AMERICAN RAILCAR INDUSTRIES, INC. (NASDAQ:ARII) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
The information set forth in Item 8.01 of this Form 8-K regarding
the RemainCo Consulting Agreements and the Subcontractor Agreement
is hereby incorporated by reference into this Item 1.01.
the RemainCo Consulting Agreements and the Subcontractor Agreement
is hereby incorporated by reference into this Item 1.01.
Item 1.02 Termination of a Material Definitive Agreement.
The information set forth in Item 8.01 of this Form 8-K is hereby
incorporated by reference into this Item 1.02.
incorporated by reference into this Item 1.02.
Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
As previously disclosed and to an offer letter dated April 26,
2017, the Companys appointment of Mr. John OBryan as the Companys
Senior Vice President and Chief Commercial Officer became effective
on the ARL Closing Date. In connection therewith, Mr. OBryan was
granted awards of 18,316 stock appreciation rights (SARs).
2017, the Companys appointment of Mr. John OBryan as the Companys
Senior Vice President and Chief Commercial Officer became effective
on the ARL Closing Date. In connection therewith, Mr. OBryan was
granted awards of 18,316 stock appreciation rights (SARs).
These SARs will vest in three equal increments on June 1, 2018,
June 1, 2019 and June 1, 2020. Mr. OBryan must remain employed by
the Company through each anniversary of the grant date in order to
vest in the corresponding number of SARs. The SARs have a term of
seven years.
June 1, 2019 and June 1, 2020. Mr. OBryan must remain employed by
the Company through each anniversary of the grant date in order to
vest in the corresponding number of SARs. The SARs have a term of
seven years.
The SARs will be settled in cash and have an exercise price of
$35.99, the closing price of the Companys common stock on the date
of grant. Upon the exercise of any SAR, the Company shall pay Mr.
OBryan, in cash, an amount equal to the excess of the aggregate
fair market value in respect of which the SARs are being exercised,
over the aggregate exercise price of the SARs being exercised. The
SARs are subject in all respects to the terms and conditions of the
Companys Equity Incentive Plan and the Stock Appreciation Rights
Agreement evidencing the grant, which contain non-solicitation,
non-competition and confidentiality provisions.
$35.99, the closing price of the Companys common stock on the date
of grant. Upon the exercise of any SAR, the Company shall pay Mr.
OBryan, in cash, an amount equal to the excess of the aggregate
fair market value in respect of which the SARs are being exercised,
over the aggregate exercise price of the SARs being exercised. The
SARs are subject in all respects to the terms and conditions of the
Companys Equity Incentive Plan and the Stock Appreciation Rights
Agreement evidencing the grant, which contain non-solicitation,
non-competition and confidentiality provisions.
Item 5.07. Submission of Matters to a Vote of Security Holders.
The Company held its annual meeting of shareholders (the Annual
Meeting) on June 6, 2017. At the Annual Meeting, shareholders voted
on the following proposals and cast their votes as described below.
Meeting) on June 6, 2017. At the Annual Meeting, shareholders voted
on the following proposals and cast their votes as described below.
Proposal 1
The individuals listed below were elected at the Annual Meeting to
serve on the Companys Board of Directors until the next annual
meeting of shareholders or until their respective successors are
duly elected and qualified.
serve on the Companys Board of Directors until the next annual
meeting of shareholders or until their respective successors are
duly elected and qualified.
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Nominee
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For
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Against
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Abstentions
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Broker Non-Votes
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SungHwan Cho
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13,716,448
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2,689,896
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27,652
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James C. Pontious
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16,242,879
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163,604
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27,513
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J. Mike Laisure
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16,126,078
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281,646
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26,272
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Harold First
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16,038,318
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367,418
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28,260
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Jonathan Frates
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13,416,515
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2,989,969
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27,512
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Michael Nevin
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13,420,720
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2,985,597
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27,679
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Proposal 2
An advisory vote on executive compensation, as described in the
proxy materials. This proposal was approved.
proxy materials. This proposal was approved.
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For
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Against
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Abstentions
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Broker Non-Votes
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16,017,819
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354,666
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61,511
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Proposal 3
An advisory vote regarding the frequency of holding a nonbinding
advisory vote on executive compensation, as described in the
proxy materials. “1 year” was approved.
advisory vote on executive compensation, as described in the
proxy materials. “1 year” was approved.
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1 Year
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2 Years
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3 Years
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Abstentions
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Broker Non-Votes
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15,646,629
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95,899
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647,107
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44,361
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In light of these results, and consistent with the Companys
recommendation, the Company will hold an advisory vote on
executive compensation every year.
recommendation, the Company will hold an advisory vote on
executive compensation every year.
Item 7.01 Regulation FD Disclosure.
