EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of September 30, 1996 by and between Transportation Manufacturing
Operations, Inc., a Delaware corporation ("Employer"), and James P.
Bernacchi ("Executive").
WHEREAS, Executive is willing to serve as the Chief Operating Officer
of Employer pursuant to the terms and conditions hereof.
NOW, THEREFORE, Executive and Employer hereby agree as follows:
1. Terms of Employment.
(a) Position and Duties. Commencing on the date of hire (the
"Effective Date" and the "Employment Period"), unless terminated as
provided herein, Employer agrees to employ Executive, and Executive agrees
to serve Employer as its Chief Operating Officer and to perform the general
functions and duties as described in Exhibit A attached hereto, as such
functions and duties may be modified by mutual agreement by Employer and
Executive. During the Employment Period, Executive shall be accountable,
and report to the Management Committee of Employer.
(b) Compensation.
(i) Base Salary. During the Employment Period, Executive
shall receive a base cash salary (the "Base Salary") at an annual rate
(pro-rated for partial years during the Employment Period), of at least TWO
HUNDRED FOURTEEN THOUSAND TWO HUNDRED AND 00/100 DOLLARS ($214,200.00),
payable pursuant to Employer's standard payroll practices for executives.
During the Employment Period, the Base Salary shall be reviewed at least
annually and shall be increased from time to time in accordance with
Employer's performance evaluation criteria applied to Executive reasonably
and in good faith consistent with application to other executives of
Employer. For purposes of this Agreement, the term "executive" shall mean
all executives at the same corporate level of the Executive of Employer.
Executive Base Salary will be increased ("Adjusted
Base Salary") in the event of a relocation to a Relocation City by a factor
determined by the Company.
In the event Employer changes its employment grade
levels at any time during the Employment Period, Executive will be
classified under the new levels so as to remain in all substantial respects
within the same organizational, compensation and benefit levels as under
the current structure. Any increase in Base Salary shall not limit or
reduce any other obligation to Executive under this Agreement. Executive's
Base Salary shall not be reduced after the effective date of this Agreement
and after any such increase.
(ii) Incentive Bonuses. In addition to Base Salary
payable as hereinabove provided, Executive shall be entitled to participate
in Employer's Management Incentive Program (the "Incentive Program") for
each fiscal year or portion thereof during the Employment Period. For
purposes of this Paragraph, Employment Period shall be considered to
include the full year 1996. Executive shall be eligible for awards
("Incentive Bonuses") under the Incentive Program during the Employment
Period, pursuant to the terms and conditions of such Program as in effect
on the Effective Date.
(iii) Incentive, Savings and Retirement Plans. In
addition to amounts payable as provided in 1(b)(i) and (ii) above,
Executive shall be entitled to participate in all other incentive plans,
practices, policies and programs applicable to other senior executives of
Employer, including, without limitation, all plans qualified under Section
401 of the Internal Revenue Code of 1986, as amended (the "Code"), all
medical insurance and health plans, and all additional, supplemental and
incentive compensation plans, in each instance providing benefits
reasonably equivalent or in excess of those provided other executives of
Employer.
(iv) Welfare Benefit Plans. During the Employment Period,
Executive and Executive's family shall be eligible for participation in and
shall receive all benefits under the terms of welfare benefit plans,
practices, policies and programs provided to senior executives of Employer
(including, without limitation, medical prescription, dental, vision,
disability, basic life, supplemental life, accidental death and travel
accident insurance plans and programs) and all additional, supplemental and
replacement plans, practices, policies and programs provided to executives
of Employer, in each instance, providing benefits reasonably equivalent or
in excess of those provided other executives of Employer.
(v) Expenses. During the Employment Period, Executive
shall be entitled to reimbursement for all reasonable expenses incurred by
Executive in the performance of duties hereunder, in accordance with the
terms of the policies, practices and procedures of Employer as generally
applicable to its executives.
