EMPLOYMENT AGREEMENT – Mr. James Cowan

EMPLOYMENT AGREEMENT - Mr. James J. Unger 

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EX-10.59 3 c85146exv10w59.htm EXHIBIT 10.59

Exhibit 10.59

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT, dated as of May 8, 2009 (this “Agreement”), between American Railcar Industries, Inc., a Delaware corporation (the “Company”) and Mr. James Cowan (the “Employee”).

1. Employment

(a) Upon the terms and conditions hereinafter set forth, the Company hereby agrees to employ the Employee and the Employee hereby agrees to become so employed. During the Term of Employment (as hereinafter defined), the Employee shall be employed in the position of the President and Chief Executive Officer of the Company, reporting to the Board of Directors of the Company (the “Board”), and as an officer of subsidiaries of the Company as specified and directed by the Board from time to time, and shall perform such duties, consistent with such status and position, as are specified from time to time by, and shall serve in such capacities at the pleasure of, the Company and the Board, subject to the terms hereof.

(b) During the Term of Employment (as hereinafter defined), the Employee shall devote all of his professional attention, on a full time basis, to the business and affairs of the Company and shall use his best efforts to advance the best interest of the Company and shall comply with all of the policies of the Company, including, without limitation, such policies with respect to legal compliance, conflicts of interest, confidentiality and business ethics as are from time to time in effect.

(c) During the Term of Employment, the Employee shall not directly or indirectly render services to, or otherwise act in a business or professional capacity on behalf of or for the benefit of, any other “Person” (as defined below) as an employee, advisor, member of a board or similar governing body, independent contractor, agent, consultant, representative or otherwise, whether or not compensated. Notwithstanding the foregoing, the Employee may accept any such position so long as such position does not conflict, or interfere, with the performance of the Employee’s duties and obligations. “Person” or “person”, as used in this Agreement, means any individual, partnership, limited partnership, corporation, limited liability company, trust, estate, cooperative, association, organization, proprietorship, firm, joint venture, joint stock company, syndicate, company, committee, government or governmental subdivision or agency, or other entity.

2. Term

The employment period of the Employee hereunder shall commence on May 1, 2009, and shall continue through May 1, 2012 (May 1, 2012 being the “Expiration Date”), unless earlier terminated as set forth in this Agreement.

 

 

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3. Compensation

For all services to be performed by the Employee under this Agreement, during the Term of Employment, the Employee shall be compensated in the following manner:

 

(a)

 

Base Compensation

The Company will pay the Employee a salary (the “Base Salary”) at an annual rate of $350,000 per full 365-day year. The Base Salary shall be payable in accordance with the normal payroll practice of the Company. The Base Salary will be reviewed periodically by the Board of Directors as is customary with other officers. Following such review, the Board of Directors may, at its absolute and sole discretion, increase (but shall not be required to increase) the Base Salary or other benefits.

 

(b)

 

Bonus Compensation

The Company will pay the Employee an annual bonus for each calendar year of employment ending on or after December 31, 2009, calculated based on the achievement of objective performance targets for the Company to be set by the Board (or a committee thereof) not later than March 31 for each such calendar year, of up to 60% of Base Salary, if such performance targets are met. The compensation payable as contemplated in the preceding sentence of this section 3(b) is referred to herein as “Bonus Compensation”. The Bonus Compensation in respect of any calendar year shall be paid as provided for under the Company’s Management Incentive Plan as may be amended from time to time.

 

(c)

 

Taxes

All amounts paid to the Employee under or pursuant to this Agreement, including, without limitation, the Base Salary and any Bonus Compensation, or any other compensation or benefits, whether in cash or in kind, shall be subject to normal federal, state and, if applicable, local or foreign tax withholding and deductions imposed by any one or more federal, state, local and or foreign governments, or pursuant to any foreign or domestic applicable law, rule or regulation.

4. Benefits

During the Term of Employment, and in addition to any benefits and perquisites to which the Employee is otherwise entitled pursuant to this Agreement, the Employee shall be entitled to receive healthcare, group term life insurance, group long-term disability insurance, 401(k) participation, twenty business days paid vacation per year, and other similar employee benefits at least equal to those currently or subsequently received by other senior employees of the Company as such may be provided by the Company in its sole and absolute discretion from time to time. In addition, during the Term of Employment, the Employee shall be entitled to reimbursement for the reasonable use of an automobile and for the payment of reasonable country club dues (but, not including initiation fees) on terms consistent to those received by other senior employees of the Company.

 

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5. Termination

This Agreement shall terminate (subject to Section 9(f) below) and the Term of Employment and the employment of Employee hereunder shall end, on the first to occur of any of the following (each a “Termination Event”):

 

(a)

 

The Expiration Date;

 

(b)

 

The: (i) death of the Employee or (ii) the Disability of the Employee. For purposes of this Agreement, ‘Disability’ shall mean the Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months

 

 

(c)

 

The discharge of the Employee by the Company with or without Cause; or

 

(d)

 

The resignation of the Employee (and without limiting the effect of such resignation, the Employee agrees to provide the Company with not less than 30 days prior written notice of his resignation, in which event the Company may, at its option, declare such resignation to be effective at any day following receipt of such notice).

The Company may discharge the Employee at any time, for any reason or no reason, with or without Cause. As used in this Agreement, “Cause” means: (i) dishonesty detrimental to the best interests of the Company or any of its affiliates; (ii) conduct of Employee involving any immoral acts which is reasonably likely to impair the reputation of the Company or any of its affiliates; (iii) willful disloyalty to the Company or the Board, (iv) refusal or failure of Employee to obey the lawful directions of the Board, (v) neglect of duties and responsibilities assigned to Employee, (vi) indictment for a felony or conviction or plea of nolo contendere to a misdemeanor (other than a traffic violation) punishable by imprisonment under federal, state or local law, (vii) the violation by Employee of any federal and/or securities or employment laws or regulations, (viii) the use by Employee of a controlled substance without a prescription or the use of alcohol which impairs Employee’s ability to carry out his duties and responsibilities, or (ix) material violation by Employee of the Company’s policies and procedures or any breach of any agreement between the Company and Employee.

