Document:

exv10w18

 

Exhibit 10.18

MULTI-YEAR PURCHASE AND SALE AGREEMENT

     This Multi Year Purchase and Sale Agreement (this “Agreement”) is made as of this
29th day of July, 2005, by and between The CIT Group/Equipment Financing, Inc.
(“Buyer”), a corporation organized under the laws of the State of Delaware, and American Railcar
Industries, Inc. (“Seller”), a corporation organized under the laws of the State of Missouri.
Seller is a manufacturer of railroad rolling stock that Buyer desires to purchase and Seller
desires to sell.

     For and in consideration of the premises and the mutual covenants contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller hereby agree as follows:

     1. Sale of Railcars; Scope of Work.

          (a) Subject to the provisions hereof, Seller agrees to manufacture and sell to Buyer railcars
of the types described in Exhibit A attached hereto (individually, a “Car,” and collectively, the
“Cars”), and Buyer agrees to purchase Cars from any such types. Except as otherwise provided in
this Agreement, Seller shall furnish all labor, materials and equipment required to manufacture the
Cars at its manufacturing facility or facilities listed on Exhibit A hereto (hereinafter referred
to as “Seller’s Plant”).

          (b) In each of calendar 2006, 2007 and 2008 (each, an “Agreement Year”), Seller hereby offers
to sell to Buyer up to four thousand (4,000) Cars (the “Offered Quantity”) consisting of any
combination and number of types identified on Exhibit A hereto (“Offered Car Types”). Buyer agrees
to order from Seller in each Agreement Year pursuant to the terms of one or more schedules (each, a
“Schedule”) and one or more purchase orders (each, a “Purchase Order”) of not less than three
thousand (3,000) Cars (“Railcar Quantity Obligations”) from among the Offered Car Types for
delivery in each Agreement Year. The obligation of Seller to offer and the obligation of Buyer to
purchase Cars in any Agreement Year are subject to the provisions of this Agreement. Buyer shall
not be obligated to order any percentage or number of Cars from any particular Offered Car Types
provided that Buyer orders Cars which conform to one or more Offered Car Types. The parties shall
execute a separate Schedule with respect to specific Car purchases under this Agreement. Each
Schedule shall incorporate the provisions of this Agreement and the numbers and particulars of the
Cars to be ordered, delivery dates, any special terms and pricing. If pricing is not agreed or
cannot then be determined, the pricing terms may be deferred to resolution under the provisions of
this Agreement.

          (c) The purchase and sale obligations set forth in paragraph (b) of this Section 1 in any
Agreement Year shall depend on the then current American Railway Car Institute’s (“ARCI”) most
recent reported quarterly backlog during the term of this Agreement. (For purposes of reference,
the ARCI 4th quarter backlog for 2004 was in excess of 58,000 railcars.) If the most recent ARCI
reported quarterly backlog for any quarter during the term of this Agreement falls below 45,000
railcars but remains above 35,000 railcars, Buyer shall have the right, on two hundred forty (240)
days’ prior notice, to cancel any pending Purchase Orders or reduce subsequent Railcar Quantity
Obligations in the then current Agreement Year, in either

 

 

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case such that actual purchases by Buyer would not fall below 50% of that Agreement Year’s
original Railcar Quantity Obligations. If the ARCI quarterly backlog in any calendar quarter last
reported falls below 35,000 railcars, Buyer shall have the right to cancel or suspend all, or any,
pending Purchase Orders or remaining Railcar Quantity Obligations under this Agreement upon one
hundred eighty (180) days’ written notice to Seller (or lesser notice as agreed to by both Parties
in any case). If, during the term of this Agreement, the ARCI quarterly backlog again reaches
35,000 railcars, Buyer may elect, on ninety (90) days’ prior notice, to activate suspended Purchase
Orders or to place new Purchase Orders up to the Offered Quantity in each Agreement Year or pro
rata for any remaining partial Agreement Year. Buyer’s right to reactivate and Seller’s obligation
to honor such reactivation shall depend on Seller‘s available production capacity as at
the date of Seller’s receipt of Buyer’s notice of reactivation. * * * In the event Buyer elects to
cancel any pending Purchase Order under this paragraph within one hundred twenty (120) days of the
delivery date thereunder, Seller may require, by written notice to Buyer, that Buyer purchase from
Seller, at * * *, all material which Seller had theretofore purchased and identified to such
cancelled Purchase Orders. In the event Buyer purchases such material following a cancellation,
Buyer may elect to store such material at Seller’s facility for up to * * * at * * *. Buyer may at
any time have such material removed from Seller’s facility or resell such material to Seller at
cost for use in manufacture of Cars subsequently ordered by Buyer pursuant to a Purchase Order
under this Agreement.

     2. Purchase Price.

          (a) The actual purchase price (“Purchase Price”) shall be * * *. The base purchase price of
the Cars (the “Base Purchase Price”) as of July 2005 for each Offered Car Type shall be as set
forth in Exhibit A hereto. The Base Purchase Price is firm and subject to escalation or other
adjustment after the date of this Agreement only as provided in this Agreement. The Base Purchase
Price shall be * * *. The Base Purchase Price, as increased or decreased pursuant to the
provisions of this Agreement, is referred to as the “Adjusted Purchase Price.” Neither the
Adjusted Purchase Price nor any Market Price includes any state or local sales, use or other
similar taxes, and any such sales, use or similar tax arising out of this transaction, if any,
shall be paid by Buyer together with the Base Purchase Price. Seller shall sell Cars to Buyer at
the lesser of the Adjusted Purchase Price or the best current market price (“Market Price”)
determined on a “most favored nations” basis.

          (b) At the time of execution of each Schedule and Purchase Order, Seller shall provide Buyer
the Market Price for the delivery period quoted. “Most favored nations” pricing, for the purpose
of this Agreement, is defined as the lowest price of an Offered Car Type offered by Seller to the
marketplace in general.

          (c) Seller shall also inform Buyer in connection with the execution of each Schedule, of
Seller’s estimated adjustments to the relevant Base Purchase Price. Seller shall inform Buyer
promptly of its final determination of the Adjusted Purchase Price and, in any event, prior to
rendering any Seller’s invoice with respect to such Schedule. * * *. No adjustments shall be made
in any Price for changes in any of the following * * *.

          (d) * * *

 

 

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     3. Specifications* * * . The. Cars shall be constructed in a good and
workmanlike manner in accordance with the specifications described on Exhibit C hereto, as the same
may be hereafter amended or supplemented from time to time (the
“Specifications”). The
Cars will be built in accordance with all then current Federal Railroad Administration, American
Association of Railroads and United States Department of Transportation design, testing and
approval requirements for new Cars.

     Seller shall construct and equip each Car with components and appurtenances identified on * *
* attached hereto as Exhibit D. * * *

     4. Buyer’s
Option to Modify Order. Within ten (10) days of the placement of
each Purchase Order, Seller shall give Buyer written notice of the date on which Seller will
commence manufacture of each type of Car (“Manufacture Start Date”). Buyer will have the option to
change either the quantity or type of Car to be purchased subject to the following conditions:

          (a) The option must be exercised no later than * * * prior to any Manufacture Start Date by
Buyer notifying Seller in writing of the change.