(vi) Fringe and Other Benefits. During the Employment
Period, Executive shall be entitled to fringe benefits, including, without
limitation: (A) exclusive and full time use of an automobile, consistent
with Employer's policies as applied to its other executives, selected by
Executive comparable to automobiles provided other executives of Employer,
(B) payment of reasonable business related expenses including, without
limitation, professional association dues and (C ) all other benefits,
prerequisites, vacation, insurance, severance, disability, and incentives
provided to other executives of Employer.
2. Termination of Employment.
(a) Disability. If Executive becomes disabled, which, for
purposes of this Agreement, shall mean that (i) Executive fails to perform
his essential duties on an active full-time basis by reason of disability
or impairment of health for a period of at least three hundred sixty five
(365) consecutive calendar days or (ii) Employer shall have received a
certificate from a physician reasonably acceptable to Employer and
Executive, or any duly appointed legal representative of Executive, to the
effect that Executive cannot reasonably be expected to be capable of
performing his essential duties under this Agreement for a period of at
least one (1) year in accordance with past practices, Executive's
employment may be terminated for "Disability" pursuant to a Notice of
Termination (as hereinafter defined) delivered by Employer or by Executive
or his duly appointed legal representative. Payment to Executive will be
made in accordance with the terms of the Employer's Short Term Disability
Plan and Employer's Long Term Disability Plan (if elected by Executive).
(b) Cause. Pursuant to a Notice of Termination, Employer may
terminate Executive's employment hereunder "for Cause." For the purposes of
this Agreement, "for cause" means termination upon Executive's continual
failure to perform in a satisfactory manner, his essential duties and
obligations hereunder in any material respect after written notice and
reasonable opportunity to cure performance.
(c) Termination by Executive. Notwithstanding anything
contained herein to the contrary, Executive may terminate this Agreement
pursuant to a Notice of Termination at any time.
(d) Notice and Date of Termination, Etc. For purposes of this
Agreement, "Notice of Termination" means a written notice which indicates
the specific termination provision of this Agreement relied upon and which
sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of employment. For purposes of this
Agreement, "Date of Termination" means (i) if Executive's employment is
terminated for Disability pursuant to Subsection (a) of this Section 2, the
date that Notice of Termination is given, (ii) if Executive's employment is
terminated by reason of his death, the date of death, and (iii) if
Executive's employment is terminated by Employer "for Cause" or by either
party for any other reason (other than Disability or death), the date
specified in the Notice of Termination, which date shall not be less than
thirty (30) days after the date of such Notice.
3. Compensation Upon Termination of Employment or During Disability.
Upon termination of Executive's employment, Executive shall be entitled to
the following benefits:
(a) If Executive's employment is terminated for Disability,
Employer shall pay and provide Executive his full Base Salary through the
Date of Termination, plus all other disability and related benefits in
accordance with existing Company benefit plans, and Employer shall have no
further obligations to Executive under this Agreement.
(b) If Executive's employment shall be terminated other than
pursuant to Executive's death or Disability or by Employer (for Cause),
Employer shall pay and provide Executive his full Base Salary through the
Date of Termination, at the rate in effect at the time Notice of
Termination is given, plus all other benefits to which Executive is
entitled as of the Date of Termination under any compensation or benefit
plans in accordance with existing Company benefit plans, and Employer shall
have no further obligation to Executive under this Agreement.
(c) If Executive's employment shall be terminated by reason of
his death, Employer shall pay and provide his estate or designated
beneficiaries his full Base Salary through the end of the month in which
death occurs, plus any Incentive Bonuses and other bonus earned under any
bonus program as prorated for the portion of the applicable bonus
measurement period occurring prior to the date of death, plus all other
amounts and benefits to which Executive is entitled under any compensation
or benefit plans or policies provided any executive officer of Employer at
the date of death, and Employer shall have no further obligation to
Executive or his estate under this Agreement.