6. Effect of Termination

In the event of termination of the Employee’s employment hereunder, all rights of Employee under this Agreement, including all rights to compensation, shall end and Employee shall only be entitled to be paid the amounts set forth in this Section 6 below; provided, that, the obligations of the Company to make any payment required pursuant to this Section 6 (other than (x) any amounts of Employee’s Base Salary previously earned and accrued, (y) in accordance with the Company’s policy, unreimbursed business expenses of Employee, and (z) any amounts payable on account of accrued but unused vacation, ((x), (y), and (z) collectively, the “Employee’s Accrued Obligations”), is conditioned upon (i) execution and delivery by Employee to the Company of a release agreement in favor of the Company, its affiliates and their respective officers, directors, employees, agents and equity holders in respect of the Employee’s employment with the Company and the termination thereof in form substantially as set forth in Exhibit A, attached hereto (the “Release”), and (ii) such Release, once executed by Employee and delivered to the Company, becomes irrevocable, enforceable and final under the applicable law. Employee shall be required to execute and deliver the Release to the Company within forty-five (45) days following the date on which the Termination Event occurred or forfeit Employee’s right to benefits under Section 6.

 

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(a)

 

In the event that the Employee’s employment is terminated for the reason set forth in Section 5(a) above (i.e., Expiration Date), then, in lieu of any other payments of any kind (including without limitation, any severance payments), the Employee shall be entitled to receive, within thirty (30) days following the date on which the Termination Event in question occurred (the “Clause (a) Termination Date”) (or, in the case of any Bonus Compensation, as soon as practicable following the calculation thereof):

 

(i)

 

the Employee’s Accrued Obligations, due and unpaid to the Employee from the Company as of the Clause (a) Termination Date; and

 

 

(ii)

 

any amounts of Bonus Compensation earned and due in respect of a completed calendar year, which remains unpaid to the Employee as of the Clause (a) Termination Date.

 

(b)

 

In the event that the Employee’s employment is terminated for the reason set forth in Section 5(b) above (i.e., death or Disability), then, in lieu of any other payments of any kind (including without limitation, any severance payments), the Employee shall be entitled to receive, within thirty (30) days following the date on which the Termination Event in question occurred (the “Clause (b) Termination Date”) (or, in the case of any Bonus Compensation, as soon as practicable following the calculation thereof):

 

 

(i)

 

the Employee’s Accrued Obligations, due and unpaid to the Employee from the Company as of the Clause (b) Termination Date;

 

(ii)

 

any amounts of Bonus Compensation earned and due with respect to a completed calendar year, which remains unpaid to the Employee as of the Clause (b) Termination Date; and

 

 

(iii)

 

a pro-rated portion of the Bonus Compensation computed as set forth below.

 

(c)

 

In the event that the Employee’s employment is terminated (A) for the reason set forth in Section 5(d) above (i.e., resignation) or (B) due to the discharge of the Employee by the Company for Cause, then, in lieu of any other payments of any kind (including without limitation, any severance payments), the Employee shall be entitled to receive, within thirty (30) days following the date on which the Termination Event in question occurred (the “Clause (c) Termination Date”) the Employee’s Accrued Obligations, due and unpaid to the Employee from the Company as of the Clause (c) Termination Date.

 

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(d)

 

In the event that the Employee’s employment is terminated due to the discharge of the Employee by the Company without Cause (which the Company is free to do at any time in its sole and absolute discretion), then, in lieu of any other payments of any kind (including, without limitation, any severance payments), the Employee shall be entitled to receive, within thirty (30) days following the date on which the Termination Event in question occurred (the “Clause (d) Termination Date”) (other than in the case of (iv), which shall be paid in accordance with normal payroll practice of the Company or, in the case of any Bonus Compensation, as soon as practicable following the calculation thereof):

 

(i)

 

the Employee’s Accrued Obligations, due and unpaid to the Employee from the Company as of the Clause (d) Termination Date;

 

 

(ii)

 

any amounts of Bonus Compensation earned and due with respect to a completed calendar year, which remains unpaid to the Employee as of the Clause (d) Termination Date;

 

(iii)

 

a pro-rated portion of the Bonus Compensation computed as set forth below; and

 

 

(iv)

 

a continuation of the payment, in accordance with the normal payroll practice of the Company, of amounts of Base Salary that the Employee would have earned through the Expiration Date had he continued to be employed by the Company through the Expiration Date.

 

(e)

 

In the event of any termination of the Employee’s employment, the Employee shall be under no obligation to seek other employment, but in the event the Employee becomes employed following any such termination, the Company shall be entitled to an offset of the payments paid or to be paid under clause (iv) of Section 6(d) above, on account of any remuneration or other benefit attributable to any subsequent employment that the Employee may obtain. The Employee shall correctly disclose to the Company all such remuneration or other benefit, and if there is a written employment agreement in connection therewith, provide the Company with a copy thereof.

 

 

(f)

 

For the purpose of this Section 6, any Bonus Compensation shall be deemed to be earned and to become due and payable with respect to any calendar year only if the Term of Employment has continued through December 31, of such year and, with respect to the amounts, if any, of such Bonus Compensation for any year, shall be determined based upon the level of attainment of the applicable performance targets for such year. In the event that, pursuant to the terms of this Section 6, the Employee is entitled to receive any pro rated Bonus Compensation, such pro ration shall be determined following December 31 of the calendar year in which the Employee ceases to be employed hereunder, and shall be calculated by multiplying the Bonus Compensation that would have been deemed earned and to become due and payable in accordance with the terms of this Agreement with respect to the calendar year in which the Employee ceases to be employed hereunder if the Term of Employment had continued through December 31 of such year as determined based upon the applicable performance targets for such year, by a fraction, the numerator of which is the number of days from (and including) January 1 of such year through (and including) the last day of employment hereunder, and the denominator of which is 365. The Bonus Compensation shall be paid as provided for in the Company’s Management Incentive Plan as may be amended from time to time.

 

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(g)

 

Notwithstanding the foregoing, the Company shall be relieved of any obligation to continue any payments under Sections 6(d) (iii) and (iv) and any future or continuing installments thereof, in the event that Employee is determined, at any time before or after the effective date of the termination of Employee’s employment, to have engaged in any conduct constituting Cause prior to his termination date or constituting a breach of Sections 7 or 8 hereof. Further, in the event of the foregoing, Executive shall repay any remuneration already received pursuant to or on account of Sections 6(d)(iii) and (iv).