          (b) * * *

               (iii) Seller may reasonably modify the delivery schedule in the event that Seller requires
additional time to manufacture the Cars with respect to which the order has been changed.

          (c) * * *

               (iv) Seller may reasonably modify the delivery schedule in the event that it requires
additional time to manufacture the Cars with respect to which the order has been changed.

     5. Delivery and Terms of Payment

          (a) Seller shall (i) dedicate, for Buyer’s benefit, sufficient production capacity toward the
production and delivery of * * *

          (b) If, with respect to Offered Car Types covered under this Agreement, Seller is unable to
meet engineering specifications required by Buyer, the quantity of Cars that Seller is unable to
provide will be deducted from the Railcar Quantity Obligations. From time to time in any Agreement
Year of the term of this Agreement, Seller * * * .

          (c) Unless otherwise agreed in writing, delivery of the Cars shall be F.O.B. Seller’s Plant
not later than * * * following the date of the Purchase Order therefor. After a Certificate of
Acceptance (as hereinafter defined) has been executed with respect to a Car, such Car will be
shipped from Seller’s Plant to the railroad interchange designated in Exhibit A hereto (the
“Interchange Point”), and Seller shall invoice Buyer for payment of the Purchase Price. Unless
otherwise agreed, Seller shall, at its expense, deliver the Cars to the Interchange Point and all
subsequent switching and transportation charges shall be for Buyer’s account. Payment by Buyer of
Seller’s invoice shall be due * * * after Buyer’s receipt thereof Title to a Car shall pass

 

 

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to Buyer upon payment in full for such Car. Following receipt of payment for a Car, Seller
shall deliver to Buyer a bill for sale for such Car substantially in the form of Exhibit E hereto.

     6. Force Majeure. In the event that Seller is unable to deliver a Car to Buyer within
* * * after the date of a Purchase Order therefor as a result of a Force Majeure Event, Buyer shall
have the option to notify Seller that it will not purchase such Car(s) as to which delivery has
been delayed, and the Railcar Quantity Obligations in that Agreement Year shall be reduced by the
number of Cars that Seller is unable to deliver, the Purchase Price will be reduced accordingly for
each Car that Buyer has elected not to purchase, and such omitted Car will not be deemed a “Car”
under this Agreement. As used herein, a “Force Majeure Event” shall mean and include any delays in
the delivery of any Car caused by strikes, lockouts (other than lockouts by Seller) or other labor
disturbances; shortages or late delivery of material (due to no fault of Seller); unavailability,
interruptions or inadequacy of fuel supplies; acts of God; war, preparation for war or other acts
or interventions the military or other governmental agencies; governmental regulations; priorities
given to defense orders; riot, embargoes, sabotage, act of terrorism, vandalism, malicious
mischief, landslides, floods, hurricanes, earthquakes, collisions or fires; delays of
subcontractors or of carriers by land, sea or air (due to no fault of Seller); quarantine
restrictions, shortages of labor or components and any other circumstances or cause
beyond Seller’s reasonable control.

     7. Inspection and Acceptance; Failure to Deliver. Seller shall give Buyer, and/or its
designated agent, reasonable opportunity to inspect the Cars during construction at Seller’s Plant
during normal operating hours or at such other time as may be mutually agreed. Prior to shipment
of a Car, Buyer and Seller shall mutually agree on a date for Buyer’s inspection of such completed
Car and the execution of a certificate of acceptance (“Certificate of Acceptance”) in the form of
Exhibit F hereto. If Buyer determines that a Car appears to have been manufactured according to
the applicable specifications and is in acceptable condition for delivery (hereinafter, a
“Conforming Car”), Buyer shall execute a Certificate of Acceptance. In the event Buyer does not
attend such inspection, or Buyer and Seller cannot mutually agree on an inspection date to occur
within three (3) days of the date of shipment of the Car, Seller is authorized and empowered to
inspect the Car and execute a Certificate of Acceptance on Buyer’s behalf if it determines that the
Car is a Conforming Car. If Buyer notifies Seller that a Car does not conform to the
specifications applicable to that Car (hereinafter a “Non-Conforming Car”), it shall be Seller’s
obligation to make the Car a Conforming Car. The execution of a Certificate of Acceptance shall
not preclude Buyer from asserting a claim for a breach of Seller’s Car warranty contained in
Section 9 herein within the applicable warranty period or that a Car was not manufactured in
accordance with the applicable Specifications.

     If Seller is unable to provide a Conforming Car within * * * of the scheduled delivery date
for any reason whatsoever other than a Force Majeure Event or as a result of a delay caused by
Buyer,* * *.

     8. No Liens or Claims of Third Parties. Seller hereby represents and warrants to
Buyer that: (a) Seller is the sole owner of the Cars and has good and marketable title to all of
the Cars, free and clear of all liens, claims, demands, charges, security interests, privileges,
pledges or other encumbrances (“Liens”) other then the Liens created by Buyer and that Seller will
convey to Buyer good and marketable title to the Cars being sold free and clear of all Liens of

 

 

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every nature and kind whatsoever other than Liens created by Buyer; and (b) neither Seller’s
rights in the Cars, nor the Cars, are subject to any contract, agreement, or understanding, whether
written or oral, which provides for any remarketing, residual sharing or similar arrangement or
which would be binding upon or enforceable against Buyer, the Cars, or the proceeds of any sale,
lease or any disposition of any thereof.

     9. Seller’s Car Warranty; Car Cleaning. Seller warrants that each Car will be free
from defects in material and workmanship under normal use and service for a period of * * * from
the Closing Date and will be manufactured in accordance with the applicable Specifications. With
respect to parts and materials manufactured by others and incorporated by Seller in the Cars, such
parts and material shall be covered only by the warranty, if any, of the manufacturer thereof, and
Seller shall assign to Buyer any such warranty, to the extent assignable by Seller* * * . Seller’s
obligations with respect to any Car for breach of this warranty is limited at its option, to either
a credit or refund of the price of any non-conforming or defective component (or Car) or
replacement or repair of such non-conforming or defective component (or Car) at Seller’s Plant or
at such other location as Seller shall designate in order to minimize Purchaser’s transportation
expenses. Seller’s agreement set forth above to refund, repair or replace defective parts and
materials (other than with respect to parts and materials manufactured by others and incorporated
by Seller in the Cars, the remedy for which is provided for above in this Section 9) shall be
Buyer’s sole and exclusive warranty liability with respect to the Cars that are defective in any
respect or that fail to conform to any express or implied warranty, and Seller will not in any
event be liable for the cost of any labor or transportation charges expended on or in connection
with the repair, replacement or return of any component (or Car) or, except as provided herein, for
any special, indirect, incidental, or consequential damages.

     THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. BUYER ACKNOWLEDGES THAT ITS SOLE
REMEDY FOR BREACH OF THIS WARRANTY BY SELLER IS AS PROVIDED ABOVE AND, EXCEPT AS PROVIDED HEREIN,
SELLER SHALL NOT BE LIABLE FOR ANY SPECIAL, INDIRECT OR OTHER INCIDENTAL OR CONSEQUENTIAL INJURY OR
DAMAGE; PROVIDED, HOWEVER, NOTHING CONTAINED HEREIN SHALL LIMIT SELLER’S LIABILITY TO BUYER FOR
CLAIMS OF CONTRIBUTION, IN TORT, PRODUCTS LIABILITY, OR ARE BASED ON ACTS OR OMISSIONS OF SELLER
WITHOUT ANY NEGLIGENCE ON THE PART OF BUYER.

     THIS WARRANTY IS CONDITIONED UPON COMPLIANCE BY BUYER AND ALL OTHER USERS OF THE CARS WITH
OPERATION, LOADING, USE, HANDLING, MAINTENANCE AND STORAGE IN ACCORDANCE WITH GOOD COMMERCIAL
PRACTICES OF THE RAILROAD INDUSTRY. SELLER SHALL NOT BE RESPONSIBLE FOR FAILURES CAUSED BY
MISLOADING, OVERLOADING, OVERHEATING, IMPROPER CLEANING, PHYSICAL ABUSE, ACCIDENT, DERAILMENT OR
FOR OTHER DAMAGE CAUSED BY FIRE, FLOOD OR OTHER EXTERNAL CONDITIONS UNRELATED TO THE MANUFACTURE OF
THE CAR, OR FOR NORMAL WEAR AND TEAR.

     In general, Cars shall be delivered clean and free from debris or other matter. Certain of

 

 

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the Cars may require that particular cleaning procedures be followed. Any such procedures and
the Cars to which such procedures apply shall be described in Exhibit G hereto. Notwithstanding
the fact that a Certificate of Acceptance has been executed with
respect to a Car, if a Car is not
clean prior to first load by Buyer’s customer so as to make it suitable for loading the commodities
described on Exhibit G hereto, then Buyer and Seller may jointly inspect the Car or Cars in
question. Seller will either pay, or reimburse Buyer, for the expenses to clean any such Car, up
to a maximum of * * *per car, provided, however, Seller’s payment or reimbursement obligation will
not apply if the Car is not clean because foreign matter was introduced while in transit or through
loading operations or other actions of third parties.

     10. Sales Tax. Buyer shall pay, and shall indemnify and hold Seller harmless on an
after-tax basis against, all sales, use, transfer or similar taxes (and any fines, penalties,
additions to tax or interest relating thereto), if any, imposed or assessed on or with respect to
the sale and the transfer of the Cars as contemplated herein.

     11. No Finder. Each party represents and warrants to the other that neither it not
any party acting on its behalf has paid, or become obligated to pay, or committed any other party
to pay any fee or commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement.

     12. Patents. In lieu of any other warranty by Seller against patent infringement,
statutory or otherwise, Seller agrees to defend, hold harmless and indemnify Buyer against all
claims, demands, losses, suits, damages, liabilities and expenses (including reasonable attorneys’
fees) arising out of any suit, claim, or action for actual or alleged direct or contributory
infringement of, or inducement to infringe, any patent, trademark, copyright or other intellectual
property right by reason of the manufacture, use or sale of the Cars unless such actual or alleged
infringement arises out of the compliance with designs, instructions or specifications furnished by
Buyer. In case the Cars or any part thereof are held to constitute such infringement or the use
thereof is enjoined, Seller shall, at its option, take one of the following three corrective
actions (each, a “Corrective Action”): (a) procure for Buyer the right to continue using the Cars
or part thereof, (b) replace the Cars or part thereof with a non infringing Car or part thereof, or
(c) take such measures as may be required to make the Cars or part thereof non infringing, in which
event Buyer shall deliver the Cars to Seller for that purpose. In the event that Seller fails to
effect a Corrective Action within * * * after Buyer’s written request, Seller shall * * *. The
foregoing states Seller’s entire liability with respect to any patent infringement by the Cars or
part thereof.

     13. Expenses. Whether or not the transactions contemplated hereby are consummated,
each party hereto shall pay its own expenses in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, the fees and disbursements of its counsel.

     14. Entire Agreement. This Agreement and the Exhibits hereto contain the entire
agreement and understanding between the parties hereto with respect to the subject matter contained
herein and therein and supersede all prior agreements, understandings and representations; oral or
written. No modification, limitation or release of any terms and conditions contained herein or in
the Exhibits hereto shall be made except by mutual agreement to that effect in writing and signed
by the parties hereto.

 

 

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     15. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF
NEW YORK, SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THE RIGHTS AND
LIABILITIES OF THEPARTIES
HEREUNDER SHALL BE GOVERNED BY, THE LAWS OF SUCH STATE, WITHOUT REGARD TO ITS CONFLICTS OF LAW
DOCTRINE, AND THIS AGREEMENT SHALL BE DEEMED IN ALL RESPECTS TO BE A CONTRACT OF SUCH STATE. BOTH
PARTIES CONSENT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN NEW YORK, NEW YORK,
FOR ANY ACTION THAT MAY BE BROUGHT UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     16. Notice. All communications under this Agreement shall be in writing or by a
telecommunications device capable of creating a written record, and any such notice shall become
effective (a) upon personal delivery thereof, including, without limitation, by overnight mail and
courier service, (b) five (5) days after the date on which it shall have been mailed by United
States mail (by certified mail, postage prepaid, return receipt requested), or (c) in the case of
notice by such a telecommunications device, when properly transmitted, addressed to each party at
the following addresses:

	 	 	 
	 

	 	If to Seller:

	 
	 	 
	 
	 	 
	 

	 	American Railcar Industries, Inc.

100 Clark Street

St. Charles, MO 63301

Attention: Alan C. Lullman, Senior Vice President

Facsimile No.: (636) 940-600

	 
	 	 
	 
	 	 
	 

	 	If to Buyer:

	 
	 	 
	 
	 	 
	 

	 	The CIT Group/Equipment Financing, Inc.

10 LaSalle Street

Chicago, IL 60603

Attn: Kenneth Hofacker, Vice President Mechanical

Operations

Facsimile No.: (312) 223-9980

or to any other address as may be given by any party to the other by notice pursuant
to the provisions of this Section 16.

     17. Waivers and Amendments; Non-Contractual Remedies; Preservation of
Remedies. This Agreement may be amended, superseded, modified, supplemented or terminated,
and the terms hereof may be waived, only by written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof. No waiver on the part
of any party of any such right, power or privilege, nor any single or partial exercise of any such
right, power or privilege. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or in equity.

 

 

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     18. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns. No assignment of
this Agreement or of any rights hereunder shall relieve the assigning party of any of its
obligations or liabilities hereunder. This Agreement, and the certificates, schedules, annexes and
other documents executed and delivered at the closing in connection herewith are the complete
agreement of the parties regarding the subject matter hereof and thereof and supersede all prior
understandings (written or oral), communications and agreements.