(d) If Executive's employment shall be terminated other than
pursuant to Executive's death or Disability by Employer other than "for
Cause" then Executive shall be entitled to the following:
(i) Through Date of Termination. Employer shall pay
Executive his full Base Salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all other
amounts and benefits to which Executive is entitled under any compensation
or benefit plans of Employer, including, without limitation, Incentive
Bonuses, accrued or prorated through the Date of Termination, at the time
such payments are due.
(ii) Severance. Severance will be in accordance with the
Company's existing Severance Policy which is actually based on Executive's
current base salary from 6-12 months..
(e) If Executive terminates his employment pursuant to Section
2(c), Executive shall be entitled only to his current Base Salary and
benefits through the Date of Termination.
5. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement that cannot be mutually resolved by the
parties and their respective advisors and representatives, shall be settled
exclusively by arbitration in the city of residence of the Executive in
accordance with the procedures of the American Arbitration Association.
6. Confidentiality. Executive shall not, at any time following his
termination, use the name, marks, records, plans, or proprietary methods
nor the list of customers of Employer or disclose them or any part thereof
to any person, firm, corporation, association, or other entity (other than
a subsidiary, parent or affiliate of MCII/TMO) for any purpose or reason
whatsoever, or remove or retain, without Employer's consent, any figures,
calculations, letters, documents, papers, drawings, or copies thereof, or
other confidential information of any type or description or breach the
Covenants contained in the Employee Patent and Trade Secret Agreement
signed by Executive on _______________.
7. Non-Competition. Upon termination of Executive's employment,
Executive agrees not to enter into the employ of or consultancy for any bus
or coach manufacturer, or bus or coach parts manufacturer or distributor,
or bus or coach sales or service business, or bus or coach operator, in
competition with Employer, for a period of three (3 ) years from the date
of Executive's termination.
8. Transfers. The Employer shall, at any time, transfer the Executive
to any other different location as the Employer sees fit for business
reasons, locally or internationally.
9. Full Settlement. Employer's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder, shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which Employer may have against
Executive, or otherwise.
10. Successors.
(a) This Agreement is personal to Executive and without the
prior written consent of Employer, shall not be assignable by Executive
other than as provided herein. This Agreement shall inure to the benefit of
and be enforceable by Executive and Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon and enforceable by Employer and its permitted successors and
assigns.
(c) Employer will 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 Employer to assume
expressly and agree to perform this Agreement in the same manner, and to
the same extent, that Employer is bound hereunder.
11. Miscellaneous.
(a) Acceleration of Payments. In the event Employer fails to
pay Executive any payment when due and payable and such failure continues
for five (5) business days after written notice of such failure, then all
payments under this Agreement shall be accelerated and the entire amount of
such payments shall then be due and payable immediately.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without
reference to principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(c) Notices. All notices and other communication hereunder
shall be in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to Executive:
Executive's home address is on file with Employer's
payroll department.
If to Employer:
Transportation Manufacturing Operations, Inc.
10 E. Golf Road
Des Plaines, Illinois 60016
Attention: Chief Operating Officer
or if by the Chief Operating Officer,
Attention: Chief Financial Officer
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when moved.
(d) Entire Agreement; Amendments; Waivers. This Agreement
contains the entire agreement between the parties concerning the subject
matter hereof. It may not be changed orally, but only by agreement, in
writing, signed by each of the parties. The terms or covenants of this
Agreement may be waived only by a written instrument specifically referring
to this Agreement, executed by the party waiving compliance. The failure of
Employer at any time, or from time to time, to require performance of any
of the Executive's obligations under this Agreement shall, in no manner,
affect Employer's right to enforce any provisions of this Agreement at a
subsequent time; and the waiver by Employer of any right arising out of any
subsequent breach.
IN WITNESS WHEREOF, Executive has hereunder set his hand and,
pursuant to authorization from its Board of Directors, Employer has caused
these presents to be executed in its name on its behalf, all as of the date
and year first above written.
"Executive"
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James P. Bernacchi
TRANSPORTATION MANUFACTURING OPERATIONS, INC.
By /s/
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Chairman of the Board