detail the specific reasons for the Company's intention
to terminate for Cause, (2) an opportunity for the Executive, together with his
counsel, to be heard before the Board, and (3) delivery to the Executive of a
Notice of Termination, as defined in subsection (e) hereof
(d) Good Reason.
(i) The Executive may terminate his employment
hereunder for Good Reason.
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(ii) For purposes of this Agreement,
"Good Reason" shall mean, without the Executive's express written consent, the
occurrence of any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination (as defined in subsection (f)
of this Section 6) specified in the Notice of Termination (as defined in
subsection (e) of this Section 6) given in respect thereof: (A) a material
diminution in the Executive's position, duties, responsibilities (including
reporting responsibilities) or authority (except during periods when the
Executive is unable to perform all or substantially all of the Executive's
duties and/or responsibilities on account of the Executive's illness (either
physical or mental) or other incapacity), (B) a reduction in either the
Executive's annual rate of base salary or level of participation in any Bonus
Plans for which he is eligible under Section 5(b) hereof, (C) an elimination or
reduction of the Executive's participation in any Benefit Plans generally
available to employees at the Executive's level, except as otherwise permitted
herein, (D) failure to provide facilities or services which are suitable as
determined by the Board of the Company to the Executive's position and adequate
for the performance of the Executive's duties and responsibilities, including
the failure to maintain the Chicago office without the prior written consent of
the Executive or (E) any purported termination by the Company of the Executive's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of subsection (e) of this Section 6 (and for purposes of this
Agreement no such purported termination shall be effective). The Executive's
right to terminate employment pursuant to this subsection shall not be affected
by the Executive's incapacity due to physical or mental illness.
(iii) A "Change in Control" shall be
deemed to have occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(A) 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 20% or
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more of the combined voting power of the Com pany's then
outstanding securities; or
(B) during any period of two consecutive years
(not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (A), (B)
or (C) of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or
(C) the shareholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least 75% of
the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no Person acquires more than 50%
of the combined voting power of the Company's then outstanding
securities; or
(D) the shareholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the
sale or dispo-
8
sition by the Company of all or substantially all
the Company's assets.
Notwithstanding the foregoing, a Change in Control shall not include any
transaction with any entity or group which is wholly or partly controlled by the
Chief Execu tive Officer and one or more of the other executive officers of the
Company in office immediately prior to such transaction.
(iv) For purposes of this Agreement,
"Beneficial Owner" shall have the meaning defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(v) For purposes of this Agreement, "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used herein; however, a Person shall not include (i) the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its subsidiaries, (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) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than a termination pursuant
to subsection (a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 12. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set 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.
(f) "Date of Termination" shall mean (i) if the Executive's
employment is terminated pursuant to subsection (a) above, the date of his
death, (ii) if the Executive's employment is terminated pursuant to subsection
(b) above, thirty days after Notice of Termination is given (provided that the
Executive shall not have
9
returned to the full-time performance of the Executive's duties during such
thirty day period), (iii) if the Executive's employment is terminated pursuant
to subsection (c) or (d) above, the date specified in the Notice of Termination
which, in the case of a termination for Cause shall be the date such Notice of
Termination is given (or such later date as provided therein), and in the case
of a termination for Good Reason shall not be less than five (5) nor more than
thirty (30) days from the date such Notice of Termination is given, or (iv) if
the Executive terminates his employment and fails to provide written notice to
the Company of such termination, the date of such termination; provided,
however, that if within fifteen (15) days after any Notice of Termination is
given or, if later, prior to the Date of Termination (as determined without
regard to this provison), the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, then
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected); and
provided, further, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the forego ing, if the dispute is resolved in favor of the
Company, the Date of Termination shall not be deemed to have been extended for
purposes of this Agreement. If the Date of Termination is extended by a notice
of dispute, the rights and the obligations of the parties upon a final
determination shall be governed by the terms of this Agreement, regardless of
whether the Agreement otherwise remains in effect on the date of such final
determination. Notwithstanding the pendency of any such dispute, the Company
will continue to pay to the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, base
salary) and continue the Executive as a participant in all compensation, benefit
and insurance plans in which the Executive was participating when the notice
giving rise to the dispute was given and the Executive shall, at the Company's
request, continue to perform his obliga-
10
tions hereunder, in each case, until the dispute is finally resolved in
accordance with this subsection.