     19. Counterparts. This Agreement may be executed by the parties in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.

     20. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law, such provision will
be effective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision and the remaining provisions of this Agreement, and the remainder of
such provision and the remaining provisions of this Agreement shall be interpreted, to the maximum
extent possible, so as to conform to the original intent of this Agreement.

     21. Indemnification. Each party agrees that it shall indemnify and hold harmless the
other party from and against any loss, claim, damage or expense (including attorneys’ fees and
costs) attributable to a breach by such party of any of its obligations, representations or
warranties contained herein.

     22. Non-Disclosure. Seller agrees that the information contained in this Agreement as
well as other information provided to Seller by Buyer in connection with Buyer’s purchase of the
Cars (including but not limited to the price, type and number of railcars to be purchased,
particular configurations, designs or modifications, delivery locations and identity of Buyer’s
customers and parties to whom the Cars are to be delivered) is confidential and, except as provided
in this Agreement or required by Seller in order to fulfill the terms and conditions of Buyer’s
purchase, Seller shall not disclose any thereof to any third party. Seller shall similarly treat
any information provided to Seller by Buyer in connection with the purchase of the Cars prior to or
subsequent to the date of this Agreement as confidential in accordance with the terms hereof. All
of the foregoing is hereinafter referred to as the “Confidential Information.” In particular,
Seller agrees that it will not disclose any of the Confidential Information to any affiliate of
Seller engaged in the leasing of railcars or in the management of railcars or to the employees,
officers or directors of any such affiliate.

     Neither party, without the prior written consent of the other, shall issue any press release
or make any other public announcement or statement relating to Buyer’s purchase of the Cars or
containing any Confidential Information.

     Notwithstanding the foregoing, Confidential information shall not include: (a) such
information as is required to be made to UMLER and the Association of American Railroads, (b) such
information as is required to be disclosed by law, court or governmental agency or authority, (c)
such information as is required by either party’s accountants, auditors, insurance

 

 

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carriers or other legal or financial advisors, and (d) information that becomes known to a
party on a non-confidential basis from a source as to which the party has no actual knowledge that
such source was bound by a confidentiality agreement with respect to such information.

     Seller shall take reasonable security precautions, at least as great as the precautions it
takes to protect its own confidential information, to keep confidential the Confidential
Information, and will not otherwise use such Confidential Information for the benefit of any
affiliate engaged in the leasing or management of railcars or other third party.

     Seller shall notify Buyer immediately upon discovery of any unauthorized use or disclosure of
Confidential Information, and will cooperate with Buyer in every reasonable way to help Buyer
regain possession and control of the Confidential Information, and prevent its further unauthorized
use. Seller acknowledges that monetary damages may be inadequate to protect Buyer against actual
or threatened breach of this Agreement with respect to the Confidential Information. Accordingly,
Seller agrees that Buyer shall be entitled to seek injunctive relief for any such breach of
Seller’s obligations or representations under this Agreement with respect to the Confidential
Information. BUYER STIPULATES ACKNOWLEDGES AND AGREES THAT SELLER SHALL NOT BE LIABLE FOR ANY
SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES FOR ANY BREACH OF THIS AGREEMENT WITH RESPECT TO THE
CONFIDENTIAL INFORMATION BY SELLER OR BREACH OF SELLER’S REPRESENTATIONS HEREIN.

     23. Drawings. Seller agrees that all drawings and technical material, including
specifications, descriptions and tolerances relating to the Cars of any components thereof supplied
by Seller to Buyer (the “Drawings”), are the exclusive properly of Seller and contain confidential
and proprietary information. By accepting the Drawings from Seller, Buyer agrees to limit its use
of the Drawings solely to matters relating to Buyer’s use of the Cars, including the repair and
maintenance of the Cars. Buyer further agrees not to disclose the Drawings, or to disclose any
information contained in or derived from the Drawings to any person, including, but not limited to,
any other manufacturer of Cars or components; provided, however, in the event Buyer
sells any of the Cars, Buyer may deliver any Drawings relating to such Cars to the purchaser.
Seller agrees on Buyer’s written request, to provide Drawings to any car repair shop reasonably
satisfactory to Seller or other party reasonably satisfactory to Seller (other than another
manufacturer of Cars or components) provided that such car repair shop or other party agrees in
advance, in writing, to be bound by confidentiality provisions similar to those contained herein
and reasonably satisfactory to Seller.

     24. Termination. Without prejudice to any other right or remedy:

          (a) Either party may terminate this Agreement by written notice to the other party in the
event that:

               (i) the other party should breach this Agreement and such breach shall not be remedied within
* * * of the giving of notice of the breach; or

               (ii) a petition or complaint in bankruptcy or for reorganization is filed by or against the
other party or the other party becomes insolvent.

 

 

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     25. Paragraph Headings. The paragraph headings contained in this Agreement are for
convenience of reference only and shall not effect in any way the meaning or interpretation of this
Agreement.

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     IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the day and year first
hereinabove set forth.

	 	 	 
	 

	 	SELLER:
	 
	 	 
	 

	 	AMERICAN RAILCAR INDUSTRIES, INC.
	 
	 	 
	 
	 	 
	 

	 	By: /s/ James J. Unger

Title: President CEO
	 
	 	 
	 

	 	BUYER:
	 
	 	 
	 

	 	THE CIT GROUP/EQUIPMENT

FINANCING, INC.
	 
	 	 
	 
	 	 
	 

	 	By: [ILLEGIBLE]                                        

Title: 07-29-05

 

 

EXHIBIT A TO

MULTI-YEAR PURCHASE AND SALE AGREEMENT

OFFERED CAR TYPES

JULY 2005 BASE PURCHASE PRICES

DESCRIPTION

Covered Hoppers:

3,256 cu.
ft suitable for cement service - **** each

5,200 cu ft suitable for grain - **** each.

5,400 cu ft suitable for grain - **** each

6,224 cu ft suitable for plastic pellets - **** each

5,750 cu ft pressure differential covered hopper - **** each

Tanks:

25,500
gallons general purpose - **** each

30,000 gallons general purpose - **** each

33,600 gallons pressure - **** each

If Buyer successfully executes lease arrangements with customers for specialty tanks (those outside
the above three tank Offered Car Types) and Buyer elects to utilize Seller as the builder, those
tanks may count toward the Railcar Quantity Obligations.

The above prices include current estimate of surcharges and lining for the covered hoppers for
plastic pellets and for the pressure differential covered hoppers. These selling prices are
subject to steel surcharges, specialty surcharges and material cost increases applicable at time of
production.

If Buyer documents that Seller’s lowest Purchase Price is * * *, Buyer may exit from its Railcar
Quantity Obligations by that amount unless Seller chooses to match the lower price.

