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EMPLOYMENT AGREEMENT FOR XXXXX X. XXXXX
AGREEMENT made effective as of the 28th day of January 2000, among Gunite
Corporation ("Gunite"), Transportation Technologies Industries, Inc., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxx (the "Executive"). This
Agreement shall become effective only if the closing under the Merger Agreement,
dated the date hereof, between the Company and Transportation Acquisition I
Corp. occurs.
WHEREAS, the Company, through its wholly-owned subsidiaries,
including Gunite, is engaged in the business of manufacturing equipment for the
transportation industry including wheel-end components and air suspension and
static seating for medium and heavy-duty trucks, body and chassis components for
heavy duty trucks, and complex iron castings for a variety of industries
including trucking, automotive, agricultural, construction and industrial
machinery (such business hereinafter referred to as the "Business"); and
WHEREAS, the Executive, as a result of training, expertise and
personal application over the years, has acquired and will continue to acquire
considerable and unique expertise and knowledge which are of substantial value
to Gunite and the Company in the conduct, management and operation of its
Business, and Gunite and the Company consider it essential to the best interests
of Gunite and the Company's shareholders to xxxxxx the continuous employment of
key management personnel; and
WHEREAS, the Executive currently serves as President and Chief
Executive Officer of Gunite, and the Company desires to continue 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 Gunite;
NOW THEREFORE, in consideration of Gunite's continued
employment of the Executive and the benefits to be derived by the Executive
hereunder, and of the Executive's agreement to continued employment by Gunite as
provided herein, the parties mutually agree as follows:
1. EMPLOYMENT. Gunite hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue to serve Gunite, on the
terms and conditions set forth herein.
2. TERM. The employment of the Executive by Gunite pursuant to this
Agreement will continue as of the date hereof (the "Effective Date") and shall
expire on the third 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 Gunite shall have
given notice in writing that he or it does not wish to extend this Agreement;
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 third anniversary of such Change in Control or,
if such Change in Control shall be caused by the shareholder approval of a
merger or consolidation described in Section 6(d)(iii)(C) hereof, the third
ANNIVERSARY OF THE CONSUMMATION OF SUCH MERGER OR CONSOLIDATION.3. POSITION AND
DUTIES. The Executive shall serve as President and Chief Executive Officer of
Gunite, and shall have such responsibilities, duties and authority as are
customarily associated with such offices, including but not limited to, those he
may have as of the Effective Date. The Executive 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 Gunite, the Executive shall be based at the offices of
Gunite in Rockford, Illinois, except for required travel on Gunite's business to
the extent consistent with Company practices prior to the Effective Date. Gunite
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 compensation and consideration for the
performance by the Executive of the Executive's duties, responsibilities and
covenants pursuant to this Agreement, Gunite will pay the Executive and the
Executive agrees to accept in full payment for such performance THE AMOUNTS AND
BENEFITS SET FORTH BELOW.(A) SALARY. During the Term of the Executive's
employment hereunder, Gunite shall pay to the Executive an annual base salary at
a rate of $250,000 commencing on the first day of the calendar year of the
Effective Date or such higher rate as may from time to time be determined by the
Board, such salary to be paid in substantially equal installments no less
frequently than monthly. This salary may be increased from time to time by
Gunite in its sole discretion. Compensation of the Executive by salary payments
shall not be deemed exclusive and shall not prevent the Executive from
participating in any other compensation or benefit plan of Gunite or the Company
or any of the Company's subsidiaries or affiliates. The salary payments
(including any increased salary payments) hereunder shall not in any way limit
or reduce any other obligation of Gunite or 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 Gunite or the Company or any
of the Company's subsidiaries or affiliates, 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 Gunite or the Company shall in any way limit or reduce the
obligation of Gunite to pay the
EXECUTIVE'S SALARY HEREUNDER.(B) BONUS. During the Term of the
Executive's employment hereunder, the Executive shall receive an annual bonus
equal to one percent (1%) of Gunite's earnings before interest, taxes, and
amortization ("EBITA") for such year. The bonus shall be earned on a pro rata
basis during the year and shall be based on Gunite's financial statements for
such year. Following the Executive's Date of Termination for any reason other
than Cause, Gunite shall pay to the Executive a lump sum amount, in cash, equal
to one percent (1%) OF GUNITE'S EBITA FROM JANUARY 1 OF SUCH YEAR THROUGH THE
DATE OF TERMINATION.(C) EXPENSES. During the Term of the Executive's employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
reasonable living expenses in Rockford, Illinois (unless Executive relocates his
residence to Rockford), and 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 responsibilities hereunder, including
all expenses of travel and living while away from home on business or at the
request of and in the service of Gunite, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by GUNITE.(D) OTHER BENEFITS AND PERQUISITES. During the Term of the
Executive's employment hereunder:(i) the Executive shall be entitled to
participate in or receive benefits under any employee retirement or welfare
benefit plan or arrangement made available by the Company at any time during his
employment hereunder to its executive employees (collectively the "Benefit
Plans"), including without limitation each qualified or non-qualified
retirement, thrift or profit sharing plan, life insurance and accident plan,
supplemental pension and life insurance, 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 and arrangements; and
(ii) Gunite shall reimburse the Executive for
reasonable expenses of an automobile chosen by the Executive, in an
amount of up to eight hundred fifty dollars ($850) per month as well as
automobile insurance and maintenance, according to Gunite's policies
and upon the Executive's presentation of appropriate documentation. The
Executive shall also be entitled to all other perquisites the Company
gives to its executive employees.