If the Company elects not to have the Executive continue to
perform his obligations hereunder during the pendency of such dispute, and the
Company prevails in such dispute, then the Executive shall promptly return to
the Company any monies (or the value of any benefits) received with respect to
service performed by him after the originally stated Date of Termination to
which the Executive would not have been otherwise entitled.
7. Compensation Upon Termination, Death or
During Disability.
(a) During any period that the Executive
fails to perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Executive shall continue to receive his full base salary
and other benefits at the rate then in effect for such period (offset by any
payments to the Executive received pursuant to disability benefit plans
maintained by the Company) until his employment is terminated pursuant to Sec-
tion 6(b) hereof, and upon such termination, the Company shall pay all other
unpaid amounts, if any, to which the Executive is entitled as of such Date of
Termination, including any expenses owed pursuant to Section 5(c) (which
amounts shall be paid in a lump sum within 10 days of such Date of Termination)
and amounts under any compensation plan or program of the Company, at the time,
if any, such payments are payable to the Executive under the terms of such plan
in light of the circumstances in which such termination occurred, and the
Company shall, there-after, have no further obligations to the Executive under
this Agreement.
(b) If the Executive's employment is
terminated by his death, the Company shall within ten days following the date of
the Executive's death, (i) pay any amounts due to the Executive under Section 5
through the date of his death and (ii) pay to the Executive's legal
representative (A) any death benefits provided under any Benefit Plan in
accordance with their terms and (B) all other unpaid amounts, if any, to which
the Executive is entitled as of the Date of Termination, including any expenses
owed pursuant to Section 5(c) (which amounts shall be paid in a lump sum within
10 days of such Date
11
of Termination) and amounts under any compensation plan or program of the
Company, at the time, if any, such payments are payable to the Executive under
the terms of such plan in light of the circumstances in which such termination
occurred, and the Company shall, thereafter, have no further obligations to the
Executive under this Agreement.
(c) If the Executive's employment is
terminated by the Company for Cause or by the Executive for other than Good
Reason, the Company shall pay the Executive his full base salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given and all other unpaid amounts, if any, to which the Executive is entitled
as of the Date of Termination, including any expenses owed pursuant to Section
5(c) and amounts under any compensation plan or program of the Company, at the
time, if any, such payments are payable to the Executive under the terms of such
plan in light of the circumstances in which such termination occurred, and the
Company shall, thereafter, have no further obligations to the Executive under
this Agreement.
(d) Subject to Section 8 hereof, if (A)
in breach of this Agreement, the Company shall terminate the Executive's
employment (it being understood that a purported termination pursuant to Section
6(b) hereof or Section 6(c) hereof which is disputed and finally determined not
to have been proper shall be a termination by the Company in breach of this
Agreement) or (B) the Executive shall terminate his employment for Good Reason,
then the Company shall provide the following payments and benefits
(collectively, the "Severance Payments"):
(i) the Company shall pay the Executive
his full base salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given and all other unpaid amounts, if any,
to which the Executive is entitled as of the Date of Termination including any
amounts owed pursuant to Section 5(c) and amounts under any compensation plan or
program of the Company, at the time such payments are payable to the Executive
under the terms of such plan in light of the circumstances in which such
termination occurred; and
(ii) in lieu of any further salary
payments to the Executive for periods subsequent to the
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Date of Termination, the Company shall pay as liquidated damages to the
Executive within ten days of the Date of Termination, a lump sum amount equal to
the product of (1) the sum of (a) the Executive's annual base salary rate in
effect as of the date Notice of Termination is given and (b) the greatest of (i)
the Executive's guaranteed annual bonus (if any) with respect to the fiscal
year in which the Date of Termination occurs, (ii) the target annual bonus which
may become payable to the Executive with respect to the fiscal year in which the
Date of Termination occurs, (iii) the annual bonus payments made to the
Executive with respect to the fiscal year immediately prior to the fiscal year
in which the Date of Termination occurs and (iv) the average of the annual bonus
payments made to the Executive with respect to the three fiscal years
immediately prior to the fiscal year in which the Date of Termination occurs (or
