Exhibit 10.1

 

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July 17, 2017

James R. Meyer

3019 River Lane

New Bern, North Carolina 28562

 

Re:     Terms of Employment

 

Dear Jim:

 

This letter agreement (“Letter”) sets forth the terms of your employment with
FreightCar America, Inc. (the “Company”). Commencing July 31, 2017 (the
“Effective Date”), you will be employed as the Company’s President and Chief
Executive Officer, and reporting to the Company’s Board of Directors. You will
have all of the duties and responsibilities commensurate with such position
under the Company’s by-laws and consistent with the duties and responsibilities
of chief executive officers of similar businesses as the Company. During your
employment, you will devote your full-time business attention to the Company and
will use your best efforts to discharge your responsibilities. You may, however,
engage in civic and charitable activities and, with the prior consent of the
Company’s Board of Directors, corporate boards, provided that these activities
do not interfere with your duties to the Company (the Company has already
approved your continuation as a member of the CSTH, LLC Board of Directors).

 

In order to begin employment with the Company, you must successfully complete
all required employment documentation, a post-offer drug screening, background
check and reference checks. This Letter and your employment is for no specific
term. Your employment with the Company will be “at will,” meaning that either
you or the Company may terminate your employment at any time and for any reason,
with or without Cause (as defined below), subject to the terms of this Letter
below, by the Company or you upon notice to the other such party. Although your
job duties, title, compensation and benefits, as well as the Company’s personnel
policies and procedures, may change from time to time, the “at will” nature of
your employment may only be changed in an express written agreement signed by
the Company’s Board of Directors (or a designee of the Company’s Board of
Directors).

 

Two North Riverside Plaza

Suite 1300

Chicago, IL 60606 USA

312.928.0850

Fax 312.928.0890

www.freightcaramerica.com

 

 

 

 

1.                  Salary. Beginning on the Effective Date, you will receive an
annual base salary in the amount of $500,000 (“Salary”), paid in accordance with
payroll practices applicable to all salaried employees. Based on your
performance, your Salary will be reviewed by the Company annually and may be
increased (and not decreased without your written consent) in the Company’s
discretion.

 

2.                  Bonus. You will be entitled to participate in the Company’s
annual cash incentive plan applicable to all similarly situated executives (the
“Bonus Plan”) and to earn a bonus (“Bonus”) for each fiscal year of the Company
ending during your employment. The measurement period for the Bonus is based on
a calendar year. Your target Bonus is 100% of your Salary, upon achievement of a
target level of performance set forth in the Bonus Plan, payable in cash, within
two and one-half months after the end of the fiscal year to which it relates.
Your maximum Bonus, to the extent earned under the Bonus Plan, may be as much as
200% of your Salary. If there are Bonus payments under the Bonus Plan in respect
of the 2017 calendar year or any other partial year, then you will be entitled
to participate in a partial Bonus payment prorated to align with your base
salary earnings (as earned in each measurement period) and actual performance
during your employment.

 

3.                  Long-Term Incentive and Other Executive Compensation Plans
(“LTIP”). You will be entitled to participate in all of the Company’s
equity-based and cash-based long-term incentive and other executive compensation
plans. You will receive a LTIP award on an annual basis with a fair value equal
to 100% of Salary, payable 50% in performance shares (with fair value based on
the assumption that the target performance goals will be met) and 50% in
restricted shares and all awards granted will have performance goals and vesting
conditions similar to those of other Company executive officers. The performance
share and restricted share makeup of the award along with vesting schedules may
be modified from time to time and at the sole discretion of the Compensation
Committee of the Company's Board of Directors or the Company's Board of
Directors.

