Document:

EMPLOYMENT AGREEMENT

 

EXHIBIT 10.7

Employment Agreement for Andrew M. Weller

         THIS
EMPLOYMENT AGREEMENT made effective as of the 2nd day of
August, 2004 (the “Effective Date”), between Transportation
Technologies Industries, Inc., a Delaware corporation (the “Company”),
and Andrew M. Weller (the “Executive”);

WITNESSETH
THAT:

         WHEREAS, the Company, through its wholly-owned subsidiaries, 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 that are of substantial value
to the Company in the conduct, management and operation of the Business, and
the Company considers it essential to the best interests of its shareholders to
foster the continuous employment of key management personnel; and

         WHEREAS, the Executive currently serves as President and Chief Operating
Officer and a Director of the Company, and the Company desires to continue the
employment and service of the Executive as President and Chief Executive
Officer and, at all times the Executive is the Chief Executive Officer of the
Company, a Director of the Company, 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 Board of Directors of the Company (the “Board”) has
determined that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the Company’s management,
including the Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
Change in Control (as defined below); and

         WHEREAS, the Company and the Executive entered into an Employment
Agreement dated July 1, 1999, as amended March 9, 2000 (the “Prior
Employment Agreement”), and the Company and the Executive desire to
continue the employment relationship by entering into this Employment
Agreement;

         NOW THEREFORE, in consideration of the continued 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 Employment Agreement.

                    (a)     The parties hereto agree, effective as of the date hereof, to
terminate the Prior Employment Agreement, and agree that, following termination
of the Prior Employment Agreement, there shall be no liability on the part of
either party hereto with respect to the Prior Employment Agreement.

                    (b)     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
conditions set forth herein.

     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 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 on the second anniversary of the Effective Date and on each anniversary
thereafter, the Term shall automatically be extended for one year unless, not
later than 90 days prior to such anniversary, the Executive or the Company
shall have given notice in writing to the other that he or it does not wish to
extend the Term; and provided further, that 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 consummation of a merger or consolidation 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 President and, commencing at the earlier of (a) the consummation of the
Company’s initial public offering of its common stock and
(b) August 15, 2004, Chief Executive Officer, and, at all times that the Executive is the Chief
Executive Officer of the Company, a Director of the Company, 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 Company shall use its commercially reasonable effects to
take all actions necessary to nominate the Executive as a Director of the
Company if the Executive’s term as a Director of the Company shall expire at a
time that the Executive is the Chief Executive Officer of the Company during
the Term. The Executive shall devote all of his normal and regular business
time and attention to the performance of his duties in such capacities except
as otherwise set forth herein. The Executive may devote reasonable time to
supervision of personal investments and professional, charitable, educational,
religious and similar types of activities, speaking engagements and membership
on other boards of directors, so long as, taken as a whole, such activities do
not interfere with the performance of his duties hereunder and do not conflict
with Section 10 of this Agreement; provided that the Executive may not
serve on the board of directors of another company (other than the Company, TMB
portfolio companies and any company on whose board the Executive serves as of
the Effective Date) without the Board’s written consent. The Executive shall
be entitled to keep any amounts paid to him in connection with such activities
(e.g., director fees and honoraria).

     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 Effective
Date. The Company shall pay all expenses related to such office facilities

-2-

 

to the extent used by, and devoted to the operations of, the Company and
its subsidiaries (or comparable office facilities selected by the Executive and
approved by the Board), 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, the Company 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, the Company shall pay to the Executive an annual base salary at a
rate of $550,000 (as adjusted in accordance with the provisions hereof, the
“Base Salary”) 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. The Board, or such committee of the Board as is
responsible for setting the compensation of senior executive officers, shall
review the Executive’s performance and Base Salary annually in January of each
year, and determine whether to adjust the Executive’s Base Salary on a
prospective basis. Such adjusted annual salary shall then become the
Executive’s “Base Salary” for purposes of this Agreement. The Executive’s Base
Salary shall not be reduced.

                    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 the Company or any of the Company’s
subsidiaries or affiliates. The Base Salary 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 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 the
Company shall in any way limit or reduce the obligation of the Company to pay
the Base Salary hereunder.