MANUFACTURING LOCATION:

Seller’s Plant, Paragould, Arkansas, or

Marmaduke, Arkansas

INTERCHANGE POINT:

To be included in each Purchase Order as applicable

EXHIBIT A

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EXHIBIT B TO

MULTI-YEAR PURCHASE AND SALE AGREEMENT

APPROVED AUDITORS LIST

Stephen J. Petracek of Garibaldi Consulting Group

 

 

Confidential Treatment has been requested for portions 

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[Multi-Year Purchase and Sale Agreement]

EXHIBIT D TO

MULTI-YEAR PURCHASE AND SALE AGREEMENT

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EXHIBIT D

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[Multi-Year Purchase and Sale Agreement]

EXHIBIT E TO

MULTI-YEAR PURCHASE AND SALE AGREEMENT

WARRANTY BILL OF SALE

     American Railcar Industries, Inc., a Missouri corporation (the “Seller”), in consideration of
the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, from THE CIT GROUP/EQUIPMENT FINANCING, INC., a
Delaware corporation (“Buyer”), hereby grants, sells, assigns, conveys, transfers, delivers and
sets over unto Buyer, all of Seller’s right, title and interest in and to the equipment identified
in Schedule 1 attached hereto and made a part hereof, together with all parts, appurtenances or
other property attached or installed on such items of equipment (collectively with and including
such parts, appurtenances and other property, the “Equipment”).

     To have and to hold to Buyer and its successors and assigns forever.

     This Warranty Bill of Sale is being delivered in connection with the Multi-Year Purchase and
Sale Agreement between Seller and Buyer, dated as of July 29, 2005. Seller hereby warrants to
Buyer and its successors and assigns on the date hereof that Seller is the lawful owner of good and
marketable legal and beneficial title to the Equipment, that Seller has the right to sell the same,
that good and marketable title to the Equipment is conveyed to Buyer free and clear of all claims,
liens, security interests, encumbrances and rights of others of any nature whatsoever arising prior
to the delivery of the Equipment hereunder, except any claims, liens, security interests and other
encumbrances arising from, through or under Buyer, and Seller covenants that it shall warrant and
defend such title to the Equipment against all such claims and demands whatsoever.

     IN WITNESS WHEREOF, Seller has caused this Warranty Bill of Sale to be duly executed by its
officer thereunto duly authorized on this       day of                     , 2000     .

	 	 	 
	 

	 	AMERICAN RAILCAR INDUSTRIES, INC.
	 
	 	 
	 
	 	 
	 

	 	By:                                                            

Name:

Title:

	 	 	 
	STATE OF                    
 

COUNTY OF                    

	 	)

)

)

     On this       day of                     , 200_, before me personally appeared                     , to me
personally known, who, being by me duly sworn, says that he is a                      of American
Railcar Industries, Inc., and that the foregoing Warranty Bill of Sale was signed on

EXHIBIT E

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[Multi-Year Purchase and Sale Agreement]

behalf of said corporation by authority of its Board of Directors. Further, he acknowledged
that the execution of the foregoing Warranty Bill of Sale was the free act and deed of said
corporation.

	 	 	 
	 

	 	                                                            

Notary Public

[Notarial Seal]

My commission expires:                    

EXHIBIT E

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SCHEDULE 1 TO

WARRANTY BILL OF SALE

EQUIPMENT

 

 

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[Multi-Year Purchase and Sale Agreement]

EXHIBIT F TO

MULTI-YEAR PURCHASE AND SALE AGREEMENT

CERTIFICATE OF ACCEPTANCE

	 	 	 
	Contract/Order No.:                              

	 	Certificate No.                                         
	 
	 	 
	Place Accepted:                                        
	 	 
	Date Accepted:                                        
	 	 

I, the duly authorized representative of The CIT Group/Equipment Financing, Inc. (“Buyer”), under
the Multi-Year Purchase and Sale Agreement, dated July 29, 2005 (the “Agreement”), for the purpose
of accepting and inspecting the following Cars, hereby certifies that the Cars have been inspected,
approved, delivered, received and accepted on behalf of Buyer or its assigns and found to be in
apparent good order and running condition and in apparent conformance with applicable
specifications and drawings. The execution of this Certificate of Acceptance shall not relieve
American Railcar Industries, Inc. (“Seller”), of its duty or decrease its responsibility to produce
and deliver the Cars in accordance with the terms, including warranties, contained in the
Agreement.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Description of Cars	 	Quantity	 	 	Light Weight	 	 	Reporting Marks	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

Capitalized terms used herein and not otherwise defined shall have the meaning given to them in the
Agreement.

 

Authorized Representative of The CIT

Group/Equipment Financing, Inc.

EXHIBIT F

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[Multi-Year Purchase and Sale Agreement]

EXHIBIT G TO

MULTI-YEAR PURCHASE AND SALE AGREEMENT

 

 

Special Cleaning Procedures: To be included in each Purchase Order as applicable.

 

 

Commodities to be Loaded: To be included in each Purchase Order as applicable.<PAGE>
                                                                   Exhibit 10.19

                             AMERICAN RAILCAR, INC.
                           2005 EQUITY INCENTIVE PLAN

1. Purpose and Eligibility. The purpose of this 2005 Equity Incentive Plan (the
"Plan") of American Railcar, Inc., a Delaware corporation (the "Company") is to
provide stock options, stock issuances, stock units and other equity interests
in the Company (each, an "Award") to (a) employees, officers, directors,
consultants and advisors of the Company and its Parents and Subsidiaries, and
(b) any other Person who is determined by the Board to have made (or is expected
to make) contributions to the Company. Any person to whom an Award has been
granted under the Plan is called a "Participant." Additional definitions are
contained in Section 10.

2. Administration.

      a. Administration by Board of Directors. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board, in its sole
discretion, shall have the authority to grant and amend Awards, to adopt, amend
and repeal rules relating to the Plan and to interpret and correct the
provisions of the Plan and any Award. The Board shall have authority, subject to
the express limitations of the Plan, (i) to construe and determine the
respective Stock Option Agreement, Awards and the Plan, (ii) to prescribe, amend
and rescind rules and regulations relating to the Plan and any Awards, (iii) to
determine the terms and provisions of the respective Stock Option Agreements and
Awards, which need not be identical, (iv) to initiate an Option Exchange
Program, and (v) to make all other determinations in the judgment of the Board
of Directors necessary or desirable for the administration and interpretation of
the Plan. The Board may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any Stock Option Agreement or Award in the
manner and to the extent it shall deem expedient to carry the Plan, any Stock
Option Agreement or Award into effect and it shall be the sole and final judge
of such expediency. All decisions by the Board shall be final and binding on all
interested persons. Neither the Company nor any member of the Board shall be
liable for any action or determination relating to the Plan.

      b.    Appointment  of  Committee.  To the extent  permitted by
applicable law, the Board may delegate any or all of its powers under the
Plan to one or more committees or subcommittees of the Board (a "Committee").
All references in the Plan to the "Board" shall mean such Committee or the
Board.

      c. Delegation to Executive Officers. To the extent permitted by applicable
law, the Board may delegate to one or more executive officers of the Company the
power to grant Awards and exercise such other powers under the Plan as the Board
may determine, provided that the Board shall fix the maximum number of Awards to
be granted and the maximum number of shares issuable to any one Participant
pursuant to Awards granted by such executive officers.