 

4.                  Sign-On Award. You will be granted an equity award on the
Effective Date, of 350,000 stock options (the “Options”), under the FreightCar
America, Inc. 2005 Long Term Incentive Plan, as amended and restated May 17,
2013 (the “Plan”) having such terms and conditions as are set forth in the
option award agreement attached to this Letter as Exhibit A and with the terms
of such award, including as incorporated under the Plan, superseding the terms
and conditions in this Section 4. The award will feature a performance earning
schedule based on a trailing 90-consecutive calendar day average closing price
of one share of the Company’s common stock (the “Stock Price”), which shall be
earned in the proportions as set forth below:

 

(a)                You will earn 34% of the Options upon the first time the
Stock Price is equal to or greater than $5.00 per share above the Initial Stock
Price (as defined below),

 

(b)               You will earn 33% of the Options upon the first time the Stock
Price is equal to or greater than $10.00 per share above the Initial Stock
Price, and

 

(c)                You will earn 33% of the Options upon the first time the
Stock Price is equal to or greater than $15.00 per share above the Initial Stock
Price.

 

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The Options shall be treated as being fully earned upon a Change of Control (as
defined by the Plan). You will become fully vested in the Options provided that
on the date you are treated as earning the Options, you have remained in
continuous employment with the Company. The “Initial Stock Price” shall be the
closing price of one share of the Company’s common stock determined on the
Effective Date. The exercise price of the options shall be for Fair Market Value
(as defined in the Plan).

 

5.                  Board Position. You shall be elected by the Company’s Board
of Directors to fill a vacancy on the Company’ Board of Directors, and your
service will begin on the Effective Date until the 2018 annual meeting of the
stockholders of the Company. At the 2018 annual meeting of the stockholders of
the Company, the Company’s Board of Directors, subject to the Company’s Board of
Director’s standard nominating procedures, will nominate you as a director and,
if you are so elected by the Company’s stockholders, you will continue to serve
as a director of the Company.

 

6.                  Benefits; Business Expenses. During your employment, you
will be entitled to participate in each of the Company’s employee retirement,
savings, welfare and fringe benefit plans, and perquisites, offered to its
similarly situated executives, as in effect from time to time. You will be
entitled to paid annual vacation on a basis that is at least as favorable as
that provided to other similarly situated executives of the Company, but not
less than four (4) weeks per year, earned in accordance with applicable Company
policy. On a special exception basis, as of your start date the Company will
provide you with fourteen (14) paid vacation days for your use during the
remainder of 2017 (which days will be forfeited to the extent you have not used
them by December 31, 2017). You will be reimbursed for all business, including
entertainment, expenses incurred by you in connection with your duties, subject
to the Company’s policy for substantiating such expenses.

 

7.                  Termination. Upon a termination of your employment for any
reason, you will be entitled to lump sum payments, within sixty (60) days
following termination, of (i) your accrued Salary and accrued and unused
vacation through the date of termination, (ii) your prior and current (prorated)
fiscal year bonus, to the extent earned and unpaid, and (iii) any accrued and
vested benefits and unreimbursed expenses incurred and unpaid on the date of
termination in accordance with Section 6. Upon your written acknowledgement and
acceptance of the terms and conditions of the FreightCar America, Inc. Executive
Severance Plan (the “Executive Severance Plan”), you will participate in and be
entitled to benefits under the Executive Severance Plan as then in effect (but
no less than currently in effect), except in the following respects:

 

(a)                In the event of (i) your termination by the Company or its
successor without Cause within 24 months following the consummation of a “Change
in Control” (as defined in the Executive Severance Plan) or (ii) your
resignation for “Good Reason” (as defined below), modifications will apply as
follows:

 

•Under Article 3.3(b), your base salary will continue for 24 months following
the date of termination;

 

•You will receive two equal bonus payments to be made based on the calculation
as described in Article 3.3(c), with the first payment being made on the first
March 15 following the year of termination and the second payment being made on
the second March 15 following the year of termination; and

 

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•Under Article 3.3(d), participation in the Company’s group health plan will
continue for twenty-four (24) months.

 

A copy of the Executive Severance Plan as currently in effect is attached as
Exhibit B to this Letter. The release and waiver of claims referenced in
Articles 3.1 and 3.3 of the Executive Severance Plan shall preserve Executive’s
entitlement to his retirement and savings benefits and rights to indemnification
and defense in accordance with the Company’s by-laws, statutory and common law
rights, and insurance policies.

