EMPLOYMENT AGREEMENT
(CAFIERO)
AGREEMENT effective as of May 1, 1997, between AM GENERAL CORPORATION
("Employer"), and PAUL CAFIERO ("Employee").
W I T N E S S E T H:
WHEREAS Employer desires to employ Employee on the terms hereof, and
Employee desires to accept employment on such terms;
In consideration of the mutual covenants herein contained, the parties
hereto hereby agree as follows:
1. TERMS AND DUTIES.
Commencing on the date hereof and continuing until October 31, 1998, and
thereafter from year to year unless sooner terminated as herein provided (the
"Employment Term"), the Employer hereby employs the Employee as its Vice
President and Chief Financial officer. The Employee hereby accepts such
employment and agrees to devote all of his business time and his best efforts to
the business of Employer and as may be necessary to perform his duties in
accordance with the policies and budgets established from time to time by
Employer and its Board of Directors and President. During the Employment Term,
the Employee will not have any other employment, except for part time employment
at the University of Notre Dame as an accounting instructor.
2. COMPENSATION.
For Employee's services hereunder Employer shall pay to Employee
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(a) a salary at the rate of One Hundred Twenty-Five Thousand ($125,000)
Dollars per year (or such greater amount as Employer may from time to time
determine), payable periodically in accordance with Employer's usual executive
payroll payment procedures; plus
(b) the opportunity to earn an annual bonus of up to Twenty-Five Thousand
($25,000) Dollars for each fiscal year (ending October 31,) provided that
(i) Employee achieves Employer's performance objectives to the
satisfaction of Employer.
(ii) Employee is in the active employment of Employer, and actually
engaged in performing duties, at the close of such fiscal year, and
(iii) Employer's financial statements for such year, as prepared by its
independent public accountants, show a positive net income available
for common stock, as determined in accordance with generally
accepted accounting principles consistently applied, but after
adding back any non-cash charges for post-employment benefits and
before this bonus and bonuses provided for in all other executive
employment agreements.
Such annual bonus for each year shall be payable within 15 days after the
Employer's accountants have completed preparation of the Employer's financial
statement for such year. The determination of such accountants as to the amount
of the net income, as shown in such statements shall be conclusive on the
parties. Eligibility for this executive performance based bonus plan does not
detract from Employee's participation in the Profit Sharing Plan available to
all salaried employees.
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3. AUTOMOBILE.
Employer shall provide Employee with the use of a vehicle leased by
Employer at a cost equivalent to the lease of a Ford Crown Victoria. All
expenses associated with the use of said vehicle, including insurance, fuel and
maintenance shall be paid, or reimbursed to Employee, by the Employer.
4. PLACE OF EMPLOYMENT.
The Employee's regular place of employment during the Employment Term shall
be at the principal executive office of the Employer in South Bend, Indiana.
5. TRAVEL; EXPENSES.
The employee shall engage in such travel as may reasonably be required in
connection with the performance of his duties.
All reasonable travel and other expenses incurred by the Employee (in
accordance with the policies and the budget of the Employer established from
time to time) in carrying out his duties hereunder will be reimbursed by the
Employer on presentation to it of expense accounts and appropriate documentation
in accordance with the customary procedures of the Employer for reimbursement of
executive expenses.
6. EARLY TERMINATION OF EMPLOYMENT
TERM ON DISABILITY OR DEATH.
(a) If during the Employment term, the Employee fails because of illness
or other incapacity (including incapacity because of substance abuse) to render
to the Employer the services required of him hereunder for a period of two
months (during which the Employer shall continue the Employee's compensation at
the rates herein provided), the Employer may, in its
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discretion, give one month notice of termination of the Employment Term (during
which the Employee's compensation shall likewise be continued), and if the
Employee shall not resume full performance of his duties within such one month
period, the Employment Term shall terminate at the expiration thereof, provided
that any such termination shall not affect the right of the Employee (or his
estate) to continue to receive benefits under any disability insurance plan
covering the Employee which is in effect at the date of termination.