                    (b)     Bonus. During the Term of the Executive’s employment
hereunder, the Executive shall participate, in a manner consistent with the
Executive’s title, position and responsibilities, in all management incentive
plans made generally available to executives of the Company in comparable
positions (together, the “Bonus Plans”) at a targeted bonus level,
expressed as a percentage of the Base Salary, of (i) 65% for 2004 and (ii) 100%
for fiscal years thereafter so long as approved by the Board (the
“Target”). 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 committee thereof no
later than the last day of the first month of the fiscal year) and shall be
paid to the Executive after the fiscal year end following determination by the
Board or a committee thereof of the Company’s achievement of any applicable
financial goals or of any personal performance goals established for the
Executive (but in any event not later than 120 days after the end of such
fiscal year). If the Executive’s employment terminates for any reason

-3-

 

other than a termination by the Executive without Good Reason before the
end of the second quarter of a fiscal year or a termination by the Company for
Cause before the end of a fiscal year, the Company shall pay to the Executive
at the time provided in the preceding sentence a lump sum amount, in cash,
equal to the difference between (1) a pro rata portion to the Date of
Termination of any annual bonus award to the Executive for the uncompleted
fiscal year, calculated by multiplying the applicable bonus, if any, that the
Executive would have earned for that fiscal year based on the Company’s
achievement of any applicable financial goals or of any personal performance
goals established for the Executive by a fraction the numerator of which is the
number of days the Executive was employed during such fiscal year and the
denominator of which is 365, and (2) the amount of any annual bonus award the
Company has already paid to the Executive for the uncompleted fiscal year. If
the Executive terminates his employment without Good Reason before the end of
the second quarter of a fiscal year or the Company terminates the Executive’s
employment for Cause before the end of a fiscal year, the Executive will not be
entitled to receive any bonus for that fiscal year.

                    (c)     Expenses. During the Term of the Executive’s employment
hereunder, 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 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 the Company, provided that such expenses are incurred and
accounted for in accordance with the policies and procedures established by the
Company.

                    (d)     Retiree Medical Benefits. Following the Executive’s Date of
Termination for any reason other than a termination by the Executive prior to
the third anniversary of the Effective Date other than for Good Reason or a
termination by the Company for Cause (but including, without limitation, for
any reason specified in clause (a) or (b) or (d) of Section 6), the Company
shall (at the Company’s sole expense and without any contribution by the
Executive, the Executive’s Spouse and/or the Executive’s dependents) provide
the Executive, the Executive’s Spouse (as defined in this Section 5(d)) and the
Executive’s dependents with medical and dental insurance benefits substantially
similar to those benefits “provided” to them immediately prior to the Date of
Termination or, if more favorable to the Executive, those “provided” to them on
the Effective Date, from the Date of Termination until the later of the death
of the Executive or the death of the Executive’s Spouse. In determining which
benefits were “provided” at the applicable date, the Executive shall be deemed
to have elected the most comprehensive benefits and coverage available to the
Executive at that date (whether or not actually elected). Such benefits shall
also include, without limitation, an unrestricted right for the Executive, the
Executive’s Spouse and the Executive’s dependents to select their own care
providers. The Company shall provide such post-termination benefits under its
medical and dental plans, to the extent that the Executive’s continued
participation is possible under the general terms and provisions of such plans.
To the extent that such participation is not possible, the Company shall
arrange to otherwise provide the Executive with such post-termination benefits.
Also, to the extent that the Executive is, at any time, entitled to insurance
under the Medicare program or its equivalent, the insurance under this Section
5(d) shall be only supplementary or secondary to the extent allowed by law.
For purposes of this Section 5(d), the “Executive’s Spouse” shall refer
to the Executive’s spouse immediately prior to the termination of the
Executive’s employment with the Com-

-4-

 

pany. This is a vested benefit that will be provided following the
Executive’s employment termination for any reason other than termination by the
Company for Cause or a termination by the Executive prior to the third
anniversary of the Effective Date other than for Good Reason (but including,
without limitation, for any reason specified in clause (a) or (b) or (d) of
Section 6) and will survive the termination of this Agreement.

                    (e)     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)     the Company shall reimburse the Executive for reasonable
expenses of an automobile chosen by the Executive, in an amount of up to
one thousand five hundred dollars ($1,500) per month as well as
automobile insurance, parking and maintenance, according to the Company’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.

                    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 Base Salary. 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 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.

                    (f)     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.

                    (g)     Equity Compensation. The Executive shall be entitled to
participate in and receive awards under any equity compensation plan or
arrangement made available by the Company to its executive employees at any
time during his employment hereunder.

     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.

-5-

 

                    (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 that continues for one
year, the Company may terminate the Executive’s employment hereunder.

                    (c)     Cause. The Company may terminate the Executive’s employment
hereunder for Cause. 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) that materially impair the
Executive’s ability to perform his duties or responsibilities that in
each case continues after being communicated in writing to 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 that 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. Any act, or failure to act,
based upon the direction or instruction of the Board pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for the Company
shall be presumed to be done, or omitted to be done, in good faith and in the
best interests of the Company absent knowledge by the Executive the contrary.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause without (1) 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, (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 the Company, and (4) 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.