On June 6, 2017, American Railcar Industries, Inc. (ARI or the
Company) issued a press release announcing the launch of in-house
management of its railcar leasing business and increases to its
sales force. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated herein in its entirety by
reference.
Company) issued a press release announcing the launch of in-house
management of its railcar leasing business and increases to its
sales force. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated herein in its entirety by
reference.
Limitation on Incorporation by Reference.>The information
furnished in this Item 7.01, including the press release attached
hereto as Exhibit 99.1, shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), or otherwise subject to the liabilities of that
section, nor shall such information be deemed incorporated by
reference in any filing under the Securities Act of 1933, as
amended (the Securities Act), or the Exchange Act, except as
expressly set forth by specific reference in such a filing.
furnished in this Item 7.01, including the press release attached
hereto as Exhibit 99.1, shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), or otherwise subject to the liabilities of that
section, nor shall such information be deemed incorporated by
reference in any filing under the Securities Act of 1933, as
amended (the Securities Act), or the Exchange Act, except as
expressly set forth by specific reference in such a filing.
Cautionary Note Regarding Forward-Looking Statements.>Except for
historical information contained in the press release attached as
Exhibit 99.1 hereto, the press release contains forward-looking
statements that involve certain risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied by these statements. Please refer to the cautionary notes
in the press release regarding these forward-looking statements.
historical information contained in the press release attached as
Exhibit 99.1 hereto, the press release contains forward-looking
statements that involve certain risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied by these statements. Please refer to the cautionary notes
in the press release regarding these forward-looking statements.
Item 8.01 Other Events.
As previously disclosed, on December 16, 2016, ARI entered into a
railcar management transition agreement (the Transition
Agreement) with American Railcar Leasing LLC (ARL) in
anticipation of the expected sale of ARL (the ARL Sale) to SMBC
Rail Services LLC (Buyer). The Transition Agreement, among other
things, addresses the proposed transition, from ARL to ARI
following the ARL Sale, of the management of railcars owned by
ARI (the ARI Railcars) and railcars owned by ARIs subsidiary,
Longtrain Leasing III, LLC (Longtrain) (the Longtrain Railcars).
American Entertainment
railcar management transition agreement (the Transition
Agreement) with American Railcar Leasing LLC (ARL) in
anticipation of the expected sale of ARL (the ARL Sale) to SMBC
Rail Services LLC (Buyer). The Transition Agreement, among other
things, addresses the proposed transition, from ARL to ARI
following the ARL Sale, of the management of railcars owned by
ARI (the ARI Railcars) and railcars owned by ARIs subsidiary,
Longtrain Leasing III, LLC (Longtrain) (the Longtrain Railcars).
American Entertainment
Properties Corporation (AEPC) and SMRSH LLC, an affiliate of
Buyer, are also parties to the Transition Agreement for the
limited purposes previously disclosed. Immediately prior to the
ARL Sale, ARL and its subsidiaries were controlled by Mr. Carl
Icahn, ARIs principal beneficial stockholder, through Icahn
Enterprises L.P. Following the ARL Sale, ARL will be controlled
by Buyer. AEPC is controlled by Mr. Icahn.
Buyer, are also parties to the Transition Agreement for the
limited purposes previously disclosed. Immediately prior to the
ARL Sale, ARL and its subsidiaries were controlled by Mr. Carl
Icahn, ARIs principal beneficial stockholder, through Icahn
Enterprises L.P. Following the ARL Sale, ARL will be controlled
by Buyer. AEPC is controlled by Mr. Icahn.