7. Non-Disclosure

During the Term of Employment and at all times thereafter, the Employee shall hold in a fiduciary capacity for the benefit of the Company and each of its affiliates, all secret or confidential information, knowledge or data, including, without limitation, trade secrets, sources of supplies and materials, customer lists and their identity, designs, production and design techniques and methods, identity of investments, identity of contemplated investments, business opportunities, valuation models and methodologies, processes, technologies, and any other intellectual property relating to the business of the Company or its affiliates, and their respective businesses, (i) obtained by the Employee during the Employee’s employment by the Company and any of the subsidiaries of the Company and (ii) not otherwise in the public domain (“Confidential Information”). The Employee also agrees to keep confidential and not disclose any personal information regarding any controlling Person of the Company, including Carl C. Icahn, or any of its or his affiliates and their employees, and any member of the immediate family of any such Person (and all such personal information shall be deemed “Confidential Information” for the purposes of this Agreement). The Employee shall not, without the prior written consent of the Company (acting at the direction of the Board): (i) except to the extent compelled pursuant to the order of a court or other body having jurisdiction over such matter or based upon the advice of counsel that such disclosure is legally required, communicate or divulge any Confidential Information to anyone other than the Company and those designated by the Company; or (ii) use any Confidential Information for any purpose other than the performance of his duties pursuant to this Agreement. The Employee will assist the Company or its designee, at the Company’s expense, in obtaining a protective order, other appropriate remedy or other reliable assurance that confidential treatment will be accorded any Confidential Information disclosed pursuant to the terms of this Agreement.

All processes, know-how, technologies, trade-secrets information, intellectual property and inventions (collectively, “Inventions”) conceived, developed, invented, made or found by the Employee, alone or with others, during the Term of Employment and out of the performance of his duties and responsibilities hereunder, whether or not patentable and whether or not on the Company’s or any of its subsidiaries’ time or with the use of the Company’s or any of its subsidiaries’ facilities or materials, shall be the property of the Company or its respective subsidiary, as the case may be, and shall be promptly and fully disclosed by the Employee to the Company. The Employee shall perform all necessary acts (including, without limitations, executing and delivering any confirmatory assignments, power of attorney, documents, or instruments requested by the Company or any of its subsidiaries) to vest title to any such Invention in the Company or the applicable subsidiary and to enable the Company or the applicable subsidiary, at their expense, to secure and maintain domestic and/or foreign patents or any other rights for such Inventions.

 

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All right, title and interest in all copyrightable material that the Employee shall conceive or originate individually or jointly or commonly with others, and that arise during the term of his employment with the Company and out of the performance of his duties and responsibilities under this Agreement, shall be the property of the Company and are hereby assigned by the Employee to the Company, along with ownership of any and all copyrights in the copyrightable material. Upon request and without further compensation therefor, but at no expense to the Employee, the Employee shall execute any and all papers and perform all other acts necessary to assist the Company to obtain and register copyrights on such materials in any and all countries. Where applicable, works of authorship created by the Employee for the Company in performing his duties and responsibilities hereunder shall be considered “works made for hire,” as defined in the U.S. Copyright Act.

8. Non-Compete and Non-Solicitation

 

(a)

 

In addition to, and not in limitation of, all of the other terms and provisions of this Agreement, the Employee agrees that during the Term of Employment, the Employee will comply with the provisions of Section 1 above.

 

(b)

 

Unless the Employee’s employment is terminated by the Company without Cause, for the later of (i) a period of one (1) year following the last day of the Term of Employment or (ii) the period during which the Company continues to pay Base Salary to the Employee after termination of employment under Section 6(d)(iv), the Employee will not, either directly or indirectly, as principal, agent, owner, employee, director, partner, investor, shareholder (other than solely as a holder of not more than 1% of the issued and outstanding shares of any public corporation), consultant, advisor or otherwise howsoever own, operate, carry on or engage in the operation of or have any financial interest in or provide, directly or indirectly, financial assistance to or lend money to or guarantee the debts or obligations of any Person carrying on or engaged in any business that is similar to or competitive with the business conducted by the Company or any of its subsidiaries during or on the date of termination of Employee’s employment. The business of manufacturing, selling and/or distributing railcars and railcar parts and other related products shall be and be deemed to be “competitive” with the business conducted by the Company for the purposes hereof.

 

 

(c)

 

The Employee covenants and agrees with the Company and its subsidiaries that, during the Term of Employment and for the later of (i) one (1) year following the last day of the Term of Employment or (ii) the period during which the Company continues to pay Base Salary to the Employee under Section 6(d)(iv) thereafter, the Employee shall not directly, or indirectly, for herself or for any other Person:

 

(i)

 

solicit, interfere with or endeavor to entice away from the Company or any of its subsidiaries or affiliates, any customer, client or any Person in the habit of dealing with any of the foregoing;

 

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(ii)

 

attempt to direct or solicit any customer or client away from the Company or any of its subsidiaries or affiliates;

 

(iii)

 

interfere with, entice away or otherwise attempt to obtain the withdrawal of any employee of the Company or any of its subsidiaries or affiliates; or

 

 

(iv)

 

advise any Person not to do business with the Company or any of its subsidiaries or affiliates.

The Employee represents to and agrees with the Company that the enforcement of the restrictions contained in Section 7 and Section 8 (the Non-Disclosure and Non-Compete and Non-Solicitation sections respectively) would not be unduly burdensome to the Employee and that such restrictions are reasonably necessary to protect the legitimate interests of the Company. The Employee agrees that the remedy of damages for any breach by the Employee of the provisions of either of these sections may be inadequate and that the Company shall be entitled to injunctive relief, without posting any bond. This section constitutes an independent and separable covenant that shall be enforceable notwithstanding any right or remedy that the Company may have under any other provision of this Agreement or otherwise.

9. Miscellaneous

 

(a)

 

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all previous written, and all previous or contemporaneous oral negotiations, understandings, arrangements, and agreements, and may be amended, modified or changed only by a written instrument executed by the Employee and the Company.

 

(b)

 

This Agreement and all of the provisions hereof shall inure to the benefit of and be binding upon the legal representative, heirs, distributees, successors (whether by merger, operation of law or otherwise) and assigns of the parties hereto; provided, however, that the Employee may not delegate any of the Employee’s duties hereunder, and may not assign any of the Employee’s rights hereunder, and any such purported or attempted assignment or delegation shall be null and void and of no legal effect. In the event the Company assigns this Agreement and its successor assumes the Company’s obligations hereunder in writing or by operation of law, (i) the Company shall be released from all of its obligations hereunder, and (ii) all of the references to the Company, and to the Board, shall be deemed to be references to the Company’s successor and to the governing body of such successor, respectively. The Company and all of its future or current subsidiaries shall be and be deemed to be third-party beneficiaries of this Agreement.

 

 

(c)

 

This Agreement will be interpreted and the rights of the parties determined in accordance with the laws of the United States applicable thereto and the internal laws of the State of New York.

 

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(d)

 

The Employee acknowledges that he has had the assistance of legal counsel in reviewing and negotiating this Agreement.

 

(e)

 

This Agreement and all of its provisions (other than the provisions of Section 3(c)A(i), Section 5, Section 6, Section 7, Section 8, and Section 9 hereof, which shall survive termination) shall terminate upon the Employee ceasing to be an employee of the Company for any reason.