 

(b)               With respect to the definition of “Good Reason” both parties
hereto agree that such term shall be defined as provided in the Executive
Severance Plan, except that:

 

•Article 2.16(b)(i)-(iii) are hereby deleted and replaced with the following:
“(i) permanently and materially diminishes the Executive’s authority, duties, or
responsibilities, including without limitation, title or reporting
responsibilities (to and from Executive), (ii) materially reduces any component
of the Executive’s compensation, including Base Salary, Bonus opportunity, and
equity award participation, (iii) requires the Executive to relocate to a
location that is more than 50 miles from (1) the Company’s principal business
office located in the Chicago, Illinois metropolitan area or (2) the Company’s
facility located in the greater Cherokee, Alabama area, or”

 

(c)                With respect to the definition of “Cause” both parties hereto
agree that such term shall be defined as provided in the Executive Severance
Plan, except that:

 

•Article 2.5(e) is hereby deleted and replaced with the following: “(e) Any
willful act or omission by the Executive 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.”

 

This modified definitions of Cause and Good Reason shall apply with respect to
any and all compensation agreements or arrangements between yourself and the
Company that reference or rely on the definition provided in the Executive
Severance Plan and/or this Letter.

 

8.                  Restrictive Covenants.

 

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(a)                Confidential Information. You understand that the Company
possesses and will possess Confidential Information that is important to its
business. The Company devotes significant financial, human and other resources
to the development of its products, its customer base and the general goodwill
associated with its business and the Company diligently maintains the secrecy
and confidentiality of its Confidential Information. For this purpose,
“Confidential Information” is information that was or will be developed,
created, or discovered by or on behalf of the Company, or that became or will
become known by, or was or is conveyed to the Company, which has commercial
value in the Company’s business, unless and until such information becomes
publicly available, provided that you did not make the information publicly
available by acting on your own behalf. Confidential Information is sufficiently
secret to derive economic value from its not being generally known to other
persons. Confidential Information also includes any and all financial,
technical, commercial or other information concerning the business and affairs
of the Company that is confidential and proprietary to the Company, including
without limitation, (i) information relating to the Company’s past and existing
customers and vendors and development of prospective customers and vendors,
including without limitation specific customer product requirements, pricing
arrangements, payment terms, customer lists and other similar information; (ii)
inventions, designs, methods, discoveries, works of authorship, creations,
improvements or ideas developed or otherwise produced, acquired or used by the
Company; (iii) the Company’s proprietary programs, processes or software,
consisting of but not limited to, computer programs in source or object code and
all related documentation and training materials, including all upgrades,
updates, improvements, derivatives and modifications thereof and including
programs and documentation in incomplete stages of design or research and
development; (iv) the subject matter of the Company’s patents, design patents,
copyrights, trade secrets, trademarks, service marks, trade names, trade dress,
manuals, operating instructions, training materials, and other industrial
property, including such information in incomplete stages of design or research
and development; and (v) other confidential and proprietary information or
documents relating to the Company’s products, business and marketing plans and
techniques, sales and distribution networks and any other information or
documents which the Company reasonably regards as being confidential. You
understand that the Company possesses or will possess Company Materials (as
defined below) that are important to its business. For this purpose, “Company
Materials” are documents or other media, in their electronic or tangible form,
or items that contain or embody Confidential Information or any other
information, regardless of form, concerning the business, operations or
future/strategic plans of the Company, whether such documents have been prepared
by you or by others. In consideration of your employment by the Company, the
compensation received by you from the Company, and the Company’s agreement to
give you access to certain Confidential Information, you agree as follows:

 

(i)                 All Confidential Information and trade secret rights, and
other intellectual property and rights (collectively “Rights”) in connection
therewith will be the sole property of the Company. At all times, both during
your employment by the Company and after its termination for any reason, you
will keep in confidence and trust and will not use or disclose any Confidential
Information or anything relating to it without the prior written consent of a
then current officer of the Company except as may be necessary and appropriate
in the ordinary course of performing your duties to the Company.