such shorter period as the Executive has been employed by the Company)
multiplied by (2) the number two; and
(iii) notwithstanding any provision
of the Company's annual incentive plans, the Company shall pay to the Executive
a lump sum amount, in cash, equal to the sum of (a) any annual incentive
compensation which has been allocated or awarded to the Executive for the
completed fiscal year preceding the Date of Termination but has not yet been
paid (pursuant to clause (i) above or otherwise), and (b) a pro rata portion to
the Date of Termination of the value of any annual contingent incentive
compensation award to the Executive for an uncompleted fiscal year calculated
by multiplying the applicable target bonus thereunder by a fraction the
numerator of which shall be the number of days the Executive was employed
during such fiscal year and the denominator of which shall be 365; and
(iv) the Company shall at its own
cost continue the participation of the Executive for a period of two years, in
all medical, life and other employee "welfare" benefit plans and programs in
which the Executive was entitled to participate immediately prior to the Date of
Termination provided that the Executive's continued participation is provided
under the general terms and provisions of such plans and programs as in effect
on the date of such Termination. In the event that the Executive's participation
in any such plan or program is barred, the Company shall arrange to provide
13
the Executive with benefits substantially similar to those which the Executive
would otherwise have been entitled to receive under such plans and programs from
which his continued participation is barred; and
(v) if the Company shall fulfill its
obligations to the Executive pursuant to this Section 7(d) then the Company
shall, thereafter, have no further obligations to the Executive under this
Agreement.
(e) The Executive shall not be required
to mitigate the amount of any payment provided for in this Section 7 by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 7 be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to
the Company, or otherwise.
(f) The obligations of the Company to
make payments and provide benefits under this Section 7 shall survive the
termination of this Agreement.
8. Treatment of Parachute Payments.
(a) Notwithstanding any other provisions
of this Agreement, in the event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's 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) (all such payments and benefits, including the
Severance Payments, being herein-after called "Total Payments") would not be
deductible (in whole or part), by the Company, an affiliate or Person making
such payment or providing such benefit as a result of section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), then, to the extent
necessary to make such portion of the Total Payments deductible (and after
taking into account any reduction in the Total Payments provided by reason of
section 280G of the Code in such other plan, arrangement or agreement), (A) the
cash Severance Payments shall first be reduced (if necessary, to zero), and (B)
all other non-cash Severance
14
Payments shall next be reduced (if necessary, to zero). For purposes of this
limitation (i) no portion of the Total Payments the receipt or enjoyment of
which the Executive shall have effectively waived in writing prior to the Date
of Termination shall be taken into account, (ii) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected by the Company's independent auditors does not constitute a "parachute
payment" within the meaning of section 280G(b)(2) of the Code, including by
reason of section 280G(b)(4)(A) of the Code, (iii) the Severance Payments shall
be reduced only to the extent necessary so that the Total Payments (other than
those referred to in clauses (i) or (ii)) in their entirety constitute
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance
as deductions, in the opinion of the tax counsel referred to in clause (ii); and
(iv) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by the Company's independent
auditors in accordance with the principles of sections 280G(d)(3) and (4) of the
Code.
(b) If it is established pursuant to a
final determination of a court or an Internal Revenue Service proceeding that,
notwithstanding the good faith of the Executive and the Company in applying the
terms of this Section 8, the aggregate "parachute payments" paid to or for the
Executive's benefit are in an amount that would result in any portion of such
"parachute payments" not being deductible by reason of section 280G of the Code,
then the Executive shall have an obligation to pay the Company upon demand an
amount equal to the sum of (i) the excess of the aggregate "parachute payments"
paid to or for the Executive's benefit over the aggregate "parachute payments"
that could have been paid to or for the Executive's benefit without any portion
of such "parachute payments" not being deductible by reason of section 280G of
the Code; and (ii) interest on the amount set forth in clause (i) of this
sentence at the rate provided in section 1274(b)(2)(B) of the Code from the date
of the Executive's receipt of such excess until the date of such payment.