The ARL Sale was consummated (the ARL Closing) on June 1, 2017
(the ARL Closing Date). In connection with the ARL Closing, ARI
entered into the agreements described below on the ARL Closing
Date:
(the ARL Closing Date). In connection with the ARL Closing, ARI
entered into the agreements described below on the ARL Closing
Date:
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The Transition Agreement was amended by a Joinder and
Amendment to the Transition Agreement, principally to join ACF Industries, LLC, a company controlled by Mr. Icahn (ACF) as a party thereto, to address certain ACF books and records in the possession of ARL. |
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ARI, ARL, AEPC and AEP Rail Corp., a company controlled by
Mr. Icahn (AEP Rail), entered into an Electronic Mail Access Agreement that addresses procedures for the handling of certain electronic mail records of the parties in the possession and control of ARL prior to the ARL Closing. |
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ARI entered into substantially identical consulting services
agreements (each, a RemainCo Consulting Agreement and, collectively, the RemainCo Consulting Agreements) with each of AEPC RemainCo LLC (a wholly-owned subsidiary of AEPC) and AEP Rail RemainCo LLC (a wholly-owned subsidiary of AEP Rail) (each, a RemainCo and, collectively, the RemainCos). The RemainCos collectively own approximately 4,600 railcars that, to the terms and conditions of the purchase agreement governing the ARL Sale, may be sold to Buyer over a period of three years after the ARL Closing Date. Under the RemainCo Consulting Agreements, ARI has agreed to provide to each RemainCo, upon each RemainCos request, certain consulting services and facilitate communications among (i) each RemainCo, (ii) an unaffiliated, third party consultant engaged to assist each RemainCo to perform its duties regarding the inspection, testing and, if necessary, repair of railcars in accordance with the Federal Railroad Administration directive released September 30, 2016 and subsequently revised and superseded on November 18, 2016 (the Directive Duties), (iii) ARL, as manager of each RemainCos railcars (other than in respect of the Directive Duties), and (iv) other parties (collectively referred to as Services). In exchange for the Services to be performed under the RemainCo Consulting Agreements, each RemainCo will pay to ARI a total weekly fee calculated based on employee hours worked multiplied by an agreed upon rate for the Services performed. In addition, each RemainCo will reimburse ARI for all reasonable and documented costs and expenses incurred in accordance with each RemainCo Consulting Agreement. Each RemainCo Consulting Agreement is terminable by ARI or the applicable RemainCo upon five business days prior written notice with respect to any or all of the Services. |
Effective upon the ARL Closing, certain agreements between ARI
and its subsidiaries, on the one hand, and ARL, on the other
hand, were automatically terminated, and the obligations
thereunder discharged and released, all subject to the terms and
conditions of the Transition Agreement, including:
and its subsidiaries, on the one hand, and ARL, on the other
hand, were automatically terminated, and the obligations
thereunder discharged and released, all subject to the terms and
conditions of the Transition Agreement, including:
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the Railcar Services Agreement, dated April 15, 2011 (as
amended), between ARI and ARL, to which ARI provided ARL railcar repair, engineering, administrative and other services on an as-needed basis; |
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the Consulting Services Agreement, dated as of March 1, 2016,
between ARI and ARL, to which ARI provided legal services to ARL; |
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the Trademark License Agreement, dated as of June 30, 2005,
between ARI and ARL, to which ARI granted to ARL a license to use certain ARI trademarks; |
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the Consulting Services Agreement, dated as of February 15,
2017, between ARI and ARL, to which ARI provided customer service and engineering services to ARL upon ARL’s request; and |
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the Railcar Management Agreement, dated February 29, 2012 (as
amended), between ARI and ARL, to which ARL managed the ARI Railcars and marketed them for sale or lease. |
Effective as of the ARL Closing Date, ARI manages the ARI
Railcars and markets them for sale or lease.
Railcars and markets them for sale or lease.
to a Railcar Management Agreement, dated January 29, 2015,
between Longtrain and ARL (the Longtrain RMA), ARL, as manager,
has marketed Longtrain Railcars for lease, and has also arranged
for the operation, storage, re-lease, sublease, service, repair,
overhaul, replacement and maintenance of the Longtrain Railcars.
In addition, a subsidiary of ARL serves as administrator of the
accounts used to service the debt under the Longtrain Indenture
(as defined below). As previously disclosed, the Transition
Agreement, among other things, requires ARI to use commercially
reasonable efforts to obtain the consent of noteholders (the
Noteholder Consent) for ARI to replace ARL as manager of the
Longtrain Railcars under that certain Indenture, dated January
29, 2015, between Longtrain and U.S. Bank National Association,
as indenture trustee, to which Longtrain has issued certain notes
(the Longtrain Indenture), and certain related documents. ARI has
no obligation to pay any consent or similar fees in connection
with obtaining the Noteholder Consent.
between Longtrain and ARL (the Longtrain RMA), ARL, as manager,
has marketed Longtrain Railcars for lease, and has also arranged
for the operation, storage, re-lease, sublease, service, repair,
overhaul, replacement and maintenance of the Longtrain Railcars.
In addition, a subsidiary of ARL serves as administrator of the
accounts used to service the debt under the Longtrain Indenture
(as defined below). As previously disclosed, the Transition
Agreement, among other things, requires ARI to use commercially
reasonable efforts to obtain the consent of noteholders (the
Noteholder Consent) for ARI to replace ARL as manager of the
Longtrain Railcars under that certain Indenture, dated January
29, 2015, between Longtrain and U.S. Bank National Association,
as indenture trustee, to which Longtrain has issued certain notes
(the Longtrain Indenture), and certain related documents. ARI has
no obligation to pay any consent or similar fees in connection
with obtaining the Noteholder Consent.
