Document:

EX-10.28

 

Exhibit 10.28

AMERICAN RAILCAR INDUSTRIES, INC.

2005 EQUITY INCENTIVE PLAN

NOTICE OF STOCK OPTION AWARD

          Unless otherwise defined herein, the terms defined in the 2005 Equity Incentive Plan shall
have the same defined meanings in this Notice of Stock Option Award and the attached Stock Option
Award Terms, which is incorporated herein by reference (together, the “Award Agreement”).

Participant
(the “Participant”)

«Name»

«Address»

Grant

The undersigned Participant has been granted an Option to purchase Common Stock of American Railcar
Industries, Inc. (the “Company”), subject to the terms and conditions of the Plan and this Award
Agreement, as follows:

	 	 	 	 	 	 	 
	Date of Grant

	 	«Grant_Date»
	 	Total Exercise Price
	 	$«Total_Exercise_Price»
	 
	 	 	 	 	 	 
	Type of Option

	 	oIncentive

Stock Option
	 	Total Number of
Shares Granted
	 	«Shares_Granted»
	 
	 	 	 	 	 	 
	 

	 	o Nonstatutory

Stock Option	 	 	 	 
	 
	 	 	 	 	 	 
	Exercise Price per

Share

	 	$«Exercise_Price»
	 	Term/Expiration Date
	 	«Five years from Grant

Date»

Vesting Schedule:

This Option shall be exercisable, in whole or in part, according to the following vesting schedule:

	 	 	 
	Number of Months (or years) of	% of Grant (or # of Shares) Vested
	Service	 	 
	 
	 	 
	One year anniversary of Grant Date

	 	33% of Grant
	 
	 	 
	Two year anniversary of Grant Date

	 	66% of Grant
	 
	 	 
	Three year anniversary of Grant Date

	 	100% of Grant

 

 

Vesting of this Option shall cease upon termination of Employment (the “Relationship”) of the
Participant with the Company.

	 	 	 
	Participant	 	American Railcar Industries, Inc.
	 
	 	 
	 

	 	 
	Signature

	 	By
	 
	 	 
	 

	 	 
	Print Name

	 	Title
	 
	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	Residence Address
	 	 

 

 

AMERICAN RAILCAR INDUSTRIES, INC.

STOCK OPTION

AWARD TERMS

	1.	 	Grant of Option. The Committee hereby grants to the Participant named
in the Notice of Stock Option Grant an option (the “Option”) to purchase the number of
Shares set forth in the Notice of Stock Option Award, at the exercise price per Share
set forth in the Notice of Stock Option Grant (the “Exercise Price”), and subject to
the terms and conditions of the 2005 Equity Incentive Plan (the “Plan”), which is
incorporated herein by reference. In the event of a conflict between the terms and
conditions of the Plan and this Stock Option Award Agreement, the terms and conditions
of the Plan shall prevail.
	 
	 	 	If designated in the Notice of Stock Option Grant as an Incentive Stock Option
(“ISO”), this Option is intended to qualify as an Incentive Stock Option as defined
in Section 422 of the Code. Nevertheless, to the extent that it exceeds the $100,000
limitation rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option (“NSO”).

2. Exercise of Option.

	 	i.	 	Right to Exercise. This Option may be exercised during
its term in accordance with the Vesting Schedule set out in the Notice of Stock
Option Award and with the applicable provisions of the Plan and this Award
Agreement, including, without limitation, if the Participant is terminated for
Cause as described more fully in Section 9 of the Plan, the Option shall
immediately terminate.

	 	ii.	 	Method of Exercise. This Option shall be exercisable by
delivery of an exercise notice in the form attached as Exhibit A (the “Exercise
Notice”) which shall state the election to exercise the Option, the number of
Shares with respect to which the Option is being exercised (the “Exercised
Shares”), and such other representations and agreements as may be required by
the Company. The Exercise Notice shall be accompanied by payment of the
aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by payment of the aggregate Exercise Price.

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and
such exercise complies with applicable laws. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to the Participant on the date on which
the Option is exercised with respect to such Shares.

 

 

	3.	 	Termination. This Option shall be exercisable for three months after
Participant ceases to be an employee; provided, however, if the
Relationship is terminated by the Company for cause, the Option shall terminate
immediately. Upon Participant’s death or Disability, this Option may be exercised for
twelve months after the Relationship ceases. In no event may Participant exercise this
Option after the Term/Expiration Date as provided above.