(b) The Employment Term shall end upon the death of the Employee.
(c) In the event of termination for disability or death, the Employer
shall pay the Employee the $25,000 annual bonus provided for in Section 2(b)
prorated for the period from the start of the fiscal year to date of
termination, provided that the requirement of Sub-Sections 2(b)(i) and (ii) have
been met for such fiscal year.
7. CONFIDENTIALITY; COMPETITION.
(a) For the purposes hereof, all confidential information about the
business and affairs of the Employer (including, without limitation, business
plans, product design and specifications, financial, engineering and marketing
information and information about costs, manufacturing methods, suppliers and
customers) constitute "Employer Confidential Information." Employee acknowledges
that he will have access to and knowledge of Employer Confidential Information,
and that improper use or revelation of same by the Employee during or after the
termination of his employment by the Employer could cause serious injury to the
business of the Employer. Accordingly, the Employee agrees that he will forever
keep secret and inviolate all Employer Confidential Information which comes into
his possession, and that he will not use the same for
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his own private benefit, or directly or indirectly for the benefit of others,
and that he will not disclose such Employer Confidential Information to any
other person except as necessary in pursuance of his duties.
(b) The Employee agrees that during the Employment Term as extended, if
extended, and for two years after the end of the Employment Term (the
"Non-Competition Period"), the Employee will not (whether as an officer,
director, partner, proprietor, investor, associate, employee, consultant,
adviser, public relations or advertising representative or otherwise), directly
or indirectly, be engaged in the business of manufacturing high mobility
multipurpose wheeled vehicles (all models now manufactured by Employer and all
models which may be manufactured or planned for manufacture by Employer during
Employee's employment) in any part of the United States (which the parties
acknowledge is the Employer's trading area). For purposes of the preceding
sentence, the Employee shall be deemed to be engaged in any business which any
person for whom he shall perform services is engaged. Nothing herein contained
shall be deemed to prohibit the Employee from owning, as a passive investment, a
security of any issuer which is not a supplier, vendor, customer or competitor
of the Employer.
(c) Within the terms of this Agreement, it is intended to limit disclosure
and competition by the Employee to the maximum extent permitted by law. If it
shall be finally determined by any court of competent jurisdiction ruling on
this Agreement that the scope or duration of any limitation contained in this
paragraph 6 is too extensive to be legally enforceable, then the parties hereby
agree that the scope and duration (not greater than that provided for herein) of
such limitation shall be the maximum scope and duration which shall be legally
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enforceable and the Employee hereby consents to the enforcement of such
limitation as so modified.
(d) The Employee acknowledges that any violation by him of the provisions
of this paragraph 6 could cause serious and irreparable damages to the Employer.
He further acknowledges that it might not be possible to measure such damages in
money. Accordingly, the Employee further acknowledges, that in the event of a
breach or threatened breach by him of the provisions of this paragraph 6, the
Employer may seek, in addition to any other rights or remedies, including money
damages, an injunction or restraining order, restraining the Employee from doing
or continuing to do or perform any acts constituting such breach or threatened
breach.
8. BENEFITS.
The Employer agrees to provide to the Employee the benefits listed in
Schedule A hereto.
9. EMPLOYEE'S REPRESENTATION.
Employee hereby represents to the Employer that he has full lawful right
and power to enter into this Agreement and carry out his duties hereunder, and
that same will not constitute a breach of or default under any employment,
confidentiality, non-competition or other agreement by which he may be bound.
10. DEFAULT BY EMPLOYEE.
If the Employee shall:
(i) commit an act of dishonesty against the Employer or fraud upon the
Employer; or
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(ii) breach his obligations under this Agreement and fail to cure such
breach within five (5) days after written notice thereof; or
(iii) be convicted of a crime involving moral turpitude; or
(iv) fail or neglect diligently to perform his duties hereunder and
continue in his failure after written notice;
then, and in any such case, the Employer may terminate the employment of the
Employee hereunder and, in the event of any such termination, the Employee shall
no longer have any right to any of the benefits (including future salary
payments) which would otherwise have accrued such termination.