                    (ii)     “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 given in respect thereof: (A) a material change in the Executive’s
position, duties, responsibilities (including reporting responsibilities) or
authority (except

-6-

 

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 level of
participation in any Bonus Plans for which he is eligible under Section 5(b)
hereof, (C) failure to provide facilities or services that are suitable as
determined by the Board 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 (or comparable office facilities so long
as the Executive does not have to relocate outside the city of Chicago,
Illinois), without the prior written consent of the Executive, (D) any
purported termination by the Company of the Executive’s employment that 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), or (E) failure of any successor (by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to become liable for the performance
of this Agreement by assumption pursuant to Section 12 of this Agreement or by
operation of law or otherwise. 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 consummation of a merger or consolidation of the Company
with any other corporation, other than (i) merger or consolidation that
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

-7-

 

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.

Notwithstanding the foregoing, a Change in Control shall not include (i) the
initial public offering of capital stock of the Company and any associated
changes to the composition of the Board, and (ii) any changes to the
composition of the Board mandated by applicable law, rule or regulation
(including by the rules of any self-regulating entity).

                    (iv)     “Beneficial Owner” shall have the meaning given in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

                    (v)     “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 13. A
“Notice of Termination” shall mean a notice that 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 that, 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 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 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

-8-

 

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 the Company, 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, 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 and perquisites 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 obligations hereunder to the extent practicable, 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)     The following payments will be made upon the Executive’s termination
of employment for any reason: (i) earned but unpaid Base Salary through the
Date of Termination; (ii) any annual incentive plan bonus, or other form of
incentive compensation, for which the performance measurement period has ended,
but which is unpaid at the time of termination; (iii) any accrued but unpaid
vacation; (iv) the pro rata portion of the Executive’s bonus owed pursuant to
Section 5(b), if any; (v) unreimbursed business expenses owed pursuant to
Section 5(c); and (vi) any amounts payable under any of the Company’s Benefit
Plans in accordance with the terms of those plans. All amounts under clauses
(i), (ii), (iii) and (v) shall be paid in a lump sum within 30 days of the
Executive’s Date of Termination; all amounts under clause (iv) shall be paid in
a lump sum as provided in Section 5(b).

                    (b)     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 Company-paid disability benefit plans maintained
by the Company) until his employment is terminated pursuant to Section 6(b)
hereof, and upon such termination, the Company shall pay the amounts specified
in Sections 5(d) (but only in the circumstances provided therein) and 7(a), and
the Company shall, thereafter, have no further obligations to the Executive or
to his legal representative or estate or his or its successors and assigns
under this Agreement.

-9-

 

                    (c)     If the Executive’s employment is terminated by his death, the Company
shall pay to the Executive’s legal representative (A) any death benefits
provided under any Benefit Plan in accordance with their terms and (B) the
amounts specified in paragraph 7(a), and (C) benefits to which the Executive is
entitled under Section 5(d), and the Company shall, thereafter, have no further
obligations to the Executive or to his legal representative or estate or his or
its successors and assigns under this Agreement.

                    (d)     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 Base Salary pro rata through the Date of Termination at the rate
in effect at the time Notice of Termination is given, the amounts specified in
Sections 5(d) (but only in the circumstances provided therein) and 7(a), and
the Company shall, thereafter, have no further obligations to the Executive or
to his legal representative or estate or his or its successors and assigns
under this Agreement.

                    (e)     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 the amounts specified in
paragraph 7(a); and

         (ii)     in lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall pay as
liquidated damages to the Executive on the Date of Termination, a lump
sum amount equal to the product of (x) the number two, multiplied by (y)
the sum of:

            (A)     the Executive’s Base Salary 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 that may become
payable to the Executive with respect to the fiscal year in which
the Date of Termination occurs, (iii) the 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 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); and

         (iii)     the Company 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” as that term is defined in Section
3(1) of the Employee Retirement Income Security Act of 1974, as amended
(including, without limitation, the supplemental life insurance program
in place at the time of execution of this Agreement) in which the
Executive

-10-

 

was entitled to participate immediately prior to the Date of
Termination so long as 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, the
Company shall arrange to provide the Executive with benefits
substantially similar to those that the Executive would otherwise have
been entitled to receive under such plans and programs from which his
continued participation is barred; and

         (iv)     the Company shall, at its own cost, continue to provide the
Executive for a period of three years with the perquisites and
reimbursements the Company gave or provided to the Executive, pursuant to
Section 5(e) of this Agreement, immediately prior to the Date of
Termination; and

         (v)     the Company 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 the Company; and

         (vi)     if the Company shall fulfill its obligations to the Executive
pursuant to this Section 7(e) then the Company shall, thereafter, have no
further obligations to the Executive or to his legal representative or
estate or his or its successors and assigns under this Agreement.

                    (f)     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.

                    (g)     The obligations of the Company to make payments and provide benefits
under this Section 7 shall survive the termination of this Agreement.