 

 

(f)

 

All notices and other communications hereunder shall be in writing; shall be delivered by hand delivery to the other party or mailed by registered or certified mail, return receipt requested, postage prepaid or by a nationally recognized courier service such as Federal Express; shall be deemed delivered upon actual receipt; and shall be addressed as follows:

 

 

 

 

 

 

 

If to the Company:

American Railcar Industries, Inc.
100 Clark Street
St. Charles, Missouri 63301

Facsimile:       (636) 940-6044
Attention:       Chairman, Board of Directors

If to the Employee:

At the last known principal residence address reflected in the payroll records of the Company, or to such other address as either party shall have furnished to the other in writing in accordance herewith.

[Signature Page Follows]

 

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AMERICAN RAILCAR INDUSTRIES, INC.

 

 

 

 

 

By:

 

/s/ Dale C. Davies

 

Name: Dale C. Davis  
Title:   Chief Financial Officer

 

 

 

 

 

 

 

Date:

 

May 8, 2009

 

 

 

 

 

 

 

 

EMPLOYEE:

 

 

 

 

 

 

 

By:

 

/s/ James Cowan

 

James Cowan

 

 

 

 

 

 

 

Date:

 

May 8, 2009

 

 

 

[Signature page to Employment Agreement]

 

Page 10

Exhibit 10.26

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”), dated as of November 18, 2005 and effective as of the Effective Date (as herein defined), is between American Railcar Industries, Inc. (“ARI”), a Missouri corporation and Mr. James J. Unger (the “Employee”), having an address at c/o American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301. This Agreement replaces the employment agreement (the “1994 Employment Agreement”) between James J. Unger and Carl C. Icahn, on behalf of ARI, dated October 25, 1994. Reference is made to that certain letter agreement (the “Letter Agreement”), dated as of the date hereof, between the Employee and ARI.

1. Employment

     Upon the terms and conditions hereinafter set forth, ARI hereby agrees to employ the Employee and the Employee hereby agrees to become so employed. During the Term of Employment (as hereinafter defined), the Employee shall be employed in the position of President and Chief Executive Officer of ARI and in such other positions at certain subsidiaries of ARI as specified and directed by the Board of Directors of ARI (the “Board”) from time to time, and shall perform such duties as are specified from time to time by, and shall serve in such capacities at the pleasure of, ARI and the Board, as the case may be.

     During the Term of Employment, the Employee shall devote substantially all of his professional attention, on a full time basis, to the business and affairs of ARI and its subsidiaries, shall use his best efforts to advance the best interest of ARI and its subsidiaries and shall comply with all of the policies of ARI, including, without limitation, such policies with respect to legal compliance, conflicts of interest, insider trading, confidentiality and business ethics as are from time to time in effect and shall have his primary office at ARI’s principal offices located in St. Charles, Missouri.

     Except (i) for Employee’s serving as President of Ohio Castings LLC, President of Unco, Inc., General Partner of each of St. Charles Properties, Greenup Partnership, and Unger Family Limited Partnership and (ii) as directed or approved by the Board, during the Term of Employment, the Employee shall not directly or indirectly render services to, or otherwise act in a business or professional capacity on behalf of or for the benefit of, any other Person as an employee, advisor, director, independent contractor, agent, consultant, representative or otherwise, whether or not compensated. “Person” or “person”, as used in this Agreement, means any individual, partnership, limited partnership, corporation, limited liability company, trust, estate, cooperative, association, organization, proprietorship, firm, joint venture, joint stock company, syndicate, company, committee, government or governmental subdivision or agency, or other entity.

2. Term

     The employment period shall commence as of the Effective Date and shall continue through the later of (i) one year following the Effective Date and (ii) the last day of the Extension Period (as hereinafter defined), if any, unless earlier terminated as set forth in this Agreement. The Board may, at its sole option, extend the period of employment for an additional one-year

 

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term beyond the first anniversary of the Effective Date by giving the Employee written notice of such extension no later than the first anniversary of the Effective Date. The Board may also, at its sole option, extend the period of employment for another additional one-year term beyond the second anniversary of the Effective Date by giving the Employee written notice of such extension no later than the second anniversary of the Effective Date. If the Board elects to extend the period of Employment, the Term of Employment shall continue through the second or third anniversary of the Effective Date, depending upon the anniversary date to which the Board extends the period of employment, unless earlier terminated as otherwise provided in this Agreement. The period of any such extension is referred to herein as the “Extension Period,” and the aggregate period of employment of the Employee hereunder, inclusive of the Extension Period(s), if any, is referred to herein as the “Term of Employment.” The last date of the final Extension Period, or the last day of the first anniversary of the Effective Date if the employment period is not extended, is the “Expiration Date.”

3. Compensation

For all services to be performed by the Employee under this Agreement, during the Term of Employment, the Employee shall be compensated in the following manner:

ARI will pay the Employee a salary (the “Base Salary”) at a rate of not less than $350,000 per twelve-month period commencing as of the Effective Date. The Base Salary shall be payable in accordance with the normal payroll practice of ARI.

(b) Bonus Compensation

In the sole and absolute discretion of the Board and/or any compensation committee thereof, ARI may award the Employee an annual bonus (“Bonus Compensation”). The Employee acknowledges that neither ARI nor the Board is under any obligation to award or otherwise pay the Employee any Bonus Compensation.

(c) Expenses

ARI will reimburse the Employee for all reasonable and necessary business related out-of-pocket expenses actually incurred during the Term of Employment. ARI will reimburse the Employee, on a basis grossed up for income taxes, for the reasonable use of an automobile on terms consistent with past treatment of any automobile allowance.

4. Termination

This Agreement shall terminate (subject to Section 11(f) below) and the Term of Employment and the employment of Employee hereunder shall end, on the first to occur of any of the following (each a “Termination Event”):

 

(a)

 

the Expiration Date;

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(b)

 

the Employee’s death;

 

 

 

 

 

(c)

 

the Employee’s Disability (as defined below);

 

 

 

 

 

(d)

 

the discharge of the Employee by ARI for Cause (as defined below);

 

 

 

 

 

(e)

 

the resignation of the Employee, for a reason other than Good Reason (as defined below) (without limiting the effect of such resignation, the Employee agrees to provide ARI with not less than 30 days prior written notice of his resignation);

 

 

 

 

 

(f)

 

the discharge of the Employee by ARI without Cause; or

 

 

 

 

 

(g)

 

the resignation of the Employee for Good Reason (without limiting the effect of such resignation, the Employee agrees to provide ARI with not less than 30 days prior written notice of his resignation).