      d. Applicability of Section Rule 16b-3. Notwithstanding anything to the
contrary in the foregoing if, or at such time as, the Common Stock is or becomes
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any successor

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statute, the Plan shall be administered in a manner consistent with Rule 16b-3
promulgated thereunder, as it may be amended from time to time, or any successor
rules ("Rule 16b-3"), such that all subsequent grants of Awards hereunder to
Reporting Persons, as hereinafter defined, shall be exempt under such rule.
Those provisions of the Plan which make express reference to Rule 16b-3 or which
are required in order for certain option transactions to qualify for exemption
under Rule 16b-3 shall apply only to such persons as are required to file
reports under Section 16 (a) of the Exchange Act (a "Reporting Person").

      e. Applicability of Section 162 (m). Those provisions of the Plan which
are required by or make express reference to Section 162 (m) of the Code or any
regulations thereunder, or any successor section of the Code or regulations
thereunder ("Section 162 (m)") shall apply only upon the Company's becoming a
company that is subject to Section 162 (m). Notwithstanding any provisions in
this Plan to the contrary, whenever the Board is authorized to exercise its
discretion in the administration or amendment of this Plan or any Award
hereunder or otherwise, the Board may not exercise such discretion in a manner
that would cause any outstanding Award that would otherwise qualify as
performance-based compensation under Section 162 (m) to fail to so qualify under
Section 162 (m).

3     Stock Available for Awards.

      a. Number of Shares. Subject to adjustment under Section 3(c), the
aggregate number of shares of common stock of the Company (the "Common Stock")
that may be issued pursuant to the Plan is one million 1,000,000. If any Award
expires, or is terminated, surrendered or forfeited, in whole or in part, the
unissued Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan. If an Award granted under the Plan shall expire
or terminate for any reason without having been exercised in full, the
unpurchased shares subject to such Award shall again be available for subsequent
Awards under the Plan, and if shares of Common Stock issued pursuant to the Plan
are repurchased by, or are surrendered or forfeited to, the Company at no more
than the price paid for such shares, such shares of Common Stock shall again be
available for the grant of Awards under the Plan. Shares issued under the Plan
may consist in whole or in part of authorized but unissued shares or treasury
shares.

      b. Per-Participant Limit. Subject to adjustment under Section 3(c), no
Participant may be granted Awards during any one fiscal year to purchase more
than two hundred and fifty thousand 300,000 shares of Common Stock.

      c. Adjustment to Common Stock. Subject to Section 7, in the event of any
stock split, reverse stock split stock dividend, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off, split-up, or other similar change in
capitalization or similar event (other than any stock split effected in
connection with the merger of American Railcar Industries, Inc., a Missouri
Corporation with and into the Corporation), (i) the number and class of
securities available for Awards under the Plan and the per-Participant share
limit, (ii) the number and class of securities, vesting schedule and exercise
price per share subject to each outstanding Option, (iii) the repurchase price
per security subject to repurchase, and (iv) the terms of each other outstanding

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Award shall be adjusted by the Company (or substituted Awards may be made if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is appropriate.

4. Stock Options.

      a. General. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option and the shares of Common
Stock issued upon the exercise of each Option, including, but not limited to,
vesting provisions, repurchase provisions and restrictions relating to
applicable federal or state securities laws. Each Option will be evidenced by a
Stock Option Agreement, consisting of a Notice of Stock Option Award and a Stock
Option Award Agreement (collectively, a "Stock Option Agreement").

      b. Incentive Stock Options. An Option that the Board intends to be an
incentive stock option (an "Incentive Stock Option") as defined in Section 422
of the Code, as amended, or any successor statute ("Section 422"), shall be
granted only to an employee of the Company and shall be subject to and shall be
construed consistently with the requirements of Section 422 and regulations
thereunder. The Board and the Company shall have no liability if an Option or
any part thereof that is intended to be an Incentive Stock Option does not
qualify as such. An Option or any part thereof that does not qualify as an
Incentive Stock Option is referred to herein as a "Nonstatutory Stock Option" or
"Nonqualified Stock Option."

      c. Dollar Limitation. For so long as the Code shall so provide, Options
granted to any employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to qualify as Incentive Stock Options
shall not qualify as Incentive Stock Options to the extent that such Options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate fair market value (determined as of
the respective date or dates of grant) of more than $100,000. The amount of
Incentive Stock Options which exceed such $100,000 limitation shall be deemed to
be Nonqualified Stock Options. For the purpose of this limitation, unless
otherwise required by the Code or regulations of the Internal Revenue Service or
determined by the Board, Options shall be taken into account in the order
granted, and the Board may designate that portion of any Incentive Stock Option
that shall be treated as Nonqualified Option in the event that the provisions of
this paragraph apply to a portion of any Option. The designation described in
the preceding sentence may be made at such time as the Committee considers
appropriate, including after the issuance of the Option or at the time of its
exercise.

      d. Exercise Price. The Board shall establish the exercise price (or
determine the method by which the exercise price shall be determined) at the
time each Option is granted and specify the exercise price in the applicable
Stock Option Agreement, provided, however, in no event may the per share
exercise price be less than the fair market value of the Common Stock at the
time of the grant. In the case of an Incentive Stock Option granted to a
Participant who, at the time of grant of such Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any parent or subsidiary, then the exercise price

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shall be no less than 110% of the fair market value of the Common Stock on the
date of grant. In the case of a grant of an Incentive Stock Option to any other
Participant, the exercise price shall be no less than 100% of the fair market
value of the Common Stock on the date of grant.

      e. Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
Stock Option Agreement; provided, that the term of any Incentive Stock Option
may not be more than ten (10) years from the date of grant. In the case of an
Incentive Stock Option granted to a Participant who, at the time of grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any parent or subsidiary, the
term of the Option shall be no longer than five (5) years from the date of
grant.

      f. Exercise of Option. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 4(g) and the Stock Option Agreement
for the number of shares for which the Option is exercised.

      g. Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option shall be paid for by one or any combination of the following forms of
payment as permitted by the Board in its sole and absolute discretion:

         i. by check payable to the order of the Company;

         ii. only if the Common Stock is then publicly traded, by delivery of an
irrevocable and unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise price, or delivery
by the Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price;

         iii. to the extent explicitly provided in the applicable Stock Option
Agreement, by delivery of shares of Common Stock owned by the Participant valued
at fair market value (as determined by the Board or as determined pursuant to
the applicable Stock Option Agreement); and

         iv. payment of such other lawful consideration as the Board may
determine.

