THIS AGREEMENT
(the “Agreement”) is entered into by and between
FreightCar America, Inc., a Delaware corporation (the
“Company”), and Nicholas J. Matthews (the
“Executive”), effective as January 10, 2008 (the
“Effective Date”).
WHEREAS, the
Executive and the Company have reached agreement concerning the
terms and conditions of his employment and wish to formalize that
agreement;
NOW, THEREFORE, in
consideration of the mutual terms, covenants and conditions stated
in this Agreement, the Executive and the Company agree as
follows:
1.
Employment, Position and Duties . From the Effective Date
through the close of business on the date which the Company
hereafter specifies to the Executive, which date the Company
currently anticipates to be on or about May 1, 2008 (the
“Promotion Time”), the Company shall employ the
Executive, and the Executive hereby agrees to serve the Company, as
its Vice President, Operations. Beginning on the Promotion Time,
the Company shall employ the Executive, and the Executive hereby
agrees to serve the Company, as its Senior Vice President,
Operations, and the Executive shall have such responsibilities,
duties and authority as are customarily associated with such office
and as the Company’s Chief Executive Officer may assign. The
Executive also hereby agrees to serve as an officer of such of the
Company’s subsidiaries (if any) as the Company’s Chief
Executive Officer shall reasonably request.
2.
Term . The employment of the Executive by the Company
pursuant to this Agreement will commence as of the Effective Date
and will terminate three (3) years thereafter; provided,
however, that this Agreement shall remain in effect from year to
year thereafter unless, not less than ninety (90) days prior
to the then termination of the term of this Agreement, either the
Executive or the Company shall deliver to the other written notice
of his or its intention not to continue in effect this Agreement,
in which case this Agreement shall terminate as of December 31
of the year in which such notice is given (the “Term”);
and provided further that, if a Change in Control (as defined
below) shall have occurred during the Term, this Agreement shall
continue in effect and the Term shall be extended until at least
the second anniversary of such Change in Control.
3.
Duties . During the Term:
(a) The Executive
shall report to the Company’s Chief Executive
Officer.
(b) The Executive
will devote substantially all his full working time and best
efforts, talents, knowledge and experience to serving the Company.
However, the Executive may devote reasonable working time to
activities such as supervision of personal investments and
activities involving professional, charitable, educational,
religious and similar types of activities, speaking engagements and
membership on other boards of directors, provided that such
activities do not interfere in any substantial way with the
business of the Company; and provided further, that the Executive
may not serve on the board of directors of any other for-profit
company without the prior written
approval of the
Company’s Chief Executive Officer. The time involved in such
activities shall not be treated as vacation time. The Executive
shall be entitled to keep any amounts paid to him in connection
with such activities ( e.g. , director fees and
honoraria).
(c) The Executive
will perform his duties diligently and competently and shall act in
conformity with the Company’s written and oral policies and
within the limits, budgets and business plans set by the Board. The
Executive will at all times during the Term adhere to and obey all
of the rules and regulations in effect from time to time relating
to the conduct of executives of the Company. Except as provided in
(b) above, the Executive shall not engage in consulting work
or any trade or business for his own account or for or on behalf of
any other person, firm or company that competes, conflicts or
interferes with the performance of his duties hereunder in any
way.
4. Place
of Performance . In connection with the Executive’s
employment by the Company, the Executive shall be based at the
Company’s offices in Chicago, Illinois, except for required
travel on the Company’s business.
5.
Compensation and Related Matters . As compensation and
consideration for the performance by the Executive of the
Executive’s duties, responsibilities and covenants pursuant
to this Agreement, the Company agrees to pay the Executive and the
Executive agrees to accept in full payment for such performance the
amounts and benefits set forth below:
(a) Salary
. Commencing as of the Effective Date, the Company shall pay to the
Executive an annual base salary (“Base Salary”) of two
hundred and fifty thousand dollars ($250,000 ) . Thereafter,
the Board, or such committee of the Board as is responsible for
setting the compensation of senior executive officers, shall review
the Executive’s Base Salary annually in January of each year,
in light of competitive data, the Company’s performance, and
the Executive’s performance, and determine whether to
increase the Executive’s Base Salary on a prospective basis.
The first review shall be in January 2009. Such adjusted
annual salary then shall become the Executive’s “Base
Salary” for purposes of this Agreement. The Executive’s
annual Base Salary shall not be reduced at any time, including
after any increase, without the Executive’s consent. The
Company shall pay the Executive’s Base Salary according to
payroll practices in effect for all senior executive officers of
the Company.