ARI may discharge the Employee at any time, for any reason or no reason, with or without Cause, in which event the Employee shall be entitled only to such payments as are set forth in Section 5 below.

“Cause” means the occurrence of any one of the following: (i) the Employee’s failure to perform his material duties under this Agreement, the Letter Agreement or any other material agreement between the Employee and ARI, (ii) the Employees’ commission of an act of dishonesty, fraud, theft or embezzlement in connection with his employment, (iii) the Employee’s indictment or conviction of a misdemeanor involving fraud or of any felony or (iv) the Employee’s material violation of any federal or state securities law or regulation; provided, that no Cause shall exist involving subsection (i) of this sentence until the Employee first has failed to cure such failure which is curable within thirty consecutive days of having been given written notice by ARI of the specifics of such failure.

“Good Reason” means the occurrence of any one or more of the following events without the Employee’s express consent: (i) a material breach by ARI of its obligations under this Agreement, the Letter Agreement or any other material agreement between the Employee and ARI, (ii) a material diminution in the Employee’s position or duties as the President and Chief Executive Officer of ARI (provided that for purposes of this clause (ii), the hiring by ARI of a Chief Operating Officer shall not be a material diminution in the Employee’s position or duties) or (iii) any reduction of the Employee’s Base Salary; provided, that a Good Reason shall not exist until ARI has first failed to cure such failure or breach within thirty days of having been given written notice of such failure or breach by the Employee.

“Disability means the Employee’s inability to perform the functions of President and Chief Executive Officer of ARI as determined by a physician selected by the Board who is reasonably acceptable to the Employee.

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5. Effect of Termination

In the event of termination of the Employee’s employment hereunder, all rights of the Employee under this Agreement, including all rights to compensation, shall end and the Employee shall only be entitled to be paid the amounts set forth in this Section 5 below; provided, that, the obligations of ARI to make any such payment is conditioned upon execution and delivery by the Employee to ARI of a settlement and release agreement in favor of ARI, its affiliates and their respective officers, directors, employees, agents and equity holders, substantially in the form of Exhibit A attached hereto.

 

(a)

 

In the event that the Employee’s employment is terminated for any reason or no reason (other than termination for a reason set forth in, Section 4(f) (discharge without Cause) or Section 4(g) (resignation for Good Reason)), then, in lieu of any other payments of any kind (including without limitation, any severance payments), the Employee shall be paid by ARI, in a single lump sum payment, within thirty (30) days following the date on which the Termination Event in question occurred (the “Termination Date”), (x) amounts of Base Salary due and unpaid to the Employee from ARI as of the Termination Date in question and (y) amounts of Bonus Compensation, if any, earned, due and unpaid to the Employee from ARI as of the Termination Date in question.

 

 

 

 

 

(b)

 

In the event that the Employee’s employment is terminated for a reason set forth in, Section 4(f) (discharge without Cause) or Section 4(g) (resignation for Good Reason), then, in lieu of any other payments of any kind (including without limitation, any severance payments), the Employee shall be paid by ARI, in a single lump sum payment, within thirty (30) days following the date on which the Termination Event in question occurred (the “Termination Date”), (x) amounts of Base Salary due and unpaid to the Employee from ARI as of the Termination Date in question, (y) amounts of Bonus Compensation, if any, earned, due and unpaid to the Employee from ARI as of the Termination Date in question and (z) amounts of Base Salary the Employee would have earned through the then applicable Expiration Date, which would occur as of the end of the last day of the anniversary year of the Effective Date in which the Termination Date occurs, had the Employee stayed employed until such Expiration Date.

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6. Effectiveness; Termination of 1994 Agreement

(a) This Agreement shall become effective on the closing date (the “Effective Date”) of a public offering of ARI common stock that is registered with the Securities and Exchange Commission on Form S-1.

(b) Effective as of the Effective Date, the Employee agrees that the 1994 Employment Agreement is terminated in its entirety and is of no further force or effect. On the Effective Date, the Employee shall execute and deliver to ARI and Carl C. Icahn, a release agreement substantially in the form of Exhibit B attached hereto. For the avoidance of doubt, the 1994 Employment Agreement, to the extent it exists immediately prior to the execution of this Agreement, shall remain in effect until the Effective Date.

7. Non-Disclosure

During the Term of Employment and at all times thereafter, the Employee shall hold in a fiduciary capacity for the benefit of ARI and each of its affiliates, all secret or confidential information, knowledge or data, including, without limitation, trade secrets, identity of investments, identity of contemplated investments, business opportunities, valuation models and methodologies, relating to the business of ARI or its affiliates, and their respective businesses as, (i) obtained by the Employee during the Employee’s employment by ARI and any of its subsidiaries and (ii) not otherwise in the public domain (“Confidential Information”). The Employee also agrees to keep confidential and not disclose to any unauthorized Person any personal information regarding any controlling Person of ARI or any of its affiliates and any member of the immediate family of any such Person (and all such personal information shall be deemed “Confidential Information” for the purposes of this Agreement). The Employee shall not, without the prior written consent of ARI (acting at the direction of the Board): (i) except to the extent compelled pursuant to the order of a court or other body having jurisdiction over such matter or based upon the advice of counsel that such disclosure is legally required, communicate or divulge any Confidential Information to anyone other than ARI and those designated by ARI; or (ii) use any Confidential Information for any purpose other than the performance of his duties pursuant to this Agreement. The Employee will assist ARI or its designee, at ARI’s expense, in obtaining a protective order, other appropriate remedy or other reliable assurance that confidential treatment will be accorded any Confidential Information disclosed pursuant to the terms of this Agreement.

In no event shall the Employee during or after his employment hereunder, disparage ARI, any controlling Person of ARI, their respective affiliates and family members or any of their respective officers, directors or employees.

All processes, technologies, intellectual property and inventions (collectively, “Inventions”) conceived, developed, invented, made or found by the Employee, alone or with others, during the Term of Employment, whether or not patentable and whether or not on ARI’s or any of its subsidiaries’ time or with the use of ARI’s or any of its subsidiaries’ facilities or materials, shall be the property of ARI or its respective subsidiary, as the case may be, and shall be promptly and fully disclosed by the Employee to ARI. The Employee shall perform all necessary acts (including, without limitations, executing and delivering any confirmatory assignments, documents, or instruments requested by ARI or any of its subsidiaries) to vest

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title to any such Invention in ARI or the applicable subsidiary and to enable ARI or the applicable subsidiary, at their expense, to secure and maintain domestic and/or foreign patents or any other rights for such Inventions.

8. Non-Compete

(a) In addition to, and not in limitation of, all of the other terms and provisions of this Agreement, the Employee agrees that during the Term of Employment, the Employee will comply with the provisions of Section 1 above.