     8.     Additional Payments for Adherence to Restrictive Covenants Following
Termination. In addition to the compensation, payments and benefits
payable and provided under Section 7, upon any termination of the Executive’s
employment entitling him to benefits under Section 7(e), in exchange for the
Executive’s adherence to the restrictive covenants provided in Section 10, the
Company shall pay to the Executive on the Date of Termination, a lump sum
amount equal to the sum of: (a) the Executive’s Base Salary 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 that may become
payable to the Executive with respect to the fiscal year in which the Date of
Termination occurs, (iii) the 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 bonus payments made to the
Executive with respect to the three fiscal years immediately

-11-

 

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).

                    The Executive shall not be required to mitigate the amount of any payment
provided for in this Section 8 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 8 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. The
Company’s obligations to make payments under this Section 8 shall survive the
termination of this Agreement.

     9.     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 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(e)(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 9, 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 or, if the parties determine that
the certified public accounting firm used for auditing purposes by the Company
immediately prior to the Date of Termination cannot make such determination
because of legal restrictions, the parties shall agree on a different certified
public accounting firm (such certified public accounting firm is hereinafter
referred to as the “Accounting Firm”), which shall provide detailed supporting
calculations both to the Company and the Execu-

-12-

 

tive 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 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 (the “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, the
Company 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. The Executive will notify the
Company in writing of any claim by the IRS or other agency that, if successful,
would require payment by the Company of the additional payments under this
paragraph. The Executive 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. The Company shall pay all fees and expenses of the
Executive relating to a claim by the IRS or other agency.

     10.     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 that 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 11.
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 at all times during the Executive’s employment by the Company and, 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 (such period,
together with the period of the Executive’s employment by the Company, 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 that is engaged in direct
competition with any business of the Company on the Date of Termination that
had revenues of ten percent (10%) or more of the Company’s consolidated
revenues for the four most recently completed fiscal quarters (a business
meeting this requirement shall be referred to as a “Competitor”).

-13-

 

                    If any court of competent jurisdiction determines that the covenant not to
compete contained in this Section 10, 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. The Executive agrees that,
during the Non-Compete Period, he shall not, without the prior written consent
of the Company, solicit any current employee of 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)     Non-Disparagement. The Executive agrees that, during the
Non-Compete Period, he shall not make any statements, in writing or otherwise,
that disparage the reputation or character of the Company or any of its
affiliates, subsidiaries or divisions or any of their respective directors,
officers, employees or shareholders at any time for any reason whatsoever,
except that nothing in this Section 10(c) shall prevent the Executive from
giving truthful testimony in any litigation or any administrative or
arbitration proceeding either between the Executive and the Company or in
connection with which the Executive is required by law to give testimony. The
Company agrees that, during the Non-Compete Period, it shall not make any
statements, in writing or otherwise, that disparage the reputation or character
of the Executive at any time for any reason whatsoever, except that nothing in
this Section 10(c) shall prevent representatives of the Company from giving
truthful testimony in any litigation or any administrative or arbitration
proceeding either between the Company and the Executive or in connection with
which any representative of the Company is required by law to give testimony.

                    (d)     Survival of Non-Compete, Non-Solicitation and Non-Disparagement
Terms. The provisions set forth in this Section 10 shall survive
termination of this Agreement.

     11.     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 Company and otherwise affecting or relating to the Company (“Confidential
Information”) and therefore agrees to be bound by the provisions of this
Section 11, which both the Company and the Executive agree and acknowledge to
be reasonable and to be necessary to the Company. “Confidential Information”
shall include, but not be limited to, information regarding customers, customer
lists, costs, prices, earnings, products, services, machines, equipment,
manufacturing procedures, operations, potential acquisitions, new location
plans, prospective and executed contracts and other business arrangements. In
recognition of this fact, the Executive agrees that the Executive will not
disclose any Confidential Information (except (i) information that becomes
publicly available without violation of this Agreement, (ii) information that
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 reasonable advance 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

-14-

 

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.

     12.     Binding Agreement; Successors. 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. This Agreement shall be binding upon, and inure to the benefit of, any
successors or assigns of the Company. This Agreement is not intended to confer
upon any person other than the parties hereto (and the Executive’s Spouse and
dependents) any rights or remedies, except as specifically provided in this
Section 12. The Company will, by agreement in form and substance reasonably
satisfactory to the Executive, require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the successor to become liable for the performance
of this Agreement by assumption or by operation of law or otherwise shall
constitute “Good Reason” under Section 6(d). As used in this Agreement,
“Company” shall mean the Company as defined herein and any successor to all or
substantially all of its business and/or assets that assumes and agrees to
perform this Agreement by operation of law or otherwise.