Except as otherwise expressly set forth in a Stock Option Agreement, the Board
shall have no obligation to accept consideration other than cash and in
particular, unless the Board so expressly provides, in no event will the Company
accept the delivery of shares of Common Stock that have not been owned by the
Participant at least six months prior to the exercise. The fair market value of
any shares of the Company's Common Stock or other non-cash consideration which
may be delivered upon exercise of an Option shall be determined in such manner
as may be prescribed by the Board.

      h. Acceleration, Extension, Etc. The Board may, in its sole discretion,
and in all instances subject to any relevant tax and accounting considerations
which may adversely impact

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or impair the Company, (i) accelerate the date or dates on which all or any
particular Options or Awards granted under the Plan may be exercised, or (ii)
extend the dates during which all or any particular Options or Awards granted
under the Plan may be exercised or vest.

      i. Determination of Fair Market Value. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded under the
Exchange Act, "fair market value" shall mean (i) if the Common Stock is listed
on any established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq Small Cap Market of The
Nasdaq Stock Market, its fair market value shall be the last reported sales
price for such stock (on that date) or the closing bid, if no sales were
reported as quoted on such exchange or system as reported in The Wall Street
Journal or such other source as the Board deems reliable; or (ii) the average of
the closing bid and asked prices last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common Stock is not
reported on a national market system. In the absence of an established market
for the Common Stock, the fair market value thereof shall be determined in good
faith by the Board after taking into consideration all factors which it deems
appropriate.

5. Restricted Stock.

      a. Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to (i) delivery to the Company by the
Participant of a check in an amount at least equal to the par value of the
shares purchased, and (ii) the right of the Company to repurchase all or part of
such shares at their issue price or other stated or formula price from the
Participant in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each, a
"Restricted Stock Award").

      b. Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award. Any stock certificates issued in
respect of a Restricted Stock Award shall be registered in the name of the
Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). After the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or, if the Participant has died, to the
beneficiary designated by a Participant, in a manner determined by the Board, to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.

6. Other Stock-Based Awards. The Board shall have the right to grant other
Awards based upon the Common Stock having such terms and conditions as the Board
may determine, including, without limitation, the grant of shares based upon
certain conditions, the grant of securities convertible into Common Stock and
the grant of stock appreciation rights, phantom stock awards or stock units.

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7. General Provisions Applicable to Awards.

      a. Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant; provided, however, except as the Board may otherwise
determine or provide in an Award, that Nonstatutory Options and Restricted Stock
Awards may be transferred pursuant to a qualified domestic relations order (as
defined in the Employee Retirement Income Security Act of 1974, as amended) or
to a grantor-retained annuity trust or a similar estate-planning vehicle in
which the trust is bound by all provisions of the Stock Option Agreement and
Restricted Stock Award, which are applicable to the Participant. References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.

      b. Documentation. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine or as executed by
an officer of the Company pursuant to authority delegated by the Board. Each
Award may contain terms and conditions in addition to those set forth in the
Plan, provided that such terms and conditions do not contravene the provisions
of the Plan or applicable law.

      c. Board Discretion. The terms of each type of Award need not be
identical, and the Board need not treat Participants uniformly.

      d. Additional Award Provisions. The Board may, in its sole discretion,
include additional provisions in any Stock Option Agreement, Restricted Stock
Award or other Award granted under the Plan, including without limitation
restrictions on transfer, repurchase rights, commitments to pay cash bonuses, to
make, arrange for or guaranty loans or to transfer other property to
Participants upon exercise of Awards, or transfer other property to Participants
upon exercise of Awards, or such other provisions as shall be determined by the
Board; provided that such additional provisions shall not be inconsistent with
any other term or condition of the Plan or applicable law.

      e. Termination of Status. The Board shall determine the effect on an Award
of the disability (as defined in Section 22(e)(3) of the Code), death,
retirement, authorized leave of absence or other change in the employment or
other status of a Participant and the extent to which, and the period during
which, the Participant, or the Participant's legal representative, conservator,
guardian or Designated Beneficiary, may exercise rights under the Award, subject
to applicable law and the provisions of the Code related to Incentive Stock
Options.

      f. Change in Control. Unless otherwise expressly provided in the
applicable Stock Option Agreement or Restricted Stock Award or other Award, in
connection with the occurrence of a Change in Control (as defined below), the
Board shall, in its sole discretion as to any outstanding Awards including any
portions thereof (on the same basis or on different bases, as the Board shall
specify), take one or any combination of the following actions:

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                  A. make appropriate provision for the continuation of such
Awards by the Company or the assumption of such Awards by the surviving or
acquiring entity and by substituting on an equitable basis for the shares then
subject to such Awards either (x) the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Change in Control, (y)
shares of stock of the surviving or acquiring corporation or (z) such other
securities as the Board deems appropriate, the fair market value of which (as
determined by the Board in its sole discretion) shall not materially differ from
the fair market value of the shares of Common Stock subject to such Awards
immediately preceding the Change in Control;

                  B. accelerate the date of exercise or vesting of such Awards;

                  C. permit the exchange of such Award for the right to
participate in any stock option or other employee benefit plan of any successor
corporation;

                  D. provide for the repurchase of the Award for an amount equal
to the difference of (i) the consideration received per share for the securities
underlying the Award in the Change in Control minus (ii) the per share exercise
price, if any, of such securities. Such amount shall be payable in cash for the
property payable with respect to such securities in connection with the Change
in Control. The value of any such property shall be determined by the Board in
its sole discretion; or

                  E. provide for the termination of any such Awards immediately
prior to a Change in Control; provided that no such termination will be
effective if the Change in Control is not consummated.

      g. Change in Control Defined. For purposes of this Agreement, "Change in
Control" means the consummation of any transaction (including, without
limitation, any sale of stock, merger, consolidation or spin-off), the result of
which is that any Person, other than Carl Icahn or the Related Parties, becomes
the Beneficial Owner, directly or indirectly, of more than 50% of the Voting
Stock of the Company. For purposes of the definition of Change in Control, the
capitalized terms shall have the following meaning: "Beneficial Owner" has the
meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange
Act, except that in calculating the beneficial ownership of any particular
"person" (as that term is used in Section 13(d)(3) of the Exchange Act), such
"person" shall be deemed to have beneficial ownership of all securities that
such "person" has the right to acquire by conversion or exercise of other
securities, whether such right is currently exercisable or is exercisable only
after the passage of time. The terms "Beneficially Owns" and "Beneficially
Owned" have a corresponding meaning. "Exchange Act" means the Securities
Exchange Act of 1934, as amended, and any successor thereto. "Related Parties"
means: (1) Carl Icahn, any spouse and any child, stepchild, sibling or
descendant of Carl Icahn; (2) any estate of Carl Icahn or of any person under
clause (1); (3) any person who receives a beneficial interest in any estate
under clause (2) to the extent of such interest; (4) any executor, personal
administrator or trustee who holds such beneficial interest in the Company for
the benefit of, or as fiduciary for, any person under clauses (1), (2) or (3) to
the extent of such interest; and (5) any Person, directly or indirectly owned or
controlled by Carl Icahn or any other person or persons identified in clauses
(1), (2), (3) or (4), and (6) any not-for-