Gunite shall pay the Executive such additional amount as is
necessary (after taking into account all federal, state and local income taxes
imposed upon the Executive as a result of the receipt of the benefits and
perquisites contemplated by this Section 5(e)) to place the Executive in the
same after-tax position the Executive would have been in had no income taxes
been imposed upon or incurred or paid by the Executive with respect to such
benefits and perquisites (the "Benefit Gross-Up").Nothing paid to the Executive
under any plan, arrangement or perquisite currently 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 Gunite 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 Gunite's vacation policy. The Executive shall also be entitled to all paid
HOLIDAYS AND PERSONAL DAYS GIVEN BY GUNITE 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 Gunite, the Executive shall become unable to
perform his duties hereunder due to physical or mental illness which continues
for one year, Gunite may terminate the Executive's employment hereunder.n (c)
CAUSE. Gunite may terminate the Executive's employment hereunder for Cause. For
purposes of this Agreement, Gunite 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 Gunite or 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
Gunite or the Company.
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 Gunite or 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 Gunite's intention to
terminate for Cause, (2) an opportunity for the Executive, together with his
counsel, to be heard before the Board, (3) with respect to actions or inaction
specified in paragraph (i) above, a reasonable opportunity for the Executive to
cure the action or inaction specified by Gunite, and (4) delivery to the
Executive of a Notice of Termination, as defined in subsection (e) hereof.
(D) GOOD REASON.
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(i) The Executive may terminate his employment
hereunder for Good Reason.
(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 change 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), which, in the Executive's reasonable
judgment, represent an adverse change, (B) a reduction in either the
Executive's annual rate of base salary or bonus formula as specified
under Section 5(b) hereof, (C) 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 Rockford office without the prior written consent of the
Executive, or (D) any purported termination by Gunite 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 more of the combined
voting power of the Company'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) 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 disposition by the Company of all or
substantially all the Company's assets.
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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 Executive 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, (iv) the
stockholders of the Company immediately after the merger; or (v) 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 Gunite 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 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 twenty (20) 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 Gunite 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 proviso), 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 foregoing, if the dispute is resolved in favor of Gunite,
the Date of Termination shall not he 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, Gunite 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 and perquisites in which the Executive was participating
when the notice giving rise to the dispute was given and the Executive shall, at
Gunite's request, continue to perform his obligations hereunder, in each case,
until the dispute is finally resolved in accordance with this subsection.If
Gunite elects not to have the Executive continue to perform his obligations
hereunder during the pendency of such dispute, and Gunite prevails in such
dispute, then the Executive shall promptly return to Gunite 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 Gunite or
the Company) until his employment is terminated pursuant to Section 6(b) hereof,
and upon such termination, Gunite 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 Gunite or 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 neither Gunite nor the
Company shall, thereafter, have no further obligations to the Executive under
this Agreement.(b) If the Executive's employment is terminated by his death,
Gunite 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 he paid in a lump sum within 10 days of such Date of Termination)
and amounts under any compensation plan or program of Gunite or 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
neither Gunite nor the Company shall, thereafter, have no further obligations to
the Executive under this Agreement.(c) If the Executive's employment is
terminated by Gunite for Cause or by the Executive for other than Good Reason,
Gunite 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 Gunite or 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
neither Gunite nor 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, Gunite 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 Gunite in breach of this Agreement) or (B) the
Executive shall terminate his employment for Good Reason, then Gunite shall
provide the following payments and benefits (collectively, the "Severance
Payments"):(i) Gunite 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 Gunite or 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 Date of Termination, Gunite
shall pay as liquidated damages to the Executive on 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 Gunite) multiplied
by (2) the number three; and