(b) For a period of one (1) year following the last day of the Term of Employment, unless the Employee’s employment is terminated by ARI without Cause or Employee resigns for Good Reason, the Employee will not, either directly or indirectly, as principal, agent, owner, employee, partner, investor, shareholder (other than solely as a holder of not more than 1% of the issued and outstanding shares of any public corporation), consultant, advisor or otherwise howsoever own, operate, carry on or engage in the operation of or have any financial interest in or provide, directly or indirectly, financial assistance to or lend money to or guarantee the debts or obligations of any Person carrying on or engaged in any business that is competitive with or similar to the business conducted by ARI or any of its subsidiaries in the United States.

(c) The Employee covenants and agrees with ARI and its subsidiaries that, during the Term of Employment and for one (1) year thereafter, the Employee shall not directly, or indirectly, for himself or for any other Person:

 

(i)

 

solicit, interfere with or endeavor to entice away from ARI or any of its subsidiaries or affiliates, any customer, client or any Person in the habit of dealing with any of the foregoing;

 

 

 

 

 

(ii)

 

attempt to direct or solicit any customer or client away from ARI or any of its subsidiaries or affiliates;

 

 

 

 

 

(iii)

 

interfere with, entice away or otherwise attempt to obtain the withdrawal of any employee of ARI or any of its subsidiaries or affiliates; or

 

 

 

 

 

(iv)

 

advise any Person not to do business with ARI or any of its subsidiaries or affiliates.

The Employee represents to and agrees with ARI that the enforcement of the restrictions contained in Section 7 and Section 8 (the Non-Disclosure and Non-Compete sections, respectively) would not be unduly burdensome to the Employee and that such restrictions are reasonably necessary to protect the legitimate interests of ARI. The Employee agrees that the remedy of damages for any breach by the Employee of the provisions of either of these sections may be inadequate and that ARI shall be entitled to injunctive relief, without posting any bond. This section constitutes an independent and separable covenant that shall be enforceable notwithstanding any right or remedy that ARI may have under any other provision of this Agreement or otherwise.

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9. Taxes

All amounts paid to the Employee under or pursuant to this Agreement, including, without limitation, Base Salary, Bonus Compensation, if any, or any other compensation or benefits, whether in cash or in kind, shall be subject to normal withholding and deductions imposed by any one or more local, state or federal governments, or pursuant to any foreign or domestic applicable law, rule or regulation.

10. Benefits

During the Term of Employment, the Employee shall be entitled to receive healthcare, vacation, 401K participation, transportation and other similar employee benefits comparable to those received by other senior employees of ARI as such may be provided by ARI, in its sole and absolute discretion from time to time.

11. Miscellaneous

 

(a)

 

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof.

 

 

 

 

 

(b)

 

This Agreement and all of the provisions hereof shall inure to the benefit of and be binding upon the legal representative, heirs, distributees, successors (whether by merger, operation of law or otherwise) and assigns of the parties hereto; provided, however, that the Employee may not delegate any of the Employee’s duties hereunder, and may not assign any of the Employee’s rights hereunder, and any such purported or attempted assignment or delegation shall be null and void and of no legal effect.

 

 

 

 

 

(c)

 

This Agreement will be interpreted and the rights of the parties determined in accordance with the laws of the State of New York.

 

 

 

 

 

(d)

 

The Employee covenants and represents that (i) he is not a party to any contract, commitment or agreement, nor is he subject to, or bound by, any order, judgment, decree, law, statute, ordinance, rule, regulation or other restriction of any kind or character, which would prevent or restrict him from entering into and performing his obligations under this Agreement, (ii) he is free to enter into the arrangements contemplated herein, and (iii) he is not subject to any agreement or obligation that would limit his ability to act on behalf of ARI or any of its subsidiaries.

 

 

 

 

 

(e)

 

The Employee acknowledges that he has had the assistance of legal counsel in reviewing and negotiating this Agreement.

 

 

 

 

 

(f)

 

This Agreement and all of its provisions, other than the provisions of Section 5, Section 7, Section 8 and Section 11 hereof (which shall survive termination), shall terminate upon the Employee ceasing to be an employee of ARI for any reason.

[Signature Page Follows]

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AMERICAN RAILCAR INDUSTRIES, INC.

 

 

 

 

 

 

 

By:

 

/s/ William P. Benac

 

 

 

 

 

 

 

 

 

Name: William P. Benac
Title: Chief Financial Officer

 

 

 

 

 

 

 

EMPLOYEE:

 

 

 

 

 

 

 

By:

 

/s/ James J. Unger

 

 

 

 

 

 

 

 

 

James J. Unger

 

 

[Signature page to J. J. Unger Employment Agreement]

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Exhibit A

SETTLEMENT AND RELEASE AGREEMENT

     This settlement and release agreement is dated as of November 18, 2005, (this “Release”) between James J. Unger (the “Employee”) and American Railcar Industries, Inc., a Missouri corporation (“ARI”). Terms not otherwise defined herein shall have the meaning assigned to such terms in the employment agreement (the “Employment Agreement”), dated as of November 18, 2005, between the Employee and ARI.

     1. The Employee hereby settles, releases and discharges Mr. Carl C. Icahn, ARI, its successors, directors, owners, officers, and affiliates, from any and all claims in law or in equity, demands, actions, causes of action, obligations, contracts, damages, liabilities, losses, costs or expenses of every nature and kind whatsoever, whether known or unknown, suspected or unsuspected, relating to or arising out of the Employee’s employment with ARI through the Effective Date, other than claims relating to benefits under pension plans, as defined within Section 3(2) of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”).

     2. The Employee’s general release under this Release includes, but is not limited to, claims for declaratory relief, injunctive relief, violation of public policy, breach of any express or implied contract, breach of any implied covenant, fraud, intentional or negligent misrepresentation, or any other claims known or unknown in any way relating to or arising out of the Employee’s employment with ARI at any time, other than claims relating to benefits under pension plans, as defined within Section 3(2) of Title I of ERISA.

     3. The Employee hereby acknowledges that effective as of the date hereof, the Employment Agreement shall be terminated in its entirety and shall be of no further force or effect.

     4. This Release may be executed in one or more counterparts, all of which taken together shall constitute one agreement.

     5. The provisions of this Release are severable, and if any part of it is found to be unenforceable, the other paragraphs shall remain fully valid and enforceable. This Release shall survive the termination of any arrangements contained herein.

     6. This Release is entered into in and shall be governed by and construed and interpreted in accordance with the laws of the State of New York, without respect to any choice of law provisions or statutes.