As provided in the Transition Agreement, following the ARL
Closing the Longtrain RMA will continue in effect, with ARL
remaining as manager of the Longtrain Railcars under the
Longtrain RMA and the Longtrain Indenture, unless and until ARI
obtains the Noteholder Consent and becomes the manager of the
Longtrain Railcars. Further, as contemplated by the Transition
Agreement, effective as of the ARL Closing Date, ARI entered into
a sub-contract arrangement with ARL (the Subcontractor Agreement)
to provide services to ARL covering the day-to-day management of
the Longtrain Railcars and the leases associated therewith. Under
this arrangement, ARL and its subsidiary, as manager and
administrator, respectively, will remain in control of the
accounts used to service the debt under the Longtrain Indenture.
During the term of the Subcontractor Agreement, management fees
and expenses paid to ARL in respect of management duties
subcontracted to ARI will be paid by ARL to ARI. The
Subcontractor Agreement will continue until the earlier of the
date on which ARI becomes the manager of the Longtrain Railcars
following receipt of the Noteholder Consent, or the date that is
thirty (30) months after the ARL Closing Date, unless terminated
earlier to its terms.
Closing the Longtrain RMA will continue in effect, with ARL
remaining as manager of the Longtrain Railcars under the
Longtrain RMA and the Longtrain Indenture, unless and until ARI
obtains the Noteholder Consent and becomes the manager of the
Longtrain Railcars. Further, as contemplated by the Transition
Agreement, effective as of the ARL Closing Date, ARI entered into
a sub-contract arrangement with ARL (the Subcontractor Agreement)
to provide services to ARL covering the day-to-day management of
the Longtrain Railcars and the leases associated therewith. Under
this arrangement, ARL and its subsidiary, as manager and
administrator, respectively, will remain in control of the
accounts used to service the debt under the Longtrain Indenture.
During the term of the Subcontractor Agreement, management fees
and expenses paid to ARL in respect of management duties
subcontracted to ARI will be paid by ARL to ARI. The
Subcontractor Agreement will continue until the earlier of the
date on which ARI becomes the manager of the Longtrain Railcars
following receipt of the Noteholder Consent, or the date that is
thirty (30) months after the ARL Closing Date, unless terminated
earlier to its terms.
The independent directors of the Companys Audit Committee
reviewed and unanimously approved the terms and conditions of,
and the Companys entry into, the Companys agreements discussed
above with entities controlled by Mr. Icahn.
reviewed and unanimously approved the terms and conditions of,
and the Companys entry into, the Companys agreements discussed
above with entities controlled by Mr. Icahn.
The description above includes a summary of the terms of the
RemainCo Consulting Agreements and Subcontractor Agreement. This
description does not purport to be complete and is qualified in its
entirety by reference to the text of the RemainCo Consulting
Agreements and Subcontractor Agreement, copies of which are
attached hereto as Exhibits 10.1, 10.2 and 10.3 and are
incorporated herein by reference.
RemainCo Consulting Agreements and Subcontractor Agreement. This
description does not purport to be complete and is qualified in its
entirety by reference to the text of the RemainCo Consulting
Agreements and Subcontractor Agreement, copies of which are
attached hereto as Exhibits 10.1, 10.2 and 10.3 and are
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
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(d)
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Exhibits
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Exhibit
Number
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Description
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Exhibit 10.1
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Consulting Services Agreement, by and between American
Railcar Industries, Inc. and AEPC RemainCo LLC, dated June 1, 2017 |
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Exhibit 10.2
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Consulting Services Agreement, by and between American
Railcar Industries, Inc. and AEP Rail RemainCo LLC, dated June 1, 2017 |
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Exhibit 10.3
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Subcontractor Agreement, by and among American Railcar
Industries, Inc., American Railcar Leasing LLC and solely for the purposes of Section 5 thereof, American Entertainment Properties Corp., dated June 1, 2017 |
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Exhibit 99.1
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Press release dated June 6, 2017 of American Railcar
Industries, Inc. |
About AMERICAN RAILCAR INDUSTRIES, INC. (NASDAQ:ARII)
American Railcar Industries, Inc. is a designer and manufacturer of hopper and tank railcars. The Company designs, manufactures and sells railcars and a range of components for the North American railcar and industrial markets. The Company operates through three segments: manufacturing, railcar leasing and railcar services. The manufacturing consists of railcar manufacturing, and railcar and industrial component manufacturing. The railcar-leasing segment consists of railcars manufactured by the Company and leased to third parties under operating leases. The railcar services segment consists of railcar repair, engineering and field services. It manufactures over two types of railcars, hopper railcars and tank railcars. It also manufactures various components for railcar and industrial markets. It manufactures both general service and specialty hopper railcars at its Paragould plant. Its hopper railcars are designed for shipping a range of dry bulk products from light density products.