(iii) notwithstanding any provision of Gunite's
annual incentive plans, Gunite 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) the
difference between (1) 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, as provided in Section 5(b),
and (2) the amount of any annual incentive compensation award Gunite
has already paid to the Executive for the uncompleted fiscal year; and
(iv) Gunite shall at its own cost continue the
participation of the Executive for a period of three years, in all
medical, life and other employee "welfare" benefit plans and programs
(including, without limitation, all qualified, non-qualified, and
supplemental retirement and welfare benefit plans) in which the
Executive was entitled to participate immediately prior to the Date of
Termination, provided that the Executive's continued participation is
permitted under the 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, Gunite
shall arrange to provide 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) Gunite shall, at its own cost, continue to
provide the Executive for a period of three years with the perquisites,
reimbursements and payments Gunite gave or provided to the Executive,
pursuant to Section 5(e) of this Agreement, immediately prior to the
Date of Termination; and
(vi) Gunite shall pay to the Executive (upon
presentation of appropriate invoices and other documentation) an amount
equal to the amount of all legal fees and expenses incurred by the
Executive in contesting, arbitrating or disputing any such termination
or in seeking to obtain or ENFORCE ANY RIGHT OR BENEFIT PROVIDED BY
THIS AGREEMENT; PROVIDED that, such claim has been brought in good
faith by the Executive and if the Executive shall not be successful,
the Executive shall return 50% of the legal fees and expenses
previously reimbursed to the Executive by Gunite; and
(vii) if Gunite shall fulfill its obligations to the
Executive pursuant to this Section 7(d) then neither Gunite nor 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 Gunite or the Company, or otherwise.(f)
The obligations of Gunite 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,
and except as set forth below, 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 Gunite or 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 hereinafter called "Total Payments") is
determined to be an "excess parachute payment" pursuant to Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), or any successor or
substitute provision of the Code, with the effect that Executive is liable for
the payment of the excise tax described in Code Section 4999 or any successor or
substitute provision of the Code (the "Excise Tax"), then, after taking into
account any reduction in the Total Payments provided by reason of Code Section
280G in such other plan, arrangement or agreement, the cash payments provided in
Section 7(d)(ii) of this Agreement shall first be reduced, and the noncash
payments and benefits shall thereafter be reduced, to the extent necessary so
that no portion of the Total Payments is subject to the Excise Tax; provided,
however, that Executive may elect (at any time prior to the payment of any Total
Payment under this Agreement) to have the noncash payments and benefits reduced
(or eliminated) prior to any reduction of the cash payments under this
Agreement. NOTWITHSTANDING THE FOREGOING, PAYMENTS OR BENEFITS UNDER THIS
AGREEMENT WILL NOT be reduced unless: (i) the net amount of the Total Payments,
as so reduced (and after subtracting the net amount of federal, state and local
INCOME TAXES ON SUCH REDUCED TOTAL PAYMENTS) IS GREATER than (ii) the difference
of (A) the net amount of such Total Payments, without reduction (but after
subtracting the net amount of federal, state and local income taxes on such
Total Payments), minus (B) the amount of Excise Tax to which the Executive would
be subject in respect of such unreduced Total Payments.(b) All determinations
required to be made under this Section 8, and the assumptions to be utilized in
arriving at such determination, shall be made by the certified public accounting
firm used for auditing purposes by the Company immediately prior to the Date of
Termination (the "Accounting Firm"), which shall provide detailed supporting
calculations both to each of Gunite, the Company and the Executive not later
than 5 days prior to the Date of Termination. The Company shall pay all fees and
expenses of the Accounting Firm. Any determination by the Accounting Firm shall
be binding upon Gunite, the Company and the Executive, except as provided in
paragraph (c) below.(c) As a result of the uncertainty in the application of
Code Sections 280G and 4999 at the time of the initial determination by the
Accounting Firm hereunder, it is possible that the Internal Revenue Service
("IRS") or other agency will claim that an Excise Tax, or a greater Excise Tax,
is due. If the Executive is required to make a payment of any such Excise Tax,
Gunite will promptly pay the Executive an additional amount equal to the amount,
or greater amount, of Excise Tax the Executive is required to pay (plus a gross
up payment for any income taxes, interest, penalties or additional Excise Tax
payable by Executive with respect to such Excise Tax or additional payment), as
determined by the Accounting Firm. Executive will notify Gunite and the Company
in writing of any claim by the IRS or other agency that, if successful, would
require payment by Gunite of the additional payments under this paragraph. The
Executive, Gunite and the Company shall each reasonably cooperate with the other
in connection with any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to the Total
Payments. Gunite shall pay all fees and expenses of the Executive relating to a
claim by the IRS or other AGENCY.9.RESTRICTIVE COVENANTS.
