Document:

exv10w1

 

EXHIBIT 10.1

THE OILGEAR COMPANY

2006 EQUITY INCENTIVE PLAN

ARTICLE 1

Introduction.

     
1.01     Purpose. This plan
shall be known as The Oilgear Company 2006 Equity Incentive Plan
(the “Plan”). The purposes of the Plan are to attract
and retain the best available employees and directors of the
Company or any Subsidiary which now exists or hereafter is
organized or acquired by the Company, to provide additional
incentive to such persons and to promote the success and growth
of the Company. These purposes may be achieved through the grant
of options to purchase Common Stock of The Oilgear Company, the
grant of Stock Appreciation Rights, the grant of Restricted
Stock Awards, the grant of Performance Stock Awards and the
grant of Stock in Lieu of Cash Awards, as described below.

     
1.02     Effective Date. The
effective date of the Plan shall be March 15, 2006, subject
to the approval of the Plan by shareholders of the Company at
the 2006 annual meeting. No Awards will be granted prior to
stockholder approval of the Plan. If the Plan is approved by
shareholders, no further grants will be made under any other
stock incentive plan of the Company.

ARTICLE 2

Definitions.

     
2.01     “Award” means
an Incentive Stock Option, Non-Qualified Stock Option, Stock
Appreciation Right, Restricted Stock Award, Performance Stock
Award or Stock in Lieu of Cash Award, as appropriate.

     
2.02     “Award
Agreement” means the agreement between the Company and
the Grantee specifying the terms and conditions as described
thereunder.

     
2.03     “Board” means
the Board of Directors of The Oilgear Company

     
2.04     “Change in
Control” shall deemed to have occurred if and when:
(a) any ’person’ (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934), other than the Company or any of its Subsidiaries, the
Oilgear Stock Retirement Plan, the Oilgear Salaried Savings Plus
Plan, or any other qualified or non-qualified plan maintained by
the Company or any of its affiliates, is or becomes a beneficial
owner (as defined in
Rule 13d-3
promulgated under such Act), directly or indirectly, of
securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding
securities, (b) at any time less than a majority of the
members of the Company Board shall be persons who were either
nominated for election by the Board (prior to any Change in
Control) or were elected by the Board (prior to any Change in
Control), (c) the Company sells, leases or otherwise
transfers all or substantially all of its assets not in the
ordinary course of business to another person or party,
(d) the Company is combined (by merger, consolidation or
otherwise) with another corporation and as a result of such
combination, less than 50% of the outstanding securities of the
surviving or resulting corporation are owned in the aggregate by
the immediate former shareholders of the Company.

     
2.05     “Code” means
the Internal Revenue Code of 1986, as it may be amended from
time to time.

     
2.06     “Committee”
means the committee described in Article IV or the person
or persons to whom the committee has delegated its power and
responsibilities under Article IV.

     
2.07     “Common
Stock” or “Stock” means the common
stock of the Company having a par value of $1.00 per share.

     
2.08     “Company”
means The Oilgear Company, a Wisconsin corporation.

 

 

     
2.09     “Fair Market
Value” means for purposes of the Plan at any date
(i) the reported closing price of such stock on the Nasdaq
System on such date, or if no sale of such stock shall have been
made on that date, on the preceding date on which there was such
a sale, (ii) if such stock is not then listed on the Nasdaq
System, the last trade price per share for such stock in the
over-the-counter market
as quoted on Nasdaq or the pink sheets or successor publication
of the National Quotation Bureau on such date, or (iii) if
such stock is not then listed or quoted as referenced above, an
amount determined in good faith by the Board or the Committee.

     
2.10     “Grant Date”
means the date on which an Award is deemed granted, which shall
be the date on which the Committee authorizes the Award or such
later date as the Committee shall determine in its sole
discretion.

     
2.11     “Grantee”
means an individual who has been granted an Award.

     
2.12     “Incentive Stock
Option” or “ISO” means an option that
is intended to meet the requirements of Section 422 of the
Code and regulations thereunder.

     
2.13     “Non-Qualified Stock
Option” or “NSO” means an option other
than an Incentive Stock Option.

     
2.14     “Option”
means an Incentive Stock Option or Non-Qualified Stock Option,
as appropriate.

