Exhibit 10.1

 

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July 9, 2013

Charles F. Avery, Jr.

 

  Re: Terms of Employment

Dear Chip:

This letter agreement (“letter”) sets forth the terms of your employment with
FreightCar America, Inc. (the “Company”). Commencing August 1, 2013, you will be
employed as the Company’s Vice President, Finance, Chief Financial Officer and
Treasurer, based at the Company’s offices in Chicago, Illinois, and reporting to
the Company’s President and Chief Operating Officer. 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 financial
officers of similar businesses as the Company. Your duties will also include
responsibility for the Information Technology organization. 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 (“Board”), corporate boards, provided that these
activities do not interfere with your duties to the Company.

This letter and your employment is for no specific term. Your employment may be
terminated at any time for any reason (or no reason), subject to the terms of
this letter below, by the Company or you upon notice to the other such party.

1. Salary. Beginning August 1, 2013, you will receive an annual base salary in
the amount of $300,000 (“Salary”), paid in accordance with payroll practices
applicable to senior executives. Your Salary will be reviewed by the Company
annually and may be increased (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 senior 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 annual cash incentive plan runs
concurrent with the Company’s

 

 

Two North Riverside Plaza

Suite 1300

Chicago, IL 60606 USA

312.928.0850

Fax 312.928.0890

www.freightcaramerica.com

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fiscal calendar which concludes on December 31st of each year. Your target Bonus
is 50% of your Salary, upon achievement of a target level of performance set
forth in the Bonus Plan, payable in cash or securities of the Company, as may be
determined under the Bonus Plan, 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 75% of your Salary. Should there be
Bonus payments for 2013 under the Bonus Plan, you will be eligible for
consideration for a partial Bonus payment for 2013 pro-rated to align with your
base salary earnings from your start date with the Company through 12/31/13.

3. Long-Term Incentive and Other Executive Compensation Plans. You will be
eligible to participate in all of the Company’s equity-based and cash-based
long-term incentive and other executive and deferred compensation plans on a
basis no less favorable than other similarly situated executives. Any awards
under these plans may be made from time to time in the sole discretion of the
Compensation Committee of the Board or the Board.

4. Sign-On Award. On August 1, 2013, you will be granted 7,000 restricted shares
of Company common stock under the Company’s 2005 Long Term Incentive Plan,
having such terms and conditions as are set forth in the restricted share award
agreement attached to this letter as Exhibit A.

5. 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 senior 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 an exception basis, the Company
will provide you with eight (8) paid vacation days for use as of your start date
with the Company which are to be fully exhausted no later than 12/31/13. 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.

6. Termination. Upon a termination of your employment for any reason, you will
be entitled to (i) your accrued Salary and accrued and unused vacation through
the date of termination, (ii) your prior 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 5. You
will also participate in and be entitled to benefits under the Company’s
Executive Severance Plan as then in effect, subject to your prior written
acknowledgement and acceptance of the terms and conditions of that plan. A copy
of the Executive Severance Plan as currently in effect is attached as Exhibit B
to this letter.

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7. Restrictive Covenants

(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.
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”
that are important to its business. For this purpose, “Company Materials” are
documents or other media or tangible items that contain or embody Confidential
Information or any other information 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

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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 agrees
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.

(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 7, you shall forfeit all of the applicable payments and benefits
described in this letter, and the Company shall have the right to recapture and
seek repayment of any such applicable payments and benefits under this
Agreement.

(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,

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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.

(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 7, 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 7, 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,
protectible interest of the Company.

(f) Blue Pencil. If any court determines that the covenants contained in this
Section 7, 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 7 shall
survive the termination of your employment.

8. Section 409A. Anything in this Agreement to the contrary notwithstanding, if
any payment(s) or benefit(s) under this Agreement 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).

9. 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. In the event of any inconsistency between this
letter (including Exhibits A and B) and any plan, program, practice or agreement
of or with the Company and you, this letter (including Exhibits A and B) shall
control.

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(b) Survival. The provisions of Section 7 shall survive any termination of your
employment.

(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 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 9(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.

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(g) 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.

Very truly yours,

FreightCar America, Inc.

 

By:  

/s/ Thomas P. McCarthy

      Senior Vice President – Human Resources

Accepted and agreed:

 

/s/ Charles F. Avery, Jr.