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profit entity not subject to taxation pursuant to Section 501(c)(3) of the Code
or any successor provision to which Carl Icahn or any person identified in
clauses (1), (2), or (3) above is a member of the Board of Directors or an
equivalent governing body of, and is a senior officer or trustee, as the case
may be, of any such entity. "Voting Stock" means any class or series of capital
stock, or of an equity interest in an entity other than a corporation, that is
(A) ordinarily entitled to vote in the election of directors thereof at a
meeting of stockholders called for such purpose, without the occurrence of any
additional event or contingency or (B) in the case of an entity other than a
corporation, ordinarily entitled to elect or appoint the governing body of such
entity, without the occurrence of any additional event or contingency.

      h. Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Board shall notify each Participant as soon as
practicable prior to the effective date of such proposed transaction. The Board
in its sole discretion may provide for a Participant to have the right to
exercise his or her Award until fifteen (15) days prior to such transaction as
to all of the shares of Common Stock covered by the Option or Award, including
shares as to which the Option or Award would not otherwise be exercisable, which
exercise may in the sole discretion of the Board, be made subject to and
conditioned upon the consummation of such proposed transaction. In addition, the
Board may provide that any Company repurchase option applicable to any shares of
Common Stock purchased upon exercise of an Option or Award shall lapse as to all
such shares of Common Stock, provided the proposed dissolution and liquidation
takes place at the time and in the manner contemplated.

      i. Assumption of Options Upon Certain Events. In connection with a merger
or consolidation of an entity with the Company or the acquisition by the Company
of property or stock of an entity, the Board may grant Awards under the Plan in
substitution for stock and stock-based awards issued by such entity or an
affiliate thereof. The substitute Awards shall be granted on such terms and
conditions as the Board considers appropriate in the circumstances.

      j. Parachute Payments and Parachute Awards. Notwithstanding the provisions
of Section 7(f) and in the sole discretion of the Company, if, in connection
with a Change in Control described therein, if a tax under Section 4999 of the
Code would be imposed on the Participant (after taking into account the
exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code, if
applicable), then the number of Awards which shall become exercisable,
realizable or vested as provided in such Section shall be reduced (or delayed),
to the minimum extent necessary, so that no such tax would be imposed on the
Participant (the Awards not becoming so accelerated, realizable or vested, the
"Parachute Awards"). All determinations required to be made under this Section
7(j) shall be made by the Company.

      k. Amendment of Awards. The Board may amend, modify or terminate any
outstanding Award including, but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant and such
action is expressly permitted herein, including, without limitation, Section
7(m).

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      l. Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

      m. Acceleration. The Board may, without the Participant's consent, at any
time provide that any Options shall become immediately exercisable in full or in
part, that any Restricted Stock Awards shall be free of some or all
restrictions, or that any other stock-based Awards may become exercisable in
full or in part or free of some or all restrictions or conditions, or otherwise
realizable in full or in part, as the case may be, despite the fact that the
foregoing actions may (i) cause the application of Sections 280G and 4999 of the
Code if a change in control of the Company occurs, or (ii) disqualify all or
part of the Option as an Incentive Stock Option.

8. Withholding. The Company shall have the right to deduct from payments of any
kind otherwise due to the optionee or recipient of an Award any federal, state
or local taxes of any kind required by law to be withheld with respect to any
shares issued upon exercise of Options under the Plan or the purchase of shares
subject to the Award. Subject to the prior approval of the Company, which may be
withheld by the Company in its sole discretion, the optionee or recipient of an
Award may elect to satisfy such obligation, in whole or in part, (a) by causing
the Company to withhold shares of Common Stock otherwise issuable pursuant to
the exercise of an Option or the purchase of shares subject to an Award or (b)
by delivering to the Company shares of Common Stock already owned by the
optionee or Award recipient of an Award. The shares so delivered or withheld
shall have a fair market value of the shares used to satisfy such withholding
obligation as shall be determined by the Company as of the date that the amount
of tax to be withheld is to be determined. An optionee or recipient of an Award
who has made an election pursuant to this Section may only satisfy his or her
withholding obligation with shares of Common Stock which are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements.

9. No Exercise of Option if Engagement or Employment Terminated for Cause. If
the employment or engagement of any Participant is terminated "for Cause," the
Award may terminate, upon a determination of the Board, on the date of such
termination and the Option shall thereupon not be exercisable to any extent
whatsoever and the Company shall have the right to repurchase any shares of
Common Stock, subject to a Restricted Stock Award whether or not such shares
have vested, at the Participant's initial purchase price. For purposes of this
Section 9, "for Cause" shall be defined as follows: (i) if the Participant has
executed an employment agreement, then the definition of "cause" contained
therein, if any, shall govern, or (ii) conduct, as determined by the Board of
Directors, involving any one of the following: (a) misconduct or inadequate
performance by the Participant which is injurious to the Company; (b) the
commission of an act of embezzlement, fraud or theft, which results in economic
loss,

                                       9
<PAGE>

damage or injury to the Company; (c) the unauthorized disclosure of any trade
secret or confidential information of the Company (or any client, customer,
supplier or other third party who has a business relationship with the Company)
or the violation of any noncompetition or nonsolicitation covenant or assignment
of inventions obligation with the Company; (d) the commission of an act which
constitutes unfair competition with the Company or which induces any customer or
prospective customer of the Company to breach a contract with the Company or to
decline to do business with the Company; (e) the indictment of the Participant
for a felony or serious misdemeanor offense, either in connection with the
performance of his or her obligations to the Company or which shall adversely
affect the Participant's ability to perform such obligations; (f) the commission
of an act of fraud or breach of fiduciary duty which results in loss, damage or
injury to the Company; or (g) the failure of the Participant to perform in a
material respect his or her employment, consulting or advisory obligations
without proper cause. The Board may in its discretion waive or modify the
provisions of this Section at a meeting of the Board with respect to any
individual Participant with regard to the facts and circumstances of any
particular situation involving a determination under this Section.

10. Miscellaneous.

      a. Definitions.

          i. "Company," for purposes of eligibility under the Plan, shall
include any present or future subsidiary corporations of American Railcar, Inc.,
as defined in Section 424(f) of the Code (a "Subsidiary"), and any present or
future parent corporation of American Railcar, Inc., as defined in Section
424(e) of the Code. For purposes of Awards other than Incentive Stock Options,
the term "Company" shall include any other business venture in which the Company
has a direct or indirect significant interest, as determined by the Board in its
sole discretion.

         ii. "Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.

         iii. "Employee" for purposes of eligibility under the Plan shall
include a person to whom an offer of employment has been extended by the
Company.

          iv "Option Exchange Program" means a program whereby outstanding
options are exchanged for options with a lower exercise price.

      b. No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan.

      c. No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to

                                       10
<PAGE>

any shares of Common Stock to be distributed with respect to an Award until
becoming the record holder thereof.

      d. Effective Date and Term of Plan. The Plan shall become effective on the
date on which it is adopted by the Board. No Awards shall be granted under the
Plan after the completion of ten years from the date on which the Plan was
adopted by the Board, but Awards previously granted may extend beyond that date.

      e. Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time.

      f. Governing Law. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the state of
Delaware, without regard to any applicable conflicts of law.

                                       11

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