 

(ii)               All Company Materials will be the sole property of the
Company. You agree that during your employment by the Company, you will not
remove any Company Materials from the business premises of the Company or
deliver any Company Materials to any person or entity outside the Company,
except as you are required to do so in connection with performing the duties of
your employment. You further agree that, immediately upon the termination of
your employment by you or by the Company for any reason, or during your
employment if so requested by the Company, you will return all Company
Materials, apparatus, equipment and other physical property, or any reproduction
of such property.

 

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Notwithstanding anything else contained or referenced herein, nothing in this
Letter shall limit or impede your right (with or without prior notice to the
Company) to (i) raise in good faith or participate in an investigation regarding
any potential violation of law or regulation with any governmental or regulatory
agency, including the Securities and Exchange Commission, or (ii) make any
disclosure protected by law under the whistleblower provisions of any state or
federal statutes or regulations. However, any disclosure of Confidential
Information made to any governmental or regulatory agency will be limited to
Confidential Information that is reasonably related to the alleged violation
and/or specifically requested by the investigating agency. You will make any
such disclosure(s) only to such parties authorized to investigate the potential
violation.

 

(b)               Noncompetition and Non-solicitation. While employed by the
Company and for a period of twelve (12) consecutive months thereafter, you will
not, directly or indirectly:

 

(i)                 Contact, solicit, interfere with, or divert, or induce or
attempt to contact, solicit, interfere with or divert, any of the Company’s
customers;

 

(ii)               Participate or engage in (as an owner, partner, employee,
officer, director, independent contractor, consultant, advisor or in any other
capacity calling for the rendition of services, advice, or acts of management,
operation or control) any business engaged in the manufacture of railcars in
North America; and

 

(iii)             Solicit or induce or attempt to solicit or induce, by or for
yourself, or as the agent of another, or through others as an agent in any way,
any person who is employed by the Company for the purpose of encouraging that
employee to join you as a partner, agent, employee or otherwise in any business
activity which is competitive with the Company.

 

(c)                Forfeitures. In the event that you materially breach any of
the restrictions in this Section 8 (which if such breach is curable, such breach
is not cured to the Company’s reasonable satisfaction after the Company provides
you a reasonable period of time to cure) you shall forfeit all of the applicable
payments and benefits, described in Sections 2, 3 and 4 of this Letter, and the
Company shall have the right to recapture and seek repayment of any such
applicable payments and benefits under this Letter.

 

(d)               Intellectual Property. “Inventions” includes all improvements,
inventions, designs, formulas, works of authorship, trade secrets, technology,
computer programs, compositions, ideas, processes, techniques, know-how and
data, whether or not patentable, made or conceived or reduced to practice or
developed by you, either alone or jointly with others, during the term of your
employment, including during any period prior to the date of this Letter. Except
as defined in this Letter, all Inventions that you make, conceive, reduce to
practice or develop (in whole or in part, either alone or jointly with others)
during your employment will be the sole property of the Company to the maximum
extent permitted by law. You agree to assign such Inventions and all Rights in
them to the Company. Exemptions from this agreement to assign may be authorized
in those circumstances where the mission of the Company is better served by such
action, provided that overriding obligations to other parties are met and such
exemptions are not inconsistent with other Company policies. Further, you may
petition the Company for license to make, market or sell a particular Invention.

 

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(e)                Injunction. You acknowledge that monetary damages will not be
an adequate remedy for the Company in the event of a breach of this Section 8,
and that it would be impossible for the Company to measure damages in the event
of such a breach. Therefore, you agree that, in addition to other rights and
remedies that the Company may have, the Company is entitled to an injunction
preventing you from any breach of this Section 8, and you hereby waive any
requirement that the Company post any bond in connection with any such
injunction. You further agree that injunctive relief is reasonable and necessary
to protect a legitimate, protectable interest of the Company.

 

(f)                Blue Pencil. If any court determines that the covenants
contained in this Section 8, or any part hereof, are unenforceable because of
the duration or geographic scope of such provision, such court shall have the
power to reduce the duration or scope of such provision, as the case may be, to
as close to the terms hereof as shall be enforceable and, in its reduced form,
such provision shall then be enforceable.