(b) Annual
Bonus . The Executive will be eligible for an annual cash bonus
(the “Bonus”) in accordance with the provisions of the
Company’s annual bonus plan as then in effect (“Bonus
Plan”), based on performance, and calculated as a percentage
of the Executive’s Base Salary. Initially, the Executive will
participate in the Bonus Plan at the Group A, forty percent (40%)
of Base Salary target level. In any plan adopted by the Company to
replace the current Bonus Plan, the Executive’s participation
will have a potential payout at least equal to his potential payout
under the current Bonus Plan.
The Company shall
pay the Executive’s Bonus, if any, according to the terms of
the Bonus Plan. The Company intends that the Bonus will be paid
within 2 1
/ 2 months of
the close of the Company’s fiscal year, but in no event later
than the end of the Company’s first fiscal quarter. In the
event that payments are not made within 2 1 / 2
months of the close of the
Company’s fiscal year, it is the Company’s intent that
this
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Agreement be
construed in a manner consistent with Section 409A of the
Internal Revenue Code of 1986, as amended (the
“Code”).
(c) Equity
Compensation . On the Effective Date, the Company shall award
the Executive eleven thousand, five hundred (11,500) shares of
Restricted Stock in accordance with and subject to the terms of the
FreightCar America, Inc. 2005 Long Term Incentive Plan (the
“2005 LTIP”), vesting in five annual installments
beginning on the first anniversary of the Effective Date, of 2,300
shares each. This Restricted Stock award would become fully vested
upon a Change in Control. During the Term the Executive shall be
eligible for future awards under the 2005 LTIP or any similar or
successor plan, in the sole discretion of the Board.
(d) Make Whole
Agreement . It is anticipated that as a result of the
Executive’s terminating his employment with Trinity
Industries, Inc. (“Trinity”), Trinity may not pay the
Executive a bonus for the 2007 calendar year under Trinity’s
annual incentive bonus plan or its “top 25 employee bonus
plan,” or both, which otherwise would have been paid to the
Executive on or about April 1, 2008 (the “Trinity
Bonus”). Following the aforementioned date, the Executive
will notify the Company’s Chief Executive Officer whether
Trinity has paid him the Trinity Bonus. If the Executive provides a
reasonable written certification to the Company that, as a result
of his terminating his employment with Trinity, Trinity did not pay
him the Trinity Bonus, together with his best good-faith estimate
of the amount of the forgone Trinity Bonus, then the Company will
pay such amount to the Executive. The Company’s obligation
under the foregoing provision shall, however, be subject to the
following:
(i) upon the
Company’s request, the Executive will provide the Company
with such supporting documentation as the Company may reasonably
request concerning the aforementioned matters, provided, however,
that under no circumstances shall the Executive be obligated to
provide, or provide, to the Company any confidential or proprietary
information or materials of Trinity whatsoever;
(ii) the maximum
total amount the Company shall pay to the Executive under this
Section 5(d) shall not in any event exceed one hundred
seventy-eight thousand, five hundred dollars ($178,500);
and
(iii) if the
Executive voluntarily terminates his employment with the Company
before December 31, 2008, other than for Good Reason, then the
Executive will repay to the Company the full amount of the forgone
Trinity Bonus which was so paid by the Company.
(e)
Relocation . The Company will reimburse the
Executive’s reasonable moving expenses in relocating to the
Chicago, Illinois metropolitan area. Until the Executive relocates,
the Company will pay or reimburse commuting expenses between the
Executive’s home in Texas and those locations at which the
Executive needs to conduct business on the Company’s
behalf.
Pursuant to this
section, the Company shall reimburse the reasonable expenses of the
Executive and his family for: (i) shipment of reasonable and
customary household goods, with up to sixty (60) days storage,
from Texas to the Chicago metropolitan area,
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(ii) shipment of up to two automobiles from
Texas to the Chicago metropolitan area, (iii) round trip air
fare, lodging, meals and related expenses for up to two pre-move
home-finding trips for the Executive, his spouse and children under
age 21, (iv) realtor’s commission on the sale of his
residence in Texas, (v) closing costs on the purchase of the
new residence, (vi) one-way air transportation for the
Executive and his family from Texas to Chicago, and
(vii) other costs not listed in the foregoing clauses but
identified as reimbursable on the relocation benefits worksheet
(under the “Homeowner” column) previously provided by
the Company to the Executive.
