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 foster  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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<PAGE>

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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<PAGE>



                      (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-
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<PAGE>

                             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


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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-

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<PAGE>

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


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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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<PAGE>



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


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<PAGE>



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

<PAGE>



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

<PAGE>



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

                                       16
<PAGE>



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:


                                        17

<PAGE>



               If to the Executive:

                      _______________________
                      c/o Johnstown America Industries, Inc.
                            980 North Michigan Avenue
                      Suite 1000
                             Chicago, Illinois 60611

               If to the Company:

                      Johnstown America Industries, Inc.
                            980 North Michigan Avenue
                      Suite 1000
                             Chicago, Illinois 60611
                      Attn:  President

                      With a copy to:

                             Johnstown America Industries, Inc.
                             980 North Michigan Avenue
                                   Suite 1000
                             Chicago, Illinois 60611
                              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.


                                        18

<PAGE>



               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.



                                        19

<PAGE>


               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/ Andrew M. Weller
                                 ------------------------------
                                    Name:  Andrew M. Weller
                                    Title: Executive Vice President & CFO








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