     
2.15     “Performance
Goal” means a performance goal established by the
Committee prior to the grant of an Award that is based on the
attainment of goals relating to one or more of the following
business criteria measured on an absolute basis or in terms of
growth or reduction: net income (pre-tax or after-tax and with
adjustments as stipulated), earnings per share, return on
equity, return on capital employed, return on assets, return on
tangible book value, operating income, earnings before
depreciation, interest, taxes and amortization (EBITDA), loss
ratio, expense ratio, stock price, total shareholder return,
economic value added, operating cash flow and such other
subjective or objective performance goals, including individual
goals, which it deems appropriate.

     
2.16     “Performance Stock
Award” means an Award under Article IX of the
Plan, which is conditioned upon the satisfaction pre-established
performance goals.

     
2.17     “Plan” means
The Oilgear Company 2006 Equity Incentive Plan as set forth
herein, as it may be amended from time to time.

     
2.18     “Restricted Stock
Award” means a restricted stock award under
Article VIII of the Plan.

     
2.19     “Stock in Lieu of Cash
Award” means shares of Common Stock issued in lieu of a
cash compensation that would otherwise be paid, as provide under
Article X of the Plan.

     
2.20     “Subsidiary”
means any corporation in which the Company or another entity
qualifying as a Subsidiary within this definition owns 50% or
more of the total combined voting power of all classes of stock,
or any other entity (including, but not limited to, partnerships
and joint ventures) in which the Company or another entity
qualifying as a Subsidiary within this definition owns 50% or
more of the combined equity thereof.

     
2.21     “Stock Appreciation
Right” or “SAR” means the right to
receive cash or shares of Common Stock based upon the excess of
the Fair Market Value of one share of Common Stock on the date
the SAR is exercised over the Fair Market Value of one share of
Common Stock on the Grant Date.

ARTICLE 3

Shares Subject To Award.

     
3.01     Available Shares. The
number of shares of Common Stock of the Company which may be
issued under the Plan shall not exceed 250,000 shares;
provided that no individual can be granted Awards covering, in
the aggregate, more than 50,000 shares of Common Stock in
any calendar year. Shares issued

 

 

under the Plan may come from authorized but unissued shares,
from treasury shares held by the Company, from shares purchased
by the Company on an open market for such purpose, or from any
combination of the foregoing. If any Award granted under this
Plan is canceled, terminates, expires, or lapses for any reason,
any shares subject to such Award again shall be available for
the grant of an Award under the Plan.

     
3.02     Changes in Common
Stock. If any stock dividend is declared upon the Common
Stock, or if there is any stock split, stock distribution, or
other recapitalization of the Company with respect to the Common
Stock, resulting in a split or combination or exchange of
shares, the Committee shall make or provide for such adjustment
in the number of and class of shares which may be delivered
under the Plan, and in the number and class of and/or price of
shares subject to outstanding Awards as it may, in its
discretion, deem to be equitable.

ARTICLE 4

Administration.

     
4.01     Administration by the
Committee. For purposes of the power to grant Awards to
Company directors, the Committee shall consist of the entire
Board. For other Plan purposes, the Plan shall be administered
by a committee designated by the Board to administer the Plan
and shall be the Compensation Committee of the Board. The
Committee shall be constituted to permit the Plan to comply with
the provisions of
Rule 16b-3 under
the Securities Exchange Act of 1979, as amended or any successor
rule, and Section 162(m) of the Code. A majority of the
members of the Committee shall constitute a quorum. The approval
of such a quorum, expressed by a vote at a meeting held either
in person or by conference telephone call, or the unanimous
consent of all members in writing without a meeting, shall
constitute the action of the Committee and shall be valid and
effective for all purposes of the Plan.

     
4.02     Committee Powers. The
Committee is empowered to adopt such rules, regulations and
procedures and take such other action as it shall deem necessary
or proper for the administration of the Plan. The Committee
shall also have authority to interpret the Plan, and the
decision of the Committee on any questions concerning the
interpretation of the Plan shall be final and conclusive. The
Committee may consult with counsel, who may be counsel for the
Company, and shall not incur any liability for any action taken
in good faith in reliance upon the advice of counsel. Subject to
the provisions of the Plan, the Committee shall have full and
final authority to:

		
	 	     
    (a) designate the persons to whom Awards shall be granted;
	 
	 	     
    (b) grant Awards in such form and amount as the Committee
    shall determine;
	 
	 	     
    (c) impose such limitations, restrictions and conditions
    upon any such Award as the Committee shall deem appropriate;
	 
	 	     
    (d) waive in whole or in part any limitations, restrictions
    or conditions imposed upon any such Award as the Committee shall
    deem appropriate; and
	 
	 	     
    (e) modify, extend or renew any Award previously granted,
    provided that this provision shall not provide authority to
    reprice Awards to a lower exercise price.

