EMPLOYMENT
AGREEMENT, dated as of September 12, 2008 (this
“Agreement”), between American Railcar Industries,
Inc., a Delaware corporation (the “Company”) and
Mr. Dale Davies (the “Employee”).
(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 Senior
Vice President, Chief Financial Officer and Treasurer of the
Company, reporting to James J. Unger, Chief Executive Officer of
the Company and 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. “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.
The employment
period shall commence as of September 1, 2008 (the
“Effective Date”) and shall continue through
September 1, 2011 (the “Expiration Date”) (such
period being referred to herein as the “Term of
Employment.”
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:
The Company
will pay the Employee a salary (the “Base Salary”) at
an annual rate of $185,000 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.
The Company
will pay the Employee an annual bonus for each calendar year of
employment ending on or after December 31, 2008, 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 50% 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 no
later than March 15 of the following calendar year or such
later day as permissible under Section 409A of the Internal Revenue
Code of 1986, as amended from time to time, (the
“Code”) and the guidance issued thereunder from time to
time, but in any event no later than promptly following completion
of the audited financial statements of the Company for the calendar
year in question (such date, the “Bonus Payment
Date”).
All amounts
paid to the Employee under or pursuant to this Agreement,
including, without limitation, the Base Salary and any Bonus
Compensation, if any, 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.
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, vacation, 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
on terms consistent to those received by other senior employees of
the Company.
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”):
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(a)
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The
Expiration Date;
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(b)
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The: (i) death of the Employee
or (ii) reasonable determination of the Board, which
determination shall be reached in consultation with appropriate
medical professionals, that the Employee has become physically or
mentally incapacitated so as to be unable to perform the essential
functions of Employee’s duties to the Company for 60
consecutive days, even with reasonable accommodation, (the
“Disability);
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(c)
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The
discharge of the Employee by the Company with or without Cause;
or
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(d)
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the
resignation of the Employee for Good Reason (without limiting the
effect of such resignation, the Employee agrees to provide the
Company not less than 30 days prior written notice of such
resignation.
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The Company may
discharge the Employee at any time, for any reason or no reason,
with or without Cause. As used herein, “Cause” is
defined as the Employee’s: (i) failure to perform
substantially the duties of the Senior Vice President, Chief
Financial Officer andTreasurer of the Company (other than any such
failure resulting from incapacity due to Disability),
(ii) charged with any crime other than traffic violations,
(iii) engagement in an act of fraud or of willful dishonesty
towards the Company, (iv) material breach of this Agreement,
(v) willful misconduct or gross negligence in the performance
of Employee’s duties hereunder, or (vi) violation of a
federal or state securities law or regulation. As used herein,
“Good Reason” means the occurrence of any one or more
of the
following
events without the express consent of the Employee: (i) a
material breach by Company of its obligations under this Agreement,
(ii) a material diminution in Employee’s position of
duties of Senior Vice President, Chief Financial Officer and
Treasurer of the Company as set forth in this Agreement,
(iii) any reduction in Employee’s Base Salary or
benefits, or (iv) any relocation of Employee’s assigned
workplace to an area outside of the greater St. Louis metropolitan
area. A Good Reason shall not exist until the Company 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. To the extent the Employee is discharged or resigns, or
is otherwise terminated or is deemed terminated, in each case as
provided herein, from his position with the Company, he shall be
and be deemed to have ceased his employment in the same manner with
all of the subsidiaries of the Company.
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 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 the Employee’s Base Salary previously
earned and accrued and (y) in accordance with the Company’s
policy, unreimbursed business expenses of the Employee, ((x) and
(y) collectively, the “Accrued Obligations”), but
with the exception of the Accrued Obligations being payable under
clause (c) below), is conditioned upon (i) execution and
delivery by the Employee to the Company of a settlement and 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, and (ii) such
agreement, once executed by the Employee and delivered to the
Company, becomes irrevocable, enforceable and final under the
applicable law.
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(a)
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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):
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(i)
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the
Employee’s Accrued Obligations, due and unpaid to the
Employee from the Company as of the Clause (a) Termination
Date; and
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(ii)
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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.
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(b)
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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
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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):
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(i)
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the
Employee’s Accrued Obligations, due and unpaid to the
Employee from the Company as of the Clause (b) Termination
Date;
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(ii)
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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
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(iii)
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a
pro-rated portion of the Bonus Compensation computed as set forth
below.
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(c)
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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) or the Employee’s termination of this Agreement
for Good Reason, 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) or (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):
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(i)
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the
Employee’s Accrued Obligations, due and unpaid to the
Employee from the Company as of the Clause (c) or
(d) Termination Date;
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(ii)
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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 (c) or (d) Termination Date;
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(iii)
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a
pro-rated portion of the Bonus Compensation computed as set forth
below; and
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(iv)
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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.
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(d)
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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(c)
above, on account of any remuneration or other benefit attributable
to any subsequent
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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.
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(e)
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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, but shall be paid no
later than the following Bonus Payment Date, and shall be
calculate
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