[Signature Page Follows]

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JAMES J. UNGER

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

James J. Unger

 

 

 

 

 

 

 

Acknowledged by:

 

 

 

 

 

 

 

AMERICAN RAILCAR INDUSTRIES, INC.

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

Name: William P. Benac
Title: Chief Financial Officer

 

 

[Signature page to J. J. Unger Settlement and Release]

 

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Exhibit B

RELEASE AGREEMENT

     This release agreement is dated as of November 18, 2005, (this “Release”) between James J. Unger (the “Employee”) and American Railcar Industries, Inc., a Missouri corporation (“ARI”). Terms not otherwise defined herein shall have the meaning assigned to such terms in the Employment Agreement, dated as of November 18, 2005, between the Employee and ARI.

     Reference is made to that certain agreement between Carl C. Icahn and the Employee, dated as of October 25, 1994 (the “1994 Agreement”) relating to major points regarding the Employee’s employment and compensation at ARI.

     1. The Employee hereby releases and discharges Mr. Icahn, ARI, its successors, directors, owners, officers, and affiliates, from any and all claims in law or in equity, demands, actions, causes of action, obligations, contracts, damages, liabilities, losses, costs or expenses of every nature and kind whatsoever, whether known or unknown, suspected or unsuspected, relating to or arising out of the 1994 Agreement.

     2. The Employee’s general release under this Agreement includes, but is not limited to, claims for declaratory relief, injunctive relief, violation of public policy, breach of any express or implied contract, breach of any implied covenant, fraud, intentional or negligent misrepresentation, or any other claims known or unknown in any way relating to or arising out of the 1994 Agreement.

     3. The Employee hereby acknowledges that effective as of the date hereof, the 1994 Agreement shall be terminated in its entirety and shall be of no further force or effect.

     4. This Release may be executed in one or more counterparts, all of which taken together shall constitute one agreement.

     5. The provisions of this Release are severable, and if any part of it is found to be unenforceable, the other paragraphs shall remain fully valid and enforceable. This Release shall survive the termination of any arrangements contained herein.

     6. This Release is entered into in and shall be governed by and construed and interpreted in accordance with the laws of the State of New York, without respect to any choice of law provisions or statutes.

[Signature Page Follows]

 

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JAMES J. UNGER

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

James J. Unger

 

 

 

 

 

 

 

Acknowledged by:

 

 

 

 

 

 

 

AMERICAN RAILCAR INDUSTRIES, INC.

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

Name: William P. Benac
Title: Chief Financial Officer

 

 

[Signature page to J. J. Unger 1994 Agreement Release]

 

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EXECUTION COPY

Exhibit 10.27

[AMERICAN RAILCAR INDUSTRIES, INC. LETTERHEAD]

November 18, 2005

Mr. James J. Unger
c/o American Railcar Industries, Inc.
100 Clark Street
St. Charles, Missouri 63301

Dear Jim:

     This letter agreement replaces and supersedes your employment agreement as set forth in that certain agreement, as amended, between you and Carl C. Icahn, on behalf of American Railcar Industries, Inc. (“ARI”), dated October 25, 1994 (the “1994 Employment Agreement”). If the Effective Date (as defined below) does not occur on or prior to March 31, 2006, (i) the 1994 Employment Agreement shall, to the extent it exists immediately prior to the execution of this letter agreement, continue in force and not be affected by this letter agreement and (ii) this letter agreement shall terminate and shall be of no further force.

     Reference is made to that certain employment agreement (the “New Employment Agreement”), dated as of the date hereof, between ARI and you.

     As of the closing date (the “Effective Date”) of an initial public offering of ARI common stock that is registered with the Securities and Exchange Commission (the “SEC”) on Form S-1 (the “ARI S-1”), to the extent you are President and Chief Executive Officer of ARI at such time, ARI will issue to you a number of shares of voting common stock of ARI (the “Common Stock”) obtained by dividing $6,000,000 by the IPO Price (as herein defined). Such shares are hereafter called “Granted Shares.” “IPO Price” means the price per share of common stock of ARI to be paid by a public purchaser in an initial public offering of ARI shares as set forth in the final prospectus used in connection with such initial public offering.

     Forty percent (the “Registrable Shares”) of Granted Shares shall vest immediately upon the Effective Date but shall not be Transferable (as hereinafter defined) by you for 180 consecutive days after the Effective Date.

     ARI agrees to use commercially reasonable efforts to file a registration statement on Form S-8 with the SEC covering the resale of the Registrable Shares as soon as practicable after the Effective Date; provided that ARI shall not file such registration statement during the 180-day period immediately following the Effective Date unless UBS Securities LLC and Bear, Stearns & Co. Inc. provide their prior written consent. ARI shall use commercially reasonable efforts to keep such registration statement effective until the earlier of (x) the first anniversary of the Effective Date or (y) such time as all Registrable Shares have been sold pursuant to the registration statement.

 


 

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Mr. James J. Unger
November 18, 2005
Page 2

Notwithstanding anything to the contrary in the forgoing, you acknowledge and agree that (a) ARI shall have no obligation to file any such registration statement unless and until you provide ARI with such information as ARI shall reasonably request, regarding you and your proposed distribution of the Registrable Shares, for inclusion in the registration statement, (b) ARI may adopt a normal and customary insider trading policy applicable to directors, officers and employees of ARI, including you, and that your resale of the Registrable Shares will be subject to the terms and conditions and limitations of such insider trading policy, (c) in connection with the Company’s initial public offering, if requested by an underwriter of equity securities of the Company, you shall not sell or otherwise transfer or dispose of any shares of Common Stock held by you during the one hundred eighty (180) day period following the Effective Date, provided that all officers and directors of the Company enter into similar agreements, (d) if requested by the Company or an underwriter of equity securities of the Company, you shall not sell or otherwise transfer or dispose of any shares of Common Stock held by you during the ninety (90) day period following the effective date of a registration statement of the Company filed under the Securities Act of 1933, as amended, or any rule or regulation promulgated thereunder (the “Securities Act”), provided that all officers and directors of the Company enter into similar agreements, and (e) nothing herein shall be interpreted to require ARI to disclose any material non-public information in advance of when such information would otherwise be required to be disclosed under the Securities Exchange Act of 1934, as amended.

     The remaining sixty percent of Granted Shares (the “Cancelable Shares”) shall vest and be Transferable on the following schedule and terms:

 

1.

 

One half of such Cancelable Shares, or thirty percent of total Granted Shares, subject to the terms of this letter agreement, shall vest on the 365th consecutive day immediately following the Effective Date and shall be Transferable by you at such time.

 

 

 

 

 

2.