. Covenant Not to Compete. The Executive
acknowledges that, as a key management employee, the
15
Executive will be involved, on a high level, in the development, implementation
and management of the Company's strategies and plans, including those which in
volve the Company's finances, research, marketing, planning, operations,
industrial relations and acquisitions. By virtue of the Executive's unique and
sensitive position and special background, employment of the Executive by a
competitor of the Company represents a serious competitive danger to the
Company, and the use of the Executive's talent and knowledge and information
about the Company's business, strategies and plans can and would constitute a
valuable competitive advantage over the Company. In view of the foregoing, the
Executive covenants and agrees that, if the Executive's employment is terminated
(i) by the Company in breach of this Agreement, (ii) pursuant to an event
constituting Good Reason or (iii) under any other circumstances, then, for a
period of one year in the case of clauses (i) and (ii) of this sentence, and for
a period of two years in the case of clause (iii) of this sentence, after the
Date of Termination, the Executive will not engage or be engaged, in any
capacity, directly or indirectly, including but not limited to as an employee,
agent, consultant, manager, executive, owner or stockholder (except as a
passive investor holding less than a 5% equity interest in any enterprise) in
any business entity engaged in competition with any material business conducted
by the Company on the Date of Termination anywhere in North America.
The covenant not to compete contained in this Section 9 shall
survive the termination of this Agreement.
If any court determines that the covenant not to compete
contained in this Section 9, or any part hereof, is unenforceable because of
the duration or geographic scope of such provision, such court shall have the
power to reduce the duration or scope of such provision, as the case may be, to
as close to the terms hereof as shall be enforceable and, in its reduced form,
such provision shall then be enforceable.
10. Confidentiality. The Executive recognizes that he will have
access to confidential information, trade secrets, proprietary methods and other
data which are the property of and integral to the operations and success of
company and therefore agrees to be bound by
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the provisions of this Section 10, which both Company and Executive agree and
acknowledge to be reasonable and to be necessary to the Company. In recognition
of this fact, the Executive agrees that the Executive will not disclose any such
trade secrets or confidential or proprietary information (except (i)
information which becomes publicly available without violation of this Agree
ment, (ii) information which the Executive did not know and should not have
known was disclosed to the Executive in violation of any other person's
confidentiality obligation and (iii) disclosure required in connection with any
legal process (after giving the Company the opportunity to dispute such
requirement)) to any person, firm, corporation, association or other entity, for
any reason or purpose whatsoever, nor shall the Executive make use of any such
information for the benefit of any person, firm, corporation or other entity
except the Company. The Executive's obligation to keep all of such information
confidential shall be in effect during and for a period of four years after the
Date of Termination; provided, however, that the Executive will keep
confidential and will not disclose any trade secret or similar infor mation
protected under law as intangible property (subject to the same exceptions set
forth in the parenthetical clause above) for so long as such protection under
law is extended.
11. Binding Agreement. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder if he had
continued to live, 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 designee, to the Executive's
estate.
12. Notice. Notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered, if delivered personally, or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, and when received if delivered otherwise, addressed
as follows:
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If to the Executive:
_______________________
c/o Johnstown America Industries, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Company:
Johnstown America Industries, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
With a copy to:
Johnstown America Industries, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
or to such other address as any 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.
13. General Provisions. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and such officer of the Company as
may be specifically designated by the Board. 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. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware without regard
to its conflicts of law principles.
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14. Validity. The invalidity or unenforceability of any
provision or 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.
15. 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.
16. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agree-
ment of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled.
17. Injunctive Relief. The Executive agrees that in addition to
any other remedy provided at law or in equity or in this Agreement, the Company
shall be entitled to a temporary restraining order and both preliminary and
permanent injunctions restraining Executive from violating any provision of
Sections 9 and 10 of this Agreement.
18. Consent to Jurisdiction and Forum; Legal Fees and Costs. The
Company and the Executive hereby expressly and irrevocably agree that any
action, whether at law or in equity, arising out of or based upon this Agreement
or the Executive's employment by the Company shall only be brought in a federal
or state court located in Chicago, Illinois. The Executive hereby irrevocably
consents to personal jurisdiction in such court and to accept service of process
in accordance with the provisions of such court. In connection with any dispute
arising out of or based upon this Agreement or the Executive's employment by the
Company, each party shall be responsible for its or his own legal fees and
expenses and all court costs shall be shared equally by the Company and the
Executive unless the court apportions such legal fees or court costs in a
different manner.
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19. Withholding. All payments made to the Executive pursuant to
this Agreement shall be subject to applicable withholding taxes, if any, and any
amount so withheld shall be deemed to have been paid to the Executive for
purposes of amounts due to the Executive under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date and year first above written.
JOHNSTOWN AMERICA INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President & CFO
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