     
4.03     Delegation by
Committee. The Committee may delegate all or any part of its
responsibilities and powers to any executive officer or officers
of the Company selected by it. Any such delegation may be
revoked by the Board or by the Committee at any time.

 

 

ARTICLE 5

Stock Options.

     
5.01     Granting of Stock
Options. Options may be granted to directors, officers and
key employees of the Company and any of its Subsidiaries;
provided, however that a maximum of 100,000 shares of stock
may be issued pursuant to the exercise of Incentive Stock
Options. In selecting the individuals to whom Options shall be
granted, as well as in determining the number of Options
granted, the Committee shall take into consideration such
factors as it deems relevant pursuant to accomplishing the
purposes of the Plan. A Grantee may, if he is otherwise
eligible, be granted an additional Option or Options if the
Committee shall so determine. Option grants under the Plan shall
be evidenced by agreements in such form and containing such
provisions as are consistent with the Plan as the Committee
shall from time to time approve.

     
5.02     Type of Option. At the
time each Option is granted, the Committee shall designate the
Option as an Incentive Stock Option or a Non-Qualified Stock
Option. Any Option designated as an Incentive Stock Option shall
comply with the requirements of Section 422 of the Code,
including the requirement that incentive stock options may only
be granted to individuals who are employed by the Company, a
parent or a Subsidiary corporation of the Company. If required
by applicable tax rules regarding a particular grant, to the
extent that the aggregate fair market value (determined as of
the date an Incentive Stock Option is granted) of the shares
with respect to which an Incentive Stock Option grant under this
Plan (when aggregated, if appropriate, with shares subject to
other Incentive Stock Option grants made before said grant under
this Plan or another plan maintained by the Company or any ISO
Group member) is exercisable for the first time by an optionee
during any calendar year exceeds $100,000 (or such other limit
as is prescribed by the Code), such option grant shall be
treated as a grant of Nonqualified Stock Options pursuant to
Code Section 422(d).

     
5.03     Option Terms. Each
option grant agreement shall specify the number of Incentive
Stock Options and/or Nonqualified Stock Options being granted;
one option shall be deemed granted for each share of stock. In
addition, each option grant agreement shall specify the
exercisability and/or vesting schedule of such options, if any.

     
5.04     Purchase Price. The
purchase price of the Common Stock covered by each Option shall
be not less than the Fair Market Value of such Stock on the
Grant Date. Such price shall be subject to adjustment as
provided in Article III and IX hereof. The purchase price
for a share subject to Option shall not be less than 100% of the
Fair Market Value of the share on the date the option is
granted, provided, however, the option price of an Incentive
Stock Option shall not be less than 110% of the fair market
value of such share on the date the option is granted to an
individual then owning (after the application of the family and
other attribution rules of Section 424(d) or any successor
rule of the Code) more than 10% of the total combined voting
power of all classes of stock of the Company.

     
5.05     Vesting of Options.
Options may be exercised only in accordance with the terms of
each option contract. For vesting purposes, options may not be
deemed to have been granted prior to the date of shareholder
approval of the Plan. Unless the Committee determines otherwise
at the time of grant, no option shall be exercisable until the
optionee has completed at least the number of years of
continuous service from the date of grant of each option as
follows, and then the same shall be exercisable for any amount
of shares covered by such option up to the maximum percentage of
shares covered thereunder as follows:

	 	 	 	 	 
	Number of Completed Years of	 	Maximum Percentage of	
	Continuous Service After	 	Shares Becoming Exercisable	
	the Date of Grant of Option	 	Under the Option	
	 	 	 	
	
    
    Less than 1 year

    	 	 	Zero	 
	
    
    At least 1 but less than 2

    	 	 	50	%
	
    
    At least 2 but less than 3

    	 	 	75	%
	
    
    At least 3 years

    	 	 	100	%

 

 

     
No fractional shares shall be issuable on exercise of any option
and if the application of the maximum percentage set forth above
would result in a fractional share, the number of shares
exercisable shall be rounded up to the next full share. Finally,
the maximum fair market value of Common Stock (determined at the
time of grant) covered by ISOs that first become exercisable by
any optionee in any calendar year is limited to $100,000.