 

(g)               Survival. The restrictive covenants contained in this Section
8 shall survive the termination of your employment.

 

9.                  Section 409A. Anything in this Letter to the contrary
notwithstanding, if any payment(s) or benefit(s) under this Letter would be
subject to the provisions of Section 409A of the Internal Revenue Code of 1986
(the “Code”) at the time they become payable or benefits due you, to the extent
required to comply with Section 409A of the Code any such payments or benefits
will be delayed for six (6) months or such other earliest day on which such
payments could be made or benefits provided in compliance with Section 409A of
the Code and the regulations thereunder (at which point all payments so delayed
will be provided or reimbursed to you in one lump sum, without interest, within
two and one-half months after the date they then become so payable or due to
you).

 

10.              Miscellaneous.

 

(a)                Entire Agreement. Except as otherwise contemplated herein,
this Letter (including Exhibits A and B) contains the entire agreement between
you and the Company with respect to the subject matter hereof. No amendment,
modification or termination of this Letter may be made orally, but must be made
in writing and signed by you and the Company. Unless otherwise provided herein,
in the event of any inconsistency between this Letter (including Exhibits A and
B) and any plan, program, practice, personnel policy or procedure, employee
handbook, or agreement of or with the Company and you, this Letter (including
Exhibits A and B) shall control.

 

(b)               Survival. The provisions of Section 8 shall survive any
termination of your employment.

 

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(c)                Successors; Assignment. Neither party hereto may assign any
rights or delegate any duties under this Letter without the prior written
consent of the other party; provided, however, that (a) this Letter will inure
to the benefit of and be binding upon the successors and assigns of the Company
upon any sale of all or substantially all of the Company’s stock and/or assets,
or upon any merger, consolidation or reorganization of the Company with or into
any other corporation, all as though such successors and assigns of the Company
and their respective successors and assigns were the Company; and (b) this
Letter will inure to the benefit of and be binding upon your heirs, assigns or
designees to the extent of any payments due to you or them hereunder.

 

(d)               Governing Law. This Letter will be governed by and construed
in accordance with the law of the State of Illinois, and not its choice of law
rules, applicable to contracts made and to be performed entirely within that
State.

 

(e)                No Set-off or Mitigation. Your rights to payments under this
Letter will not be affected by any set-off, counterclaim, recoupment or other
right the Company may have against you or anyone else. You do not need to seek
other employment or take any other action to mitigate any amounts owed to you
under this Letter, and those amounts will not be reduced if you do obtain other
employment.

 

(f)                Notices. All notices, requests, demands and other
communications under this Letter must be in writing and will be deemed given (i)
when hand- delivered, (ii) on the first business day after the business day sent
from within the United States, if delivered by a nationally recognized overnight
courier or (iii) on the third business day after the business day sent if
delivered by registered or certified mail, return receipt requested, in each
case to the following address (or to such other address as may be specified by
notice that conforms to this Section 10(f)):

 

If to the Company, to:

FreightCar America, Inc.

Two North Riverside Plaza

Suite 1300

Chicago, Illinois 60606 Attention: Secretary

 

If to you, to your last address shown on the payroll records of the Company.

 

11.              Counterparts. This Letter may be executed in counterparts, each
of which will constitute an original and all of which, taken together, will
constitute one and the same instrument.

 

12.              Relocation. Following a reasonable period of time, you will
recommend a relocation plan to the Company’s Board of Directors for
consideration and approval. Until that time, your expenses for business travel,
including reasonable travel to and from your current home, will be reimbursed by
the Company, subject to the Company’s policy for substantiating such expenses.

 

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Very truly yours,

FreightCar America, Inc.

 

By:  /s/ Georgia L. Vlamis   Vice President, General Counsel, Corporate
Secretary and Human Resources     Accepted and agreed:       /s/ James R. Meyer
  James R. Meyer  

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT A

 

OPTION AWARD AGREEMENT

 

(See following pages.)

 

 

 

 

 

 

 

 

 

 

 

 

A-1

 

 

EXHIBIT B

 

EXECUTIVE SEVERANCE PLAN

 

(See following pages.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B-1