11. SUCCESSORS.
The rights, benefits, duties and obligations under this Agreement shall
inure to and be binding upon the Employer, its successors and assigns and upon
the Employee and his legal representatives, legatees and heirs. It is
specifically understood, however, that this Agreement may not be transferred or
assigned by the Employee. The Employer may assign any of its rights and
obligations hereunder to any subsidiary or affiliate of the Employer, or to a
successor or survivor resulting from a merger, consolidation, sale of assets or
stock or other corporate reorganization, on condition that the assignee shall
assume all of the Employer's obligations hereunder and it is agreed that such
successor or surviving corporation shall continue to be obligated to perform the
provisions of this Agreement.
12. AUTOMATIC ROLL-OVER.
This Agreement shall automatically extend for an additional one-year
period, on each
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expiration date, unless either party shall have theretofore given at least 30
days prior written notice of termination. Any extension shall be on the terms in
force immediately preceding said extension, unless otherwise agreed in writing.
13. NOTICES
Notices hereunder shall be in writing and shall be sent by telegraph or by
certified or registered mail, telecopy, or recognized overnight delivery service
(such as Federal Express) prepaid as follows:
TO EMPLOYEE: TO EMPLOYER:
- ----------- -----------
PAUL CAFIERO AM GENERAL CORPORATION
105 North Niles Avenue
South Bend, IN 46617
Attention: President
with copy to: THE RENCO GROUP, INC.
------------
30 Rockefeller Plaza-42nd Floor
New York, NY 10112
and shall be deemed to have been given when telecopied to the addressee or three
days after placed in the mail or the second business day following delivery to a
recognized overnight delivery service (such as Federal Express) or a telegraph
company, prepaid and properly addressed. Notices to the Employee may also be
delivered to him personally. Notices of change of address shall be given as
provided above, but shall be effective only when actually received.
14. WAIVER.
The failure of either party to insist upon the strict performance of any of
the terms, conditions, and provisions of this Agreement shall not be construed
as a waiver or
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relinquishment of future compliance therewith, and said terms, conditions, and
provisions shall remain in full force and effect. No waiver of any term or
condition of this Agreement on the part of the Employer shall be effective for
any purposes whatsoever unless such waiver is in writing and signed by the
Employer.
15. ENTIRE AGREEMENT; GOVERNING LAW
-------------------------------
There are no oral or written understandings concerning the Employee's
employment by Employer outside of this Agreement. This Agreement may not be
modified except by a writing signed by the parties hereto. This Agreement
supersedes any and all prior employment agreements or understandings. This
Agreement is made under; and shall be construed in accordance with, the laws of
Indiana, applicable to agreements to be performed wholly within that state.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
ATTEST: EMPLOYER:
AM GENERAL CORPORATION
[SIGNATURE ILLEGIBLE] BY [SIGNATURE ILLEGIBLE]
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WITNESS: EMPLOYEE:
[SIGNATURE ILLEGIBLE] /s/ Paul Cafiero
- ------------------------- --------------------------
PAUL CAFIERO
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SCHEDULE A
PAUL CAFIERO/AM GENERAL CORPORATION
EMPLOYMENT AGREEMENT
EFFECTIVE MAY 1, 1997
EMPLOYEE BENEFITS
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- -AMG Retirement Plan
- -AMG Capital/Accumulation Plan
- -AMG Profit Sharing Plan
- -AMG Salary Continuation Plan
- -AMG Medical and Dental Care Plans
- -AMG Educational Reimbursement Plan
- -AMG Vacation Plan
- -AMG Health Care Plan
- -AMG Disability Income Plan
- -AMG Cafeteria Plan
-Life Insurance
-Benefit Bank
-Optional Disability Income
-Optional Vacation
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