     13.     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:

Andrew M. Weller

659 Lincoln Avenue

Winnetka, Illinois 60093

     With a copy to:

Winston & Strawn LLP

35 West Wacker Drive

Chicago, Illinois 60601

Attn: Robert F. Wall, Esq.

-15-

 

     If to the Company:

Transportation Technologies Industries, Inc.

980 North Michigan Avenue

Suite 1000

Chicago, Illinois 60611

Attn: Secretary

     With a copy to:

Cahill Gordon & Reindel LLP

80 Pine Street

New York, New York 10005

Attn: Roger Meltzer, Esq.

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.

     14.     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 the Company, 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.

     15.     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 that 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.

     16.     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.

     17.     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-

 

     18.     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.

     19.     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 the
Company and its subsidiaries 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, 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 the Company its property, and to make
the Company whole.

     20.     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. The
Company shall be responsible for its own legal fees and expenses incurred in
connection with the preparation and negotiation of this Agreement and for the
reasonable legal fees and expenses incurred by the Executive incurred in
connection with the preparation and negotiation of this Agreement. Except as
provided in Section 7(e)(v), 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.

     21.     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.

-17-

 

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.

	 	 	 	 
	 	 	
Transportation Technologies Industries, Inc.
	/s/ Andrew M. Weller

Andrew M. Weller	 	
By:
	 	 	
/s/ Thomas M. Begel

	 	 	
Name: Thomas M. Begel

Title:  Chief Executive Officer

S-1EMPLOYMENT AGREEMENT

 

EXHIBIT 10.8

Employment Agreement for James D. Cirar

                    THIS
EMPLOYMENT AGREEMENT made effective as of the 2nd day of August, 2004
(the “Effective Date”), between Transportation Technologies Industries, Inc., a
Delaware corporation (the “Company”), and James D. Cirar (the “Executive”);

WITNESSETH THAT:

                    WHEREAS, the Company, through its wholly-owned subsidiaries, 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 that are of substantial value
to the Company in the conduct, management and operation of the Business, and
the Company considers it essential to the best interests of its shareholders to
foster the continuous employment of key management personnel; and

                    WHEREAS, the Executive currently serves as Executive Vice President and a
Director of the Company, and the Company desires to continue the employment and
service of the Executive as Executive Vice President, 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 Board of Directors of the Company (the “Board”) has
determined that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the Company’s management,
including the Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
Change in Control (as defined below); and

                    WHEREAS, the Company and the Executive entered into an Employment
Agreement dated January 28, 2000, as amended March 9, 2000 (the “Prior
Employment Agreement”), and the Company and the Executive desire to continue
the employment relationship by entering into this Employment Agreement;

                    NOW THEREFORE, in consideration of the continued 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 Employment Agreement.

                    (a)     The parties hereto agree, effective as of the date hereof, to
terminate the Prior Employment Agreement, and agree that, following termination
of the Prior Employment

 

 

Agreement, there shall be no liability on the part of either party hereto
with respect to the Prior Employment Agreement.

                    (b)     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
conditions set forth herein.

     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 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 on the second anniversary of the
Effective Date and on each anniversary thereafter, the Term shall automatically
be extended for one year unless, not later than 90 days prior to such
anniversary, the Executive or the Company shall have given notice in writing to
the other that he or it does not wish to extend the Term; and provided further,
that 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 consummation of a merger or consolidation
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 Executive Vice
President 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 all of his
normal and regular business time and attention to the performance of his duties
in such capacities except as otherwise set forth herein. The Executive may
devote reasonable time to supervision of personal investments and professional,
charitable, educational, religious and similar types of activities, speaking
engagements and membership on other boards of directors, so long as, taken as a
whole, such activities do not interfere with the performance of his duties
hereunder and do not conflict with Section 10 of this Agreement; provided that
the Executive may not serve on the board of directors of another company (other
than the Company, TMB portfolio companies and any company on whose board the
Executive serves as of the Effective Date) without the Board’s written consent.
The Executive shall be entitled to keep any amounts paid to him in connection
with such activities (e.g., director fees and honoraria).

     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 Effective Date. The
Company shall pay all expenses related to such office facilities to the extent
used by, and devoted to the operations of, the Company and its subsidiaries (or
comparable office facilities selected by the Executive and approved by the
Board), 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, the Company will pay
the Executive and the Executive agrees to accept in full payment for such
performance the amounts and benefits set forth below.

-2-

 

                    (a)     Salary. During the Term of the Executive’s employment hereunder, the
Company shall pay to the Executive an annual base salary at a rate of $443,000
(as adjusted in accordance with the provisions hereof, the “Base Salary”)
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.
The Board, or such committee of the Board as is responsible for setting the
compensation of senior executive officers, shall review the Executive’s
performance and Base Salary annually in January of each year, and determine
whether to adjust the Executive’s Base Salary on a prospective basis. Such
adjusted annual salary shall then become the Executive’s “Base Salary” for
purposes of this Agreement. The Executive’s Base Salary shall not be reduced.