(f) Automobile
Allowance . During his employment hereunder, the Company shall
make payments to the Executive of five hundred dollars ($500.00)
per month to defray costs associated with the Executive’s
automobile.
(g) Other
Benefits . The Executive shall be entitled to participate in or
receive benefits under any employee benefit plan, arrangement or
perquisite made available by the Company at any time during his
employment hereunder to its executive employees (collectively the
“Benefit Plans”), including without limitation each
retirement, 401(k) and profit sharing plan, group life insurance
and accident plan, medical and dental insurance plan, and
disability plan, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and
arrangements. The Company reserves the right to make changes to any
plan, arrangement or perquisite in which the Executive
participates, including termination of any such plan or
arrangement, in its sole discretion, if such changes do not result
in a proportionately greater reduction in the rights of or benefits
to the Executive as compared with other executives of the Company
or if such changes are required by law or are technical
changes.
(h)
Expenses . The Executive shall be entitled to receive an
advance or prompt reimbursement for all reasonable travel and
entertainment expenses or other out-of-pocket business expenses
incurred by the Executive during the Term in fulfilling the
Executive’s duties and responsibilities under this Agreement,
including all expenses of travel and living expenses while away
from home on business or at the request and in the service of the
Company, provided that such expenses are incurred and accounted for
in accordance with the policies and procedures established by the
Company.
(i)
Vacation . During his employment hereunder, the Executive
shall be entitled to paid vacations in each calendar year,
determined in accordance with the Company’s vacation policy,
but not less than four weeks per year. The Executive shall also be
entitled to all paid holidays and personal days given by the
Company to its executive employees.
6.
Termination . The Company, upon action by the Board, may
terminate the Executive’s employment hereunder under the
following circumstances:
(a) Death .
The Executive’s employment hereunder shall terminate upon his
death.
(b)
Disability . The Company may terminate the Executive’s
employment hereunder in the event of the Executive’s
Disability. For purposes of this Agreement,
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“Disability” shall mean, in the
written opinion of a qualified physician selected by the Company,
the Executive is, 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
12 months, (i) unable to engage in any substantial
gainful activity, or (ii) receiving income replacement
benefits for a period of not less than 3 months under the
Company’s disability plan.
(c) Cause .
The Company may terminate the Executive’s employment
hereunder for Cause. For purposes of this Agreement, the Company
shall have “Cause” to terminate the Executive’s
employment hereunder upon the Executive’s (i) willful
and continued failure substantially to perform his material duties
with Company (other than due to Disability), or the commission of
any activities constituting a material violation or material breach
of any federal, state or local law or regulation applicable to the
activities of Company, in each case, after notice thereof from the
Board to the Executive and (where possible) a reasonable
opportunity for the Executive to cease and cure such failure,
breach or violation in all respects, (ii) fraud, breach of
fiduciary duty, dishonesty, misappropriation or other act that
causes material damage to the Company’s property or business,
(iii) repeated absences from work such that the Executive is
unable to perform his employment or other duties in all material
respects, other than due to Disability or a condition that with the
passage of time would become a Disability, (iv) admission or
conviction of, or plea of nolo contendere to, any crime
that, in the reasonable judgment of the Board, adversely affects
the Company’s reputation or the Executive’s ability to
carry out the obligations of his employment, (v) failure to
reasonably cooperate with the Company in any internal investigation
or administrative, regulatory or judicial proceeding, after notice
thereof from the Board to the Executive and a reasonable
opportunity for the Executive to cure such non-cooperation or,
(vi) act or omission in violation or disregard of the
Company’s policies, including but not limited to the
harassment and discrimination policies and Standards of Conduct of
the Company then in effect, in such a manner as to cause
significant loss, damage or injury to the property, reputation or
employees of the Company. In addition, the Executive’s
employment shall be deemed to have terminated for Cause if, after
the Executive’s employment has terminated, facts and
circumstances are discovered that would have justified a
termination for Cause. For purposes of this Agreement, no act or
failure to act on the Executive’s part shall be considered
“willful” unless it is done, or omitted to be done, by
him in bad faith or without reasonable belief that his action or
omission was in the best interests of the Company. Any act or
failure to act based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted
to be done, in good faith and in the best interests of the
Company.
7.
Compensation Upon Termination, Death or During Disability
.
(a) Termination
for any Reason . If the Executive’s employment terminates
for any reason, the Company shall pay to him (or his
representative) (i) the Executive’s earned but unpaid
Base Salary through the date of termination, (ii) any annual
incentive plan bonus, or other form of i
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