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”).
(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.
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.
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 $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.
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.
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.
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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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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(b)
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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
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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
(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).
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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 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.
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.
Page 3
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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 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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