     
5.06     Method of Exercise. An
Option that has become exercisable may be exercised from time to
time by written notice to the Company stating the number of
shares being purchased and accompanied by the payment in full of
the Option price for such shares. The purchase price may be paid
by any of the following methods, (a) by cash, (b) by
check, or (c) to the extent permitted under the particular
grant agreement, by transferring to the Company shares of stock
of the Company at their fair market value as of the date of
exercise of the option, provided that the optionee held the
shares of stock for at least six months. Notwithstanding the
foregoing, the Company may arrange for or cooperate in
permitting broker-assisted cashless exercise procedures.

     
5.07     Shareholder Rights. A
Grantee shall not, by reason of any Options granted hereunder,
have any right of a shareholder of the Company with respect to
the shares covered by Options until shares of Stock have been
issued.

ARTICLE 6

Stock Appreciation Rights.

     
6.01     Granting of SARs. The
Committee may, in its discretion, grant SARs to directors,
officers and key employees of the Company and any of its
Subsidiaries. SARs may be granted with respect to options
granted concurrently (tandem SARs) or on a stand alone basis
(stand alone SARs).

     
6.02     SAR Terms. Each SAR
grant shall be evidenced by an Award Agreement that shall
specify the grant price (which shall be not less than the Fair
Market Value of such Stock on the Grant Date), the term of the
SAR, and such other provisions as the Committee shall determine.

     
6.03     Method of Exercise. An
SAR that has become exercisable may be exercised by written
notice to the Company stating the number of SARs being exercised.

     
6.04     Payment upon Exercise.
Upon the exercise of SARs, the Grantee shall be entitled to
receive an amount determined by multiplying (a) the
difference obtained by subtracting the grant price from the Fair
Market Value of a share of Common Stock on the date of exercise,
by (b) the number of SARs exercised. At the discretion of
the Committee, the payment upon the exercise of the SARs may be
in cash, in shares of Common Stock of equivalent value, or in
some combination thereof. The number of available shares under
Section 3.01 shall only be reduced by shares of Common
Stock issued upon exercise of an SAR and shall not be affected
by any cash payments.

ARTICLE 7

Effect Of Termination Of Employment, Disability Or Death.

     
7.01     Incentive Stock
Options. Unless otherwise provided herein or in a specific
Option Agreement which may provide longer or shorter periods of
exercisability, no ISO shall be exercisable after the expiration
of the earliest of:

		
	 	     
    (a) 10 years from the date the option is granted, or
    five years from the date the option is granted to an individual
    owning (after the application of the family and other
    attribution rules of Section 424(d) of the Code) at the
    time such option was granted, more than 10% of the total
    combined voting power of all classes of stock of the Company,

 

 

		
	 	     
    (b) three months after the date the Grantee ceases to
    perform services for the Company or its Subsidiaries, if such
    cessation is for any reason other than death, disability (within
    the meaning of Code Section 22(e)(3)), or cause,
	 
	 	     
    (c) one year after the date the Grantee ceases to perform
    services for the Company or its Subsidiaries, if such cessation
    is by reason of death or disability (within the meaning of Code
    Section 22(e)(3)), or
	 
	 	     
    (d) the date the Grantee ceases to perform services for the
    Company or its Subsidiaries, if such cessation is for cause, as
    determined by the Board or the Committee in its sole discretion.

     
7.02     Non-Qualified Stock Options
and SARs. Unless otherwise provided herein or in a specific
NSO or SAR Agreement which may provide longer or shorter periods
of exercisability, no ISO shall be exercisable after the
expiration of the earliest of:

		
	 	     
    (a) 10 years from the date of grant,
	 
	 	     
    (b) one year after the date the Grantee ceases to perform
    services for the Company or its Subsidiaries, if such cessation
    is for any reason other than death, permanent disability,
    retirement or cause,
	 
	 	     
    (c) two years after the date the Grantee ceases to perform
    services for the Company or its Subsidiaries, if such cessation
    is by reason of the Grantee’s death, permanent disability
    or retirement; or
	 
	 	     
    (d) the date the Grantee ceases to perform services for the
    Company or its Subsidiaries, if such cessation is for cause, as
    determined by the Board or the Committee in its sole discretion.