                    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 the Company or any of the Company’s
subsidiaries or affiliates. The Base Salary 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 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 the
Company shall in any way limit or reduce the obligation of the Company to pay
the Base Salary hereunder.

                    (b)     Bonus. During the Term of the Executive’s employment hereunder, the
Executive shall participate, in a manner consistent with the Executive’s title,
position and responsibilities, in all management incentive plans made generally
available to executives of the Company in comparable positions (together, the
“Bonus Plans”) at a targeted bonus level, expressed as a percentage of the Base
Salary, of (i) 65% for 2004 and (ii) 100% for fiscal years thereafter so long
as approved by the Board (the “Target”). 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
committee thereof no later than the last day of the first month of the fiscal
year) and shall be paid to the Executive after the fiscal year end following
determination by the Board or a committee thereof of the Company’s achievement
of any applicable financial goals or of any personal performance goals
established for the Executive (but in any event not later than 120 days after
the end of such fiscal year). If the Executive’s employment terminates for any
reason other than a termination by the Executive without Good Reason before the
end of the second quarter of a fiscal year or a termination by the Company for
Cause before the end of a fiscal year, the Company shall pay to the Executive
at the time provided in the preceding sentence a lump sum amount, in cash,
equal to the difference between (1) a pro rata portion to the Date of
Termination of any annual bonus award to the Executive for the uncompleted
fiscal year, calculated by multiplying the applicable bonus, if any, that the
Executive would have earned for that fiscal year based on the Company’s
achievement of any applicable financial goals or of any personal performance
goals established for the Executive by a fraction the numerator of which is the
number of days the Executive was employed during such fiscal year and the
denominator of

-3-

 

which is 365, and (2) the amount of any annual bonus award the Company has
already paid to the Executive for the uncompleted fiscal year. If the
Executive terminates his employment without Good Reason before the end of the
second quarter of a fiscal year or the Company terminates the Executive’s
employment for Cause before the end of a fiscal year, the Executive will not be
entitled to receive any bonus for that fiscal year.

                    (c)     Expenses. During the Term of the Executive’s employment hereunder,
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 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 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 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)     the Company shall reimburse the Executive for reasonable
expenses of an automobile chosen by the Executive, in an amount of up to
one thousand dollars ($1,000) per month as well as automobile insurance,
parking and maintenance, according to the Company’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.

                    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 Base Salary. 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 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.

-4-

 

                    (f)     Equity Compensation. The Executive shall be entitled to participate
in and receive awards under any equity compensation plan or arrangement made
available by the Company to its executive employees at any time during his
employment hereunder.

     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 that continues for one year,
the Company may terminate the Executive’s employment hereunder.

                    (c)     Cause. The Company may terminate the Executive’s employment hereunder
for Cause. 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) that materially impair the
Executive’s ability to perform his duties or responsibilities that in
each case continues after being communicated in writing to 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 that 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. Any act, or failure to act,
based upon the direction or instruction of the Board pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for the Company
shall be presumed to be done, or omitted to be done, in good faith and in the
best interests of the Company absent knowledge by the Executive the contrary.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause without (1) 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, (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 the Company, and (4) delivery to the Executive
of a Notice of Termination, as defined in subsection (e) hereof.

-5-

 

                    (d)     Good Reason.

                    (i)     The Executive may terminate his employment hereunder for Good Reason.

                    (ii)     “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
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 level of
participation in any Bonus Plans for which he is eligible under Section 5(b)
hereof, (C) failure to provide facilities or services that are suitable as
determined by the Board 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 (or comparable office facilities so long
as the Executive does not have to relocate outside the city of Chicago,
Illinois), without the prior written consent of the Executive, (D) any
purported termination by the Company of the Executive’s employment that 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), or (E) failure of any successor (by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to become liable for the performance
of this Agreement by assumption pursuant to Section 12 of this Agreement or by
operation of law or otherwise. 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

-6-

 

         (C)     the consummation of a merger or consolidation of the Company
with any other corporation, other than (i) merger or consolidation that
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.

Notwithstanding the foregoing, a Change in Control shall not include (i) the
initial public offering of capital stock of the Company and any associated
changes to the composition of the Board, and (ii) any changes to the
composition of the Board mandated by applicable law, rule or regulation
(including by the rules of any self-regulating entity).