	4.	 	Participant’s Representations. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, (the “Securities Act”) at the
time this Option is exercised and as a condition of such exercise, the Participant
shall, if required by the Company, concurrently with the exercise of all or any portion
of this Option, deliver to the Company his or her investment representations as
requested by the Company.

	5.	 	Lock-Up Period. Participant hereby agrees that, if so requested by the
Company or any representative of the underwriters (the “Managing Underwriter”) in
connection with any registration of the offering of any securities of the Company under
the Securities Act, Participant shall not sell or otherwise transfer any Shares or
other securities of the Company during the 180-day period (or such other period as may
be requested in writing by the Managing Underwriter and agreed to in writing by the
Company) (the “Market Standoff Period”) following the effective date of a registration
statement of the Company filed under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.

	6.	 	Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the stockholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of consideration
for such shares would constitute a violation of any applicable law.

	7.	 	Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and may be
exercised during the lifetime of Participant only by Participant. The terms of the
Plan and this Award Agreement shall be binding upon the executors, Committees, heirs,
successors and assigns of the Participant.

	8.	 	Term of Option. This Option may be exercised only within the Term set
out in the Notice of Stock Option Award which Term may not exceed five (5) years from
the Date of Grant, and may be exercised during such Term only in accordance with the
Plan and the terms of this Award Agreement.

	9.	 	Notice of Disqualifying Disposition of Incentive Stock Option Shares.
If this Option is an Incentive Stock Option, and if the Participant sells or otherwise
disposes of any of the Shares acquired pursuant to the Incentive Stock Option on or
before the later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of

2

 

	 	 	exercise, the Participant shall immediately notify the Company in writing of such
disposition. The Participant agrees that the Participant may be subject to income
tax withholding by the Company on the compensation income recognized by the
Participant.
	 
	10.	 	Withholding. Pursuant to applicable federal, state, local or foreign
laws, the Company may be required to collect income or other taxes on the grant of this
Option, the exercise of this Option, the lapse of a restriction placed on this Option
or the Shares issued upon exercise of this Option, or at other times. The Company may
require, at such time as it considers appropriate, that the Participant pay the Company
the amount of any taxes which the Company may determine is required to be withheld or
collected, and the Participant shall comply with the requirement or demand of the
Company. In its discretion, the Company may withhold Shares to be received upon
exercise of this Option or offset against any amount owed by the Company to the
Participant, including compensation amounts, if in its sole discretion it deems this to
be an appropriate method for withholding or collecting taxes.

	11.	 	Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Award Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their entirety all
prior undertakings and agreements of the Company and Participant with respect to the
subject matter hereof, and may not be modified (except as provided herein and in the
Plan) adversely to the Participant’s interest except by means of a writing signed by
the Company and Participant. This agreement is governed by the internal substantive
laws but not the choice of law rules of the State of Delaware.

	12.	 	No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING IN THE RELATIONSHIP AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING
ENGAGED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). PARTICIPANT FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER
AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
PROMISE OF CONTINUED EMPLOYMENT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE COMPANY’S RIGHT TO
TERMINATE THE RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

Participant acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option subject to
all of the terms and provisions thereof. Participant has reviewed the Plan and this Option
in their entirety, has had an opportunity to obtain the advice of counsel prior to executing
this

3

 

Option and fully understands all provisions of the Option. Participant hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the Committee
upon any questions arising under the Plan or this Option. Participant further agrees to
notify the Company upon any change in the residence address indicated below.

4

 

EXHIBIT A

2005 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

American Railcar Industries, Inc.

100 Clark St.

St. Charles, MO 63301

Attention: President

	 	1.	 	Exercise of Option. Effective as of today, ____________, 200___, the
undersigned (“Participant”) hereby elects to exercise Participant’s option to purchase
___ shares of the Common Stock (the “Shares”) of American Railcar Industries,
Inc. (the “Company”) under and pursuant to the 2005 Equity Incentive Plan (the “Plan”)
and the Stock Option Award Agreement dated
____________, 200___ (the “Award
Agreement”).

	 	2.	 	Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Award Agreement.

	 	3.	 	Representations of Participant. Participant acknowledges that
Participant has received, read and understood the Plan and the Award Agreement and
agrees to abide by and be bound by their terms and conditions.

	 	4.	 	Rights as Stockholder. Until the issuance of the Shares (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Shares shall be issued to the Participant as soon as
practicable after the Option is exercised. No adjustment shall be made for a dividend
or other right for which the record date is prior to the date of issuance except as
provided in Section 3(c) of the Plan.