     
7.03     ISOs, NSOs and SARs.
Unless otherwise provided in a specific grant agreement or
determined by the Committee, an Option or SAR shall only be
exercisable for the periods above following the date a Grantee
ceases to perform services to the extent the Award was
exercisable on the date of such cessation. The unvested portion
of any Award shall automatically terminate on the date the
Grantee ceases to perform services for the Company or its
Subsidiaries.

ARTICLE 8

Restricted Stock Awards.

     
8.01     Administration. Shares
of restricted stock may be issued either alone or in addition to
other Awards granted under the Plan. The Committee shall
determine the eligible persons to whom and the time or times at
which grants of restricted stock will be made, the number of
shares to be awarded, the time or times within which such Awards
may be subject to forfeiture and any other terms and conditions
of the Awards. The Committee may condition the grant of
restricted stock upon the attainment of Performance Goals so
that the grant qualifies as “performance-based
compensation” within the meaning of Section 162(m) of
the Code. The Committee may also condition the grant of
restricted stock upon such other conditions, restrictions and
contingencies as the Committee may determine. The provisions of
restricted stock Awards need not be the same with respect to
each recipient.

     
8.02     Awards and
Certificates. Each individual receiving a Restricted Stock
Award shall be issued a certificate in respect of such shares.
Such certificate shall be registered in the name of such
individual and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award,
substantially in the following form:

		
	 	
    “The transferability of this certificate and the shares of
    stock represented hereby are subject to the terms and conditions
    (including forfeiture) of The Oilgear Company 2006 Equity
    Incentive Plan and an agreement identifying the restrictions
    applicable to the shares. Copies of such Plan and agreement are
    on file at the corporate office of The Oilgear Company.”

 

 

     
The Committee may require that the certificates evidencing such
shares be held in custody by the Company until the restrictions
thereon shall have lapsed and that, as a condition of any Award,
the Grantee shall have delivered a stock power, endorsed in
blank, relating to the stock covered by such Award.

     
8.03     Terms and Conditions
Restricted Stock Awards shall be subject to the following terms
and conditions:

		
	 	     
    (a) Until the applicable restrictions lapse or the
    conditions are satisfied, the Grantee shall not be permitted to
    sell, assign, transfer, pledge or otherwise encumber the
    Restricted Stock Award.
	 
	 	     
    (b) Except to the extent otherwise provided in the
    applicable agreement, the portion of the Award still subject to
    restriction shall be forfeited by the Grantee upon termination
    of a Grantee’s service for any reason.
	 
	 	     
    (c) If and when the applicable restrictions lapse,
    unlegended certificates for such shares shall be delivered to
    the Grantee.
	 
	 	     
    (d) Each Award shall be confirmed by, and be subject to the
    terms of, an agreement identifying the restrictions applicable
    to the Award.

     
8.04     Rights as Shareholder A
Grantee receiving a Restricted Stock Award shall have all of the
rights of a shareholder of the Company, including the right to
vote the shares and the right to receive any cash dividends.
Unless otherwise determined by the Committee, cash dividends
shall be automatically paid in cash and dividends payable in
stock shall be paid in the form of additional restricted stock.

ARTICLE 9

Performance Stock Awards.

     
9.01     Administration.
Performance Stock Awards entitle a Grantee to receive shares of
Common Stock if predetermined conditions are satisfied. The
Committee shall determine the eligible persons to whom and the
time or times at which Performance Stock Awards will be made,
the number of shares to be awarded, the time or times within
which such Awards may be subject to forfeiture and any other
terms and conditions of the Awards. The Committee may condition
the grant of a Performance Stock Award upon the attainment of
Performance Goals so that the grant qualifies as
“performance-based compensation” within the meaning of
Section 162(m) of the Code. The Committee may also
condition the grant of a Performance Stock Award upon such other
conditions, restrictions and contingencies as the Committee may
determine. The provisions of Performance Stock Awards need not
be the same with respect to each recipient.