                    (iv)     “Beneficial Owner” shall have the meaning given in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

                    (v)     “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 13. A “Notice of
Termination” shall mean a notice that 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 that, in the case of a termination for Cause shall be the date such
Notice of Termination is given

-7-

 

(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 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 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 the
Company, 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, 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 and perquisites 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 obligations
hereunder to the extent practicable, 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)     The following payments will be made upon the Executive’s termination
of employment for any reason: (i) earned but unpaid Base Salary through the
Date of Termination; (ii) any annual incentive plan bonus, or other form of
incentive compensation, for which the performance measurement period has ended,
but which is unpaid at the time of termination; (iii) any accrued but unpaid
vacation; (iv) the pro rata portion of the Executive’s bonus owed pursuant to
Section 5(b), if any; (v) unreimbursed business expenses owed pursuant to
Section 5(c); and (vi) any amounts payable under any of the Company’s Benefit
Plans in accordance with the terms of those plans. All amounts under clauses
(i), (ii), (iii) and (v) shall be paid in a lump sum within 30 days of the
Executive’s Date of Termination; all amounts under clause (iv) shall be paid in
a lump sum as provided in Section 5(b).

-8-

 

                    (b)     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 Company-paid disability benefit plans maintained
by the Company) until his employment is terminated pursuant to Section 6(b)
hereof, and upon such termination, the Company shall pay the amounts specified
in Section 7(a), and the Company shall, thereafter, have no further obligations
to the Executive or to his legal representative or estate or his or its
successors and assigns under this Agreement.

                    (c)     If the Executive’s employment is terminated by his death, the Company
shall pay to the Executive’s legal representative (A) any death benefits
provided under any Benefit Plan in accordance with their terms and (B) the
amounts specified in paragraph 7(a) and the Company shall, thereafter, have no
further obligations to the Executive or to his legal representative or estate
or his or its successors and assigns under this Agreement.

                    (d)     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 Base Salary pro rata through the Date of Termination at the rate
in effect at the time Notice of Termination is given, the amounts specified in
Section 7(a), and the Company shall, thereafter, have no further obligations to
the Executive or to his legal representative or estate or his or its successors
and assigns under this Agreement.

                    (e)     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 the amounts specified in
paragraph 7(a); and

         (ii)     in lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall pay as
liquidated damages to the Executive on the Date of Termination, a lump
sum amount equal to the product of (x) the number two, multiplied by (y)
the sum of:

            (A)     the Executive’s Base Salary 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 that may become
payable to the Executive with respect to the fiscal year in which
the Date of Termination occurs, (iii) the 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 bonus payments made to the Executive with
respect to the three fiscal years imme-

-9-

 

diately 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); and

         (iii)     the Company 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” as that term is defined in Section
3(1) of the Employee Retirement Income Security Act of 1974, as amended
(including, without limitation, the supplemental life insurance program
in place at the time of execution of this Agreement) in which the
Executive was entitled to participate immediately prior to the Date of
Termination so long as 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, the
Company shall arrange to provide the Executive with benefits
substantially similar to those that the Executive would otherwise have
been entitled to receive under such plans and programs from which his
continued participation is barred; and

         (iv)     the Company shall, at its own cost, continue to provide the
Executive for a period of three years with the perquisites and
reimbursements the Company gave or provided to the Executive, pursuant to
Section 5(d) of this Agreement, immediately prior to the Date of
Termination; and

         (v)     the Company 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 the Company; and

         (vi)     if the Company shall fulfill its obligations to the Executive
pursuant to this Section 7(e) then the Company shall, thereafter, have no
further obligations to the Executive or to his legal representative or
estate or his or its successors and assigns under this Agreement.

                    (f)     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.

                    (g)     The obligations of the Company to make payments and provide benefits
under this Section 7 shall survive the termination of this Agreement.

     8.     Additional Payments for Adherence to Restrictive Covenants Following
Termination. In addition to the compensation, payments and benefits payable
and provided under Section 7, upon any termination of the Executive’s
employment entitling him to benefits under Section 7(e), in exchange for the
Executive’s adherence to the restrictive covenants provided in Sec-

-10-

 

tion 10, the Company shall pay to the Executive on the Date of
Termination, a lump sum amount equal to the sum of: (a) the Executive’s Base
Salary 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 that may become payable to the Executive with respect to the
fiscal year in which the Date of Termination occurs, (iii) the 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 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).

                    The Executive shall not be required to mitigate the amount of any payment
provided for in this Section 8 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 8 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. The
Company’s obligations to make payments under this Section 8 shall survive the
termination of this Agreement.

     9.     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 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(e)(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.

-11-

 

                    (b)     All determinations required to be made under this Section 9, 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 or, if the parties determine that
the certified public accounting firm used for auditing purposes by the Company
immediately prior to the Date of Termination cannot make such determination
because of legal restrictions, the parties shall agree on a different certified
public accounting firm (such certified public accounting firm is hereinafter
referred to as the “Accounting Firm”), which shall provide detailed supporting
calculations both to 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 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 (the “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, the
Company 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. The Executive will notify the
Company in writing of any claim by the IRS or other agency that, if successful,
would require payment by the Company of the additional payments under this
paragraph. The Executive 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. The Company shall pay all fees and expenses of the
Executive relating to a claim by the IRS or other agency.