	 	5.	 	Tax Consultation. Participant understands that Participant may suffer
adverse tax consequences as a result of Participant’s purchase or disposition of the
Shares. Participant represents that Participant has consulted with any tax consultants
Participant deems advisable in connection with the purchase or disposition of the
Shares and that Participant is not relying on the Company for any tax advice.

[Signatures appear on next page.]

 

 

	 	 	 
	Submitted by:	 	Accepted by:
	 
	 	 
	PARTICIPANT

	 	AMERICAN RAILCAR INDUSTRIES, INC.
	 
	 	 
	 

	 	 
	Signature

	 	By
	 
	 	 
	 

	 	 
	Print Name

	 	Title
	 
	 	 
	Address:

	 	Address:
	 
	 	 
	 

	 	100 Clark St.
	 

	 	St. Charles, MO 63301
	 

	 	Attention: President
	 
	 	 
	 

	 	 
	 

	 	Date Received

2EX-10.29

 

Exhibit 10.29

AMERICAN RAILCAR INDUSTRIES, INC.

Executive Incentive Plan for Fiscal Year 2005

	 	 	 	 	 
	I.	 	PURPOSE
	 
	 	 	 	 
	 	 	The American Railcar Industries, Inc. Executive Incentive Plan has been established for
Fiscal Year 2005 for those Participants defined under Section III below.
	 
	 	 	 	 
	 	 	The purpose of this Plan is to provide additional compensation to Participants for their
contribution to the achievement of the objectives of the Company, encouraging an
stimulating superior performance by such personnel, and assisting in attracting and
retaining highly qualified key employees.
	 
	 	 	 	 
	II.	 	DEFINITIONS
	 
	 	 	 	 
	 

	 	A.
	 	Base Salary equals the base annual salary effective December 31st
for which the award is calculated.
	 
	 	 	 	 
	 

	 	B.
	 	Company means American Railcar Industries, Inc. and its subsidiaries and its
successors and assigns.
	 
	 	 	 	 
	 

	 	C.
	 	Fiscal Year means the Company’s Fiscal Year beginning January 1 and ending
the last day of December.
	 
	 	 	 	 
	 

	 	D.
	 	Plan means the American Railcar Industries, Inc. Executive Incentive Plan, as
from time to time amended.
	 
	 	 	 	 
	 

	 	E.
	 	Chief Executive Officer means the Chief Executive Officer of American Railcar
Industries, Inc.
	 
	 	 	 	 
	 

	 	F.
	 	Financial Targets are the financial goal(s) of the Company for the Fiscal
Year identified in exhibit B as applied to Participants in Exhibit C.
	 
	 	 	 	 
	 

	 	G.
	 	Personal Goals refer to the personal goals and objectives set by each
Participant and his/her supervisor at the beginning

1

 

	 	 	 	 	 
	 

	 	 	 	of each Fiscal Year against which performance is measured under Section V below.
	 
	 	 	 	 
	III.	 	EMPLOYEES COVERED BY THIS PLAN
	 
	 	 	 	 
	 	 	Those employees listed on Exhibit C (each a “Participant”) shall be eligible to participate
in this Plan.
	 
	 	 	 	 
	IV.	 	FINANCIAL AWARD
	 
	 	 	 	 
	 	 	A Participant in the Plan shall be entitled to a Financial Award computed as the product of:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Participants

	 	X
	 	Bonus as a
	 	X
	 	Performance
	 	X
	 	Individual
	 	=
	 	Participants
	 	 
	Base Salary

	 	 	 	% of Salary
	 	 	 	as a % of
	 	 	 	Performance
	 	 	 	Financial
	 	 
	 

	 	 	 	 	 	 	 	Target
	 	 	 	Rating on a
	 	 	 	Award
	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	0 – 100 scale
	 	 	 	 	 	 

	 	 	 	 	 
	 

	 	A.
	 	“Participant’s Base Salary” shall be the salary as defined in Section II-A in
effect during applicable period.
	 
	 	 	 	 
	 

	 	B.
	 	“Bonus as % of Salary” shall be as set forth in Exhibit A, Table I based upon
Management Level of each Participant.
	 
	 	 	 	 
	 

	 	C.
	 	“Performance as a % of Target” shall be determined in accordance with the
schedule set forth in Exhibit A, Table II based on the attainment of the Company’s
financial target for the applicable period as identified in Exhibit B and as measured
in performance percentages by target for individual per Exhibit C.
	 