     
9.02     Terms and Conditions
Performance Stock Awards shall be subject to the following terms
and conditions:

		
	 	     
    (a) Until the applicable restrictions lapse or the
    conditions are satisfied, the Grantee shall not be permitted to
    sell, assign, transfer, pledge or otherwise encumber the
    Performance Stock Award.
	 
	 	     
    (b) Except to the extent otherwise provided in the
    applicable agreement, the portion of the Award still subject to
    restriction shall be forfeited by the Grantee upon termination
    of a Grantee’s service for any reason.
	 
	 	     
    (c) If and when the applicable restrictions lapse,
    unlegended certificates for such shares shall be delivered to
    the Grantee.
	 
	 	     
    (d) Each Award shall be confirmed by, and be subject to the
    terms of, an agreement identifying the restrictions applicable
    to the Award.

 

 

     
9.03     Rights as Shareholder A
Grantee receiving a Performance Stock Award shall not be deemed
the holder of any shares covered by the Award, or have any
rights as a shareholder with respect thereto, until such shares
are issued to him/her following the lapse of the applicable
restrictions.

ARTICLE 10

Stock in Lieu of Cash Awards.

     
10.01     Granting of Stock in Lieu
of Cash Awards. The Committee may, in its discretion and
with the consent of the Grantee, grant a Stock in Lieu of Cash
Award to an officer or key employee of the Company in lieu of a
cash bonus that would otherwise be paid under a Company bonus
plan. The Committee may also grant a Stock in Lieu of Cash Award
to a director in connection with the payment of directors fees;
provided that the annual Stock in Lieu of Cash Award to a
non-employee director shall not exceed 2,000 shares per
year.

     
10.02     Share Calculation. The
number of shares issued in connection with a Stock in Lieu of
Cash Award shall be based upon the Fair Market Value of the
Stock. The Committee may make such determination using the Fair
Market Value of the Stock as of a specific day or the average
Fair Market Value of the Stock over a number of days.

ARTICLE 11

Effect of Corporate Transactions.

     
11.01     Merger, Consolidation or
Reorganization. In the event of a merger, consolidation or
reorganization with another corporation in which the Company is
not the surviving corporation or a merger, consolidation or
reorganization involving the Company in which the Common Stock
ceases to be publicly traded, the Committee shall, subject to
the approval of the Board of Directors of the Company, or the
board of directors of any corporation assuming the obligations
of the Company hereunder, take action regarding each outstanding
and unexercised Award pursuant to either clause (a) or
(b) below:

		
	 	     
    (a) Appropriate provision may be made for the protection of
    such Award by the substitution on an equitable basis of
    appropriate shares of the surviving or related corporation,
    provided that the excess of the aggregate Fair Market Value of
    the shares subject to such Award immediately before such
    substitution over the exercise price thereof is not more than
    the excess of the aggregate fair market value of the substituted
    shares made subject to Award immediately after such substitution
    over the exercise price thereof; or
	 
	 	     
    (b) The Committee may cancel such Award. In the event any
    Option or SAR is canceled, the Company, or the corporation
    assuming the obligations of the Company hereunder, shall pay the
    Grantee an amount of cash (less normal withholding taxes) equal
    to the excess of (i) the value, as determined by the
    Committee, of the property (including cash) received by the
    holder of a share of Company Stock as a result of such event
    over (ii) the exercise price of such option, multiplied by
    the number of shares subject to such Award. In the event any
    other Award is canceled, the Company, or the corporation
    assuming the obligations of the Company hereunder, shall pay the
    Grantee an amount of cash or stock, as determined by the
    Committee, based upon the value, as determined by the Committee,
    of the property (including cash) received by the holder of a
    share of Company Stock as a result of such event.

     
11.02     Change in Control.
Notwithstanding any provision in the Plan to the contrary,
unless the particular Award Agreement provides otherwise, the
unvested Awards held by each Grantee shall automatically become
vested upon the occurrence, before the expiration or termination
of such Award, of a Change in Control. Further, the Committee
shall have the right to cancel such Awards and pay the Grantee
an amount determined under Section 11.01(b) above.

 

 

ARTICLE 12

Miscellaneous.