(A) COVENANT NOT TO COMPETE. The Executive acknowledges that, as a key
management employee, the Executive will be involved, on a high level, in the
development, implementation and management of the Company's strategies and
plans, including those which involve the Company's finances, research,
marketing, planning, operations, industrial relations and acquisitions, and that
he will have access to Confidential Information, as defined in Section 10. 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 two years in the case of clauses (i) and
(ii) of this sentence, and for a period of one year in the case of clause (iii)
of this sentence, after the Date of Termination (the "Non-Compete Period"), 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
anywhere in North America which is engaged in direct competition with any
business of the Company on the Date of Termination which had revenues of ten
percent (10%) or more of the Company's consolidated revenues for the four most
completed fiscal quarters (a business meeting this requirement shall be referred
to as a "Competitor").If any court determines that the covenant not to compete
contained in this Section 9, or any part hereof, is unenforceable, such court
shall have the power to reduce the duration or scope of such provision, or make
any other changes, provided that such changes are as close to the terms hereof
as possible and, in its reduced form, such provision SHALL THEN BE
ENFORCEABLE.(B) NON-SOLICITATION OF EMPLOYEES. Executive agrees that, during the
Non-Compete Period, he shall not, without the prior written consent of Gunite or
the Company, solicit any current employee of Gunite or the Company or any of its
subsidiaries, or any individual who becomes an employee at or before the Date of
Termination, to leave such employment and join or become affiliated with any
business that is, during the NON-COMPETE PERIOD, A COMPETITOR.(C) SURVIVAL OF
NON-COMPETE TERMS. The provisions set forth in this SECTION 9 SHALL SURVIVE
TERMINATION OF THIS AGREEMENT.10. CONFIDENTIALITY. The Executive recognizes that
he will have access to confidential information, trade secrets, proprietary
methods and other data that are the property of and integral to the operations
and success of the Company ("Confidential Information") and therefore agrees to
be bound by the provisions of this Section 10, which each of Gunite, the Company
and Executive agree and acknowledge to be reasonable and to be necessary to
Gunite and the Company. In recognition of this fact, the Executive agrees that
the Executive will not disclose any Confidential Information (except (i)
information which becomes publicly available without violation of this
Agreement, (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 Gunite or 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 Gunite or the Company. The Executive's obligation to keep
all of such information confidential shall be in effect during and for a period
of two years after the Date of TERMINATION; PROVIDED, HOWEVER, that the
Executive will keep confidential and will not disclose any trade secret or
similar information 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:If to the Executive:
Xxxxx X. Xxxxx
0000 Xxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to Gunite or the Company:
Transportation Technologies Industries, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Secretary
With a copy to:
Xxxxxx X. Xxxx, Esq.
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
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. INDEMNIFICATION. Following the
Executive's Date of Termination, the Company will: (i) indemnify and hold
harmless the Executive for all costs, liability and expenses (including
reasonable attorneys' fees) for all acts and omissions of the Executive that
relate to the Executive's employment with Gunite, to the maximum extent
permitted by law; and (ii) continue the Executive's coverage under the
directors' and officers' liability coverage maintained by the Company, as in
effect from time to time, to the same extent as other current or former senior
executive officers AND DIRECTORS OF THE COMPANY.14. 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 Gunite and 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.15. 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.16. 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.17. 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 agreement of the parties hereto in respect of
the subject matter contained herein is hereby TERMINATED AND CANCELED.18.
IRREPARABLE HARM. The Executive acknowledges that: (i) the Executive's
compliance with this Agreement is necessary to preserve and protect the
proprietary rights, Confidential Information and the goodwill of Gunite and the
Company as going concerns; (ii) any failure by the Executive to comply with the
provisions of this Agreement will result in irreparable and continuing injury
for which there will be no adequate remedy at law; and (iii) in the event that
the Executive should fail to comply with the terms and conditions of this
Agreement, Gunite and the Company shall be entitled, in addition to such other
relief as may be proper, to all types of equitable relief (including, but not
limited to, the issuance of an injunction and/or temporary restraining order) as
may be necessary to cause the Executive to comply with this Agreement, to
RESTORE TO GUNITE OR THE COMPANY ITS PROPERTY, AND TO MAKE GUNITE OR THE COMPANY
WHOLE.19. CONSENT TO JURISDICTION AND FORUM; LEGAL FEES AND COSTS. Gunite 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 Gunite 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. Except as provided in Section 7(d)(v), in
connection with any dispute arising out of or based upon this Agreement or the
Executive's employment by Gunite, each party shall be responsible for its or his
own legal fees and expenses and all court costs shall be shared equally by
Gunite and the Executive unless the court apportions such legal fees or court
costs in a different manner.20. 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 Xxxxxxxxx.XX
WITNESS WHEREOF, the parties have executed this AGREEMENT ON THE DATE AND YEAR
FIRST ABOVE WRITTEN.GUNITE CORPORATION TRANSPORTATION TECHNOLOGIES INDUSTRIES,
INC.
By: _________________________ By:____________________________
Name: _______________________ Name:__________________________
Title:________________________ Title:_________________________
______________________________________
XXXXX X. XXXXX