	 	 	 	 
	 

	 	D.
	 	“Individual Performance Rating” shall be based on an individual performance
evaluation in accordance with Section V below.
	 
	 	 	 	 
	 

	 	 	 	If a Participant was in more than one management level during a Fiscal Year, a
separate computation shall be made for each level applicable to the Participant
during such Fiscal Year; the sum of the separate computations shall be the
Participant’s Financial Award.
	 
	 	 	 	 
	V.	 	PERSONAL PERFORMANCE RATING
	 
	 	 	 	 
	 	 	Personal goals for each Participant are to be developed jointly by the Participant and
his/her supervisor for the Fiscal Year.

2

 

	 	 	 
	 

	 	Attainment of such goals and other performance criteria, both quantifiable and
non-quantifiable, may be used to arrive at an overall individual performance rating from 0%
to 100%. Such criteria shall be applied consistently to Participants with similar duties
pursuant to an evaluation process to be reviewed and approved by the Vice President,
Administration. Criteria that may be weighed in arriving at an individual performance
rating include, without limitation:

	 	•	 	Achievement of income goals by business unit
	 
	 	•	 	Development of subordinates
	 
	 	•	 	Successful development of new accounts/products
	 
	 	•	 	Improvement in product programs
	 
	 	•	 	Attainment of self-development objectives
	 
	 	•	 	Control or reduction of operating expenses by business unit
	 
	 	•	 	Safety record of Facility or Facilities
	 
	 	•	 	Quality Program Achievement

	 	 	 
	 

	 	The supervisor will assign a Personal Performance %, from 0% to 100%, reflecting the
Participant’s performance during such Fiscal Year. The Personal Performance %
recommendation of the supervisor shall be reviewed by the appropriate member of the
Management Committee, who shall recommend an appropriate Personal Performance % to the
Chief Executive Officer who shall approve the final Personal Performance % for each
Participant. The Chief Executive Officer reserves the right, in his sole discretion, to
accept the Personal Performance % recommendation for each Participant or to modify any
Personal Performance % for any Participant to achieve such dispersion of performance
ratings as the Chief Executive Office deems appropriate.
	 
	 	 
	VI.

	 	PERFORMANCE MEASURES, TARGETS AND PAYOUT RANGES
	 
	 	 
	 

	 	The financial performance measures, targets and payout ranges used for incentive purposes
shall be established by the Board of Directors based on the annual business plan. Those
measures, targets and payout ranges, as appropriate, shall be approved by

3

 

	 	 	 
	 

	 	the Chief Executive Officer and the Board of Directors. The performance measures, targets
and payout ranges are defined in Exhibit A, B and C.
	 
	 	 
	VII.

	 	PARTICIPANT BONUS COMPOSITION
	 
	 	 
	 

	 	The composition of the bonuses are established by Management Level and communicated
individually to each Participant.
	 
	 	 
	VIII.

	 	COMPUTATION AND DISBURSEMENT OF FUNDS
	 
	 	 
	 

	 	As soon as practicable after the close of the Fiscal Year, the members of the Management
Committee will recommend a Personal Performance % for each Participant in his department to
the Chief Executive Officer and the Board of Directors. In addition, the Chief Financial
Officer of the Company shall calculate the financial performance measure and the proposed
payout under the Plan based upon the Chief Executive Officer’s determination of each
Participant’s Personal Performance % and the achievement of the financial performance
measure. The proposed payout shall be presented to the Board of Directors for final
approval. Once approved, payment of the Financial Awards shall be made as soon as
practicable after the completion of the annual audit.
	 
	 	 
	 

	 	If the Participant dies before receiving his/her award, the amount due will be paid to the
designated beneficiaries on file with the Company and, in the absence of such designation,
to the Participant’s estate.
	 
	 	 
	 

	 	All payment awards shall be reduced by amounts required to be withheld for taxes at the
time payments are made.
	 
	 	 
	IX.

	 	CHANGES TO TARGET
	 
	 	 
	 

	 	The Chairman of the Board of Directors, at any time prior to the final determination of
awards and in consultation with the Board of Directors, may consider changes to the
performance measures, targets, and payout ranges used for incentive purposes, such that if,
in the judgment of the Chairman of the Board of Directors, such change(s) is/are desirable
in the interests of equitable treatment of the Participants and the Company as a result of
extraordinary or non-recurring events, changes in applicable accounting rules or
principles, changes in the Company’s methods of accounting, changes in applicable law,
changes due to consolidation,

4

 

	 	 	 
	 

	 	acquisitions, or reorganization. The Chief Executive Officer shall implement such
change(s) for immediate incorporation into the Plan.
	 