 

The remaining one half of such Cancelable Shares, or thirty percent of total Granted Shares, shall vest on the 365th consecutive day immediately following the Effective Date but shall not be Transferable by you until the 540th consecutive day immediately following the Effective Date.

     At the Effective Date, the Cancelable Shares shall be deposited by you with ARI, together with duly executed stock powers attached thereto, all in the form suitable for the transfer of such Cancelable Shares to ARI in the event of a Cancellation Event (as hereinafter defined). Subject to cancellation as herein provided, you shall have all rights of a stockholder with respect to the Cancelable Shares, including voting and dividend rights.

     At such time as the Cancelable Shares have vested and are Transferable pursuant to the terms of this letter agreement, ARI agrees, upon your advance written request to ARI, to use commercially reasonable efforts to include your Cancelable Shares in any registration statement

 


 

EXECUTION COPY

Mr. James J. Unger
November 18, 2005
Page 3

filed by the Company, on behalf of Mr. Carl C. Icahn, with regards to the registration for sale of Mr. Icahn’s shares of common stock of ARI.

     In the event your employment with ARI is terminated for Cause (as hereafter defined), or is voluntarily terminated by you for other than Good Reason (as hereafter defined) within the period of 365 consecutive days immediately following the Effective Date (a “Cancellation Event”), the Cancelable Shares shall be returned to ARI and cancelled. Upon your death, Disability, voluntary termination of your employment with ARI for Good Reason or termination of your employment with ARI without Cause, all Cancelable Shares shall become fully vested and Transferable and not subject to forfeiture or cancellation; provided, however, that if any of the aforementioned events occur within 180 consecutive days of the Effective Date, such Cancelable Shares shall only be Transferable after the periods of non-Transferability lapse as provided in this letter agreement. In the event of your death prior to Cancelable Shares becoming Transferable, the ownership of such Shares shall be transferred in accordance with your testamentary direction but shall only be Transferable by the person or entity who receives such Shares after the periods of non-Transferability lapse as provided in this letter agreement.

     “Transferable” means your ability, directly or indirectly, to sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase, assign, transfer, pledge, hypothecate or otherwise transfer or dispose of by operation of law or otherwise Granted Shares, subject to compliance with applicable state and federal securities laws and the limitations therein.

     “Cause” means the occurrence of any one of the following: (i) your failure to perform your material duties under this letter agreement, the New Employment Agreement or any other material agreement between you and ARI, (ii) your commission of an act of dishonesty, fraud, theft or embezzlement in connection with your employment, (iii) your indictment or conviction of a misdemeanor involving fraud or of any felony or (iv) your violation of any material federal or state securities law or regulation; provided, that no Cause shall exist involving subsection (i) of this sentence until you first have failed to cure such failure which is curable within thirty consecutive days of having been given written notice by ARI of the specifics of such failure.

     “Good Reason” means the occurrence of any one or more of the following events without your express consent: (i) a material breach by ARI of its obligations under this letter agreement, the New Employment Agreement or any other material agreement between you and ARI, (ii) a material diminution in your position or duties as the President and Chief Executive Officer of ARI (provided that for purposes of this clause (ii), the hiring by ARI of a Chief Operating Officer shall not be a material diminution in your position or duties) or (iii) any reduction of your Base Salary (as defined in the New Employment Agreement); provided, that a Good Reason shall not exist until ARI has first failed to cure such failure or breach within thirty days of having been given written notice of such failure or breach by you.

 


 

EXECUTION COPY

Mr. James J. Unger
November 18, 2005
Page 4

     “Disability means your inability to perform the functions of President and Chief Executive Officer of ARI as determined by a physician selected by the Board who is reasonably acceptable to you.

     Certificates representing Granted Shares shall have affixed thereto the following legend:

“The shares of common stock represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”) and may not be sold, transferred or otherwise disposed of in the absence of an effective registration statement under the Act or an opinion of counsel satisfactory to American Railcar Industries, Inc. to the effect that such registration is not required.”

     In addition, certificates representing Cancelable Shares shall have affixed thereto an additional legend in substantially the following form:

“The shares of common stock represented by this certificate are subject to return to and cancellation by American Railcar Industries, Inc. as set forth in a letter agreement, dated November 18, 2005, between the registered owner of this certificate, Mr. James J. Unger, and American Railcar Industries, Inc. Such letter agreement is available for inspection without charge at the office of the Secretary of American Railcar Industries, Inc.”

     Upon (x) Registrable Shares becoming Transferable pursuant to an effective registration statement and (y) Cancelable Shares vesting pursuant to the terms of this letter agreement, ARI shall cause new certificates representing such Shares to be issued to you without either of the above legends, in the case of (x), and without the second legend, in the case of (y), and the certificates to which the above legends are affixed shall be cancelled.

     You hereby represent, warrant and covenant as follows:

(a)

 

You are acquiring the Granted Shares for your own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Granted Shares in violation of the Securities Act.

 

 

 

(b)

 

You have sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in an investment in the Granted Shares and to make an informed investment decision with respect to such investment.

 

 

 

(c)

 

You can afford the complete loss of the value of the Granted Shares and are able to bear the economic risk of holding such Granted Shares for an indefinite period of time.

 


 

EXECUTION COPY

Mr. James J. Unger
November 18, 2005
Page 5

(d)

 

You understand and acknowledge that (i) the Granted Shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (ii) the Granted Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; and (iii) in any event, the exemption from registration under Rule 144 will not be available unless a public market then exists for shares of common stock of ARI, adequate information concerning ARI is then available to the public, and other terms and conditions of Rule 144 are complied with.

 

 

 

(e)

 

You understand and acknowledge that (i) there may be Federal income tax consequences to you relating to the purchase and sale of the Granted Shares as a result of Section 83(b) of the Code, (ii) ARI is not providing you with any advice regarding Section 83(b) of the Code, (iii) you have been advised to seek, and have sought, the counsel of your own tax advisor and (iv) you must notify ARI upon making an election under Section 83(b).

 

 

 

(f)

 

You acknowledge that you have had the assistance of legal counsel in reviewing and negotiating this letter agreement.

     If you agree and accept the terms of this letter agreement, please sign below and return a copy to ARI.

 

 

 

 

 

 

 

AMERICAN RAILCAR INDUSTRIES, INC.

 

 

 

 

 

 

 

By:

 

/s/ William P. Benac

 

 

 

 

 

 

 

 

 

Name: William P. Benac
Title: Chief Financial Officer

     I hereby agree to and accept the terms of this letter agreement.

 

 

 

 

 

 

 

/s/ James J. Unger

 

 

 

 

 

James J. Unger

 

 

 

 

 

 

 

Date:

 

November 18, 2005

 

 

 

 

 

 

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