     10.     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 that 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 11.
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 at all times during the Executive’s employment by the Company and, 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 (such period,
together with the period of the Executive’s employment by the Company, 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,

-12-

 

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 that is engaged in direct
competition with any business of the Company on the Date of Termination that
had revenues of ten percent (10%) or more of the Company’s consolidated
revenues for the four most recently completed fiscal quarters (a business
meeting this requirement shall be referred to as a “Competitor”).

                    If any court of competent jurisdiction determines that the covenant not to
compete contained in this Section 10, 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. The Executive agrees that, during the
Non-Compete Period, he shall not, without the prior written consent of the
Company, solicit any current employee of 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)     Non-Disparagement. The Executive agrees that, during the Non-Compete
Period, he shall not make any statements, in writing or otherwise, that
disparage the reputation or character of the Company or any of its affiliates,
subsidiaries or divisions or any of their respective directors, officers,
employees or shareholders at any time for any reason whatsoever, except that
nothing in this Section 10(c) shall prevent the Executive from giving truthful
testimony in any litigation or any administrative or arbitration proceeding
either between the Executive and the Company or in connection with which the
Executive is required by law to give testimony. The Company agrees that,
during the Non-Compete Period, it shall not make any statements, in writing or
otherwise, that disparage the reputation or character of the Executive at any
time for any reason whatsoever, except that nothing in this Section 10(c) shall
prevent representatives of the Company from giving truthful testimony in any
litigation or any administrative or arbitration proceeding either between the
Company and the Executive or in connection with which any representative of the
Company is required by law to give testimony.

                    (d)     Survival of Non-Compete, Non-Solicitation and Non-Disparagement Terms.
The provisions set forth in this Section 10 shall survive termination of this
Agreement.

     11.     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 Company
and otherwise affecting or relating to the Company (“Confidential Information”)
and therefore agrees to be bound by the provisions of this Section 11, which
both the Company and the Executive agree and acknowledge to be reasonable and
to be necessary to the Company. “Confidential Information” shall include, but
not be limited to, information regarding customers, customer lists, costs,
prices, earnings, products, services, machines, equipment, manufacturing
procedures, operations, potential acquisitions, new location plans, prospective
and executed contracts and other business arrangements. In recognition of this
fact, the Executive agrees that the Executive will not disclose any
Confidential Information (except (i) information that becomes publicly
available without violation of this

-13-

 

Agreement, (ii) information that 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 reasonable advance 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 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.

     12.     Binding Agreement; Successors. 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. This Agreement shall be binding upon, and inure to the benefit of, any
successors or assigns of the Company. This Agreement is not intended to confer
upon any person other than the parties hereto (and the Executive’s Spouse and
dependents) any rights or remedies, except as specifically provided in this
Section 12. The Company will, by agreement in form and substance reasonably
satisfactory to the Executive, require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the successor to become liable for the performance
of this Agreement by assumption or by operation of law or otherwise shall
constitute “Good Reason” under Section 6(d). As used in this Agreement,
“Company” shall mean the Company as defined herein and any successor to all or
substantially all of its business and/or assets that assumes and agrees to
perform this Agreement by operation of law or otherwise.

     13.     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:

James D. Cirar

4855 Cider Hill Drive

Rochester, Michigan 48306

-14-

 

     With a copy to:

Winston & Strawn LLP

35 West Wacker Drive

Chicago, Illinois 60601

Attn: Robert F. Wall, Esq.

     If to the Company:

Transportation Technologies Industries, Inc.

980 North Michigan Avenue

Suite 1000

Chicago, Illinois 60611

Attn: Secretary

     With a copy to:

Cahill Gordon & Reindel LLP

80 Pine Street

New York, New York 10005

Attn: Roger Meltzer, Esq.

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.

     14.     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 the
Company, 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.

     15.     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 that 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-

 

     16.     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.

     17.     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.

     18.     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.

     19.     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 the
Company and its subsidiaries 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, 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 the Company its property, and to make
the Company whole.

     20.     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. The Company shall be
responsible for its own legal fees and expenses incurred in connection with the
preparation and negotiation of this Agreement and for the reasonable legal fees
and expenses incurred by the Executive incurred in connection with the
preparation and negotiation of this Agreement. Except as provided in Section
7(e)(v), 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.

     21.     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.

-16-

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.

	 	 	 	 
	/s/ James D. Cirar

James D. Cirar	 	
Transportation Technologies Industries, Inc.

By:
	 	 	
/s/ Andrew M. Weller

	 	 	
Name:  Andrew M. Weller

Title:  President

S-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}]]