     
12.01     Withholding. The
Company shall have the power and the right to deduct or
withhold, or require a Grantee to remit to the Company, an
amount sufficient to satisfy Federal, state, and local taxes
(including the Grantee’s FICA obligation) required by law
to be withheld with respect to any taxable event arising or as a
result of this Plan. With respect to withholding required upon
the exercise of Options or SARs, upon the lapse of restrictions
on Restricted Stock or the grant of a Stock Bonus, Grantees may
elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the
Company withhold shares having a Fair Market Value on the date
the tax is to be determined equal to the minimum statutory total
tax which could be imposed on the transaction.

     
12.02     No Employment or Retention
Agreement Intended. Neither the establishment of, nor the
awarding of Awards under this Plan shall be construed to create
a contract of employment or service between any Grantee and the
Company or its Subsidiaries; nor does it give any Grantee the
right to continued service in any capacity with the Company or
its Subsidiaries or limit in any way the right of the Company or
its Subsidiaries to discharge any Grantee at any time and
without notice, with or without cause, or to any benefits not
specifically provided by this Plan, or in any manner modify the
Company’s right to establish, modify, amend or terminate
any profit sharing or retirement plans.

     
12.03     Non-transferability of
Awards. Any Award granted hereunder shall, by its terms, be
non-transferable by a Grantee other than by will or the laws of
descent and shall be exercisable during the Grantee’s
lifetime solely by the Grantee or the Grantee’s duly
appointed guardian or personal representative. Notwithstanding
the foregoing, the Committee may permit a Grantee to transfer a
Non-Qualified Stock Option or SAR to a family member or a trust
or partnership for the benefit of a family member, in accordance
with rules established by the Committee.

     
12.04     Investment
Representation. Unless the shares of stock covered by the
Plan have been registered with the Securities and Exchange
Commission pursuant to Section 5 of the Securities Act of
1933, as amended, each Grantee by accepting an Award represents
and agrees, for himself or herself and his or her transferees by
will or the laws of descent and distribution, that all shares of
stock purchased upon the exercise of the option grant will be
acquired for investment and not for resale or distribution. Upon
such exercise of any portion of any option grant, the person
entitled to exercise the same shall upon request of the Company
furnish evidence satisfactory to the Company (including a
written and signed representation) to the effect that the shares
of stock are being acquired in good faith for investment and not
for resale or distribution. Furthermore, the Company may if it
deems appropriate affix a legend to certificates representing
shares of stock that such shares have not been registered with
the Securities and Exchange Commission and may so notify its
transfer agent.

     
12.05     Dissolution or
Liquidation. Upon the dissolution or liquidation of the
Company, any outstanding Awards theretofore granted under this
Plan shall be deemed canceled.

     
12.06     Controlling Law. The
law of the State of Wisconsin, except its law with respect to
choice of law, shall be controlling in all matters relating to
the Plan.

     
12.07     Termination and Amendment
of the Plan. The Plan will expire ten (10) after the
Effective Date, solely with respect to the granting of Incentive
Stock Options or such later date as may be permitted by the Code
for Incentive Stock Options. The Board may from time to time
amend, modify, suspend or terminate the Plan; provided, however,
that no such action shall (a) impair without the
Grantee’s consent any Award theretofore granted under the
Plan or (b) be made without shareholder approval where such
approval would be required as a condition of compliance with the
Code or other applicable laws or regulatory requirements.<PAGE>

                                                                   Exhibit 10.36

                             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

                                        1

<PAGE>

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 three hundred 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

                                        2

<PAGE>

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

                                        3

<PAGE>

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

                                        4

<PAGE>

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, including without limitation for Awards granted upon the
execution of an underwriting agreement (e.g. pricing) of an initial public
offering of the Company's 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.

                                        5

<PAGE>

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:

                                        6

<PAGE>

               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-

                                        7

<PAGE>

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).

                                        8

<PAGE>

     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.

     g. Confidentiality, Non-Compete and Non-Solicit. Each Participant agrees to
execute and deliver to the Company a Confidentiality, Non-Compete and
Non-Solicit Agreement in form and substance acceptable to the Company.

APPROVALS
ORIGINAL PLAN:
Adopted by the Board of Directors on: December 23, 2005
Approved by the stockholders on: January 13, 2006

AMENDMENTS TO PLAN:
Amended by Board of Directors on: February 28, 2006

                                       11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]