	 	 
	X.

	 	A Participant shall be entitled to payment of a partial Financial Award if, prior to the end
of such Fiscal Year, a Participant:

	 	•	 	Dies
	 
	 	•	 	Retires (is eligible to immediately receive retirement benefits under a Company
sponsored retirement plan)
	 
	 	•	 	Becomes permanently disabled
	 
	 	•	 	Transfers to a position with a salary grade not eligible for
participation in the Plan
	 
	 	•	 	Enters military service
	 
	 	•	 	Takes an approved leave of absence
	 
	 	•	 	Is appointed or elected to public office
	 
	 	•	 	Is terminated due to position elimination

	 	 	 
	 

	 	provided that the Participant was an active employee for a minimum of 30 consecutive
calendar days during such Fiscal Year. Such partial awards shall be paid at the time when
payments of awards for such Fiscal Year are made to active Participants.
	 
	 	 
	 

	 	Participants hired, or who otherwise become eligible to participate hereunder, during the
course of a Fiscal Year and who are employed through the end of such Fiscal Year shall be
eligible for a pro-rated award based on their Base Salary during such Fiscal Year and
length of eligible service prior to the end of the Fiscal Year.
	 
	 	 
	XI.

	 	FORFEITURE OF BONUS
	 
	 	 
	 

	 	Except as provided in Section X, no Participant who ceases to be an employee of the Company
prior to the end of a Fiscal Year shall be entitled to any Financial Award under this Plan
for such Fiscal Year unless the Chief Executive Officer determines otherwise.

5

 

	 	 	 
	 

	 	Participants who cease to be an employee of the company between the end of a prior Fiscal
Year and the payment date of awards for such prior Fiscal Year shall be entitled to awards
earned during such prior Fiscal Year.
	 
	 	 
	XII.

	 	ADMINISTRATION
	 
	 	 
	 

	 	This Plan shall be administered by the Sr. Director of Human Resources of American Railcar
Industries, Inc., subject to the control and supervision of the Chief Executive Officer and
the Board of Directors of American Railcar Industries, Inc.
	 
	 	 
	 

	 	In the event of a claim or dispute brought forth by a Participant, the decision of the
Chief Executive Officer as to the facts in the case and the meaning and intent of any
provision of the Plan, or its application, shall be final and conclusive.
	 
	 	 
	XIII.

	 	NO EMPLOYMENT CONTRACT; FUTURE PLANS
	 
	 	 
	 

	 	Participation in this Plan shall not confer upon any Participant any right to continue in
the employ of the Company nor interfere in any way with the right of the Company to
terminate any Participant’s employment at any time. The Company is under no obligation to
continue the Plan in future Fiscal Years.
	 
	 	 
	XIV.

	 	AMENDMENT OR TERMINATION
	 
	 	 
	 

	 	The Board of Directors of the Company may at any time, or from time to time, (a) amend,
alter or modify the provisions of this Plan, (b) terminate this Plan, or (c) terminate the
participation of an employee or group of employees in this Plan; provided, however, that in
the event of the termination of this Plan or a termination of participation, the Company
shall provide the partial awards to the affected Participant(s) for the portion of the
Fiscal Year during which such employee(s) were Participants in this Plan, in a manner in
which the Company, in its sole judgment, determines to be equitable to such Participants
and the Board of Directors of the Company.
	 
	 	 
	XV.

	 	GENERAL PROVISIONS

	 	 	 
	A.

	 	No right under the Plan shall be assignable, either voluntarily or
involuntarily by way of encumbrance, pledge, attachment,

6

 

	 	 	 
	 

	 	level or charge of any nature (except as may be required by state or federal law).
	 
	 	 
	B.

	 	Nothing in the Plan shall require the Company to segregate or set aside any
funds or other property for the purpose of paying any portion of an award. No
Participant, beneficiary or other person shall have any right, title or interest in
any amount awarded under the Plan prior to the close of the Fiscal Year, or in any
property of the company or its subsidiaries.

	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 
	 	 
	 
	 	 
	Final Approval Date
	 	Chief Executive Officer

7

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