FreightCar America, Inc. (Form: 10-Q, Received: 11/03/2015 15:47:40)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-51237

FREIGHTCAR AMERICA, INC.

(Exact name of registrant as specified in its charter)


Delaware		25-1837219
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Two North Riverside Plaza, Suite 1300 Chicago, Illinois		60606
(Address of principal executive offices)		(Zip Code)

(800) 458-2235

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

As of November 3, 2015, there were 12,328,014 shares of the registrant’s common stock outstanding.

FREIGHTCAR AMERICA, INC.

INDEX TO FORM 10-Q


Item Number		Page Number

PART I – FINANCIAL INFORMATION

1.	Financial Statements:

	Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2015 and December 31, 2014		3

	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2015 and 2014		4

	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Nine Months Ended September 30, 2015 and 2014		5

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Nine Months Ended September 30, 2015 and 2014		6

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2015 and 2014		7

	Notes to Condensed Consolidated Financial Statements (Unaudited)		8

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21

3.	Quantitative and Qualitative Disclosures About Market Risk		29

4.	Controls and Procedures		30

PART II – OTHER INFORMATION

1.	Legal Proceedings		30

1A.	Risk Factors		31

2.	Unregistered Sales of Equity Securities and Use of Proceeds		31

3.	Defaults Upon Senior Securities		31

4.	Mine Safety Disclosures		31

5.	Other Information		31

6.	Exhibits		32

	Signatures		33

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements.

FreightCar America, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


	September 30, 2015			December 31, 2014
	*(In thousands, except for share and per share data)*
Assets
Current assets
Cash and cash equivalents	$	94,997		$	113,532
Restricted cash and restricted certificates of deposit		6,896			6,015
Marketable securities		30,009			47,961
Accounts receivable, net of allowance for doubtful accounts of $80 and $188, respectively		28,824			4,086
Inventories, net		141,676			82,259
Inventory on lease		—			116
Other current assets		8,300			7,057
Deferred income taxes, net		10,214			12,139

Total current assets		320,916			273,165

Property, plant and equipment, net		44,055			43,239
Railcars available for lease, net		16,126			22,897
Goodwill		21,521			22,128
Deferred income taxes, net		22,883			21,553
Other long-term assets		2,900			2,270

Total assets	$	428,401		$	385,252

Liabilities and Stockholders’ Equity
Current liabilities
Accounts and contractual payables	$	59,136		$	34,010
Accrued payroll and employee benefits		6,565			6,462
Accrued postretirement benefits		409			409
Accrued warranty		9,305			8,742
Customer deposits and deferred revenue		11,074			43,977
Income taxes payable		7,308			—
Other current liabilities		7,458			4,725

Total current liabilities		101,255			98,325

Accrued pension costs		6,665			7,210
Accrued postretirement benefits, less current portion		75,460			73,474
Deferred income – state and local incentives, long-term		12,722			—
Accrued taxes and other long-term liabilities		10,699			7,548

Total liabilities		206,801			186,557


Stockholders’ equity
Preferred stock, $0.01 par value, 2,500,000 shares authorized (100,000 shares each designated as Series A voting and Series B non-voting, 0 shares issued and outstanding at September 30, 2015 and December 31, 2014)		—			—
Common stock, $0.01 par value, 50,000,000 shares authorized, 12,731,678 shares issued at September 30, 2015 and December 31, 2014		127			127
Additional paid in capital		93,488			100,303
Treasury stock, at cost, 403,664 and 665,869 shares at September 30, 2015 and December 31, 2014, respectively		(17,623	)		(29,971	)
Accumulated other comprehensive loss		(23,486	)		(24,017	)
Retained earnings		169,094			152,253

Total stockholders’ equity		221,600			198,695

Total liabilities and stockholders’ equity	$	428,401		$	385,252

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	*(In thousands, except for share and per share data)*

Revenues	$	241,114		$	190,280		$	569,555		$	386,054
Cost of sales		212,064			171,461			514,146			359,333

Gross profit		29,050			18,819			55,409			26,721
Selling, general and administrative expenses		10,706			9,215			30,473			26,296
Gain on sale of railcars available for lease		—			(635	)		(1,187	)		(653	)
Gain on sale of railcar repair and maintenance services business and facility		(4,578	)		(1,078	)		(4,578	)		(1,078	)

Operating income		22,922			11,317			30,701			2,156
Interest expense and deferred financing costs		(56	)		(284	)		(184	)		(854	)
Other income		8			7			91			48

Income before income taxes		22,874			11,040			30,608			1,350
Income tax provision		8,047			4,608			10,457			252

Net income	$	14,827		$	6,432		$	20,151		$	1,098

Net income per common share – basic	$	1.20		$	0.53		$	1.65		$	0.09

Net income per common share – diluted	$	1.20		$	0.53		$	1.64		$	0.09

Weighted average common shares outstanding – basic		12,241,211			12,007,970			12,153,313			11,999,150

Weighted average common shares outstanding – diluted		12,241,426			12,108,397			12,207,432			12,088,728


Dividends declared per common share	$	0.09		$	0.06		$	0.27		$	0.18

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	*(In thousands)*
Net income	$	14,827	$	6,432	$	20,151	$	1,098

Other comprehensive income:
Pension liability adjustments, net of tax		71		34		205		102
Postretirement liability adjustments, net of tax		112		99		326		297

Other comprehensive income		183		133		531		399

Comprehensive income	$	15,010	$	6,565	$	20,682	$	1,497

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(in thousands, except for share data)


					Additional Paid In Capital									Accumulated Other			Retained Earnings			Total Stockholders’ Equity
	Common Stock							Treasury Stock						Comprehensive
	Shares		Amount					Shares			Amount			Loss

Balance, December 31, 2013		12,731,678	$	127	$	99,265			(682,264	)	$	(30,970	)	$	(15,132	)	$	149,245		$	202,535

Net income		—		—		—			—			—			—			1,098			1,098
Other comprehensive income		—		—		—			—			—			399			—			399
Stock options exercised		—		—		(137	)		6,185			280			—			—			143
Restricted stock awards		—		—		(1,048	)		23,212			1,048			—			—			—
Employee stock settlement		—		—		—			(8,709	)		(224	)		—			—			(224	)
Stock-based compensation recognized		—		—		1,576			—			—			—			—			1,576
Forfeiture of restricted stock awards		—		—		138			(4,643	)		(138	)		—			—			—
Cash dividends		—		—		—			—			—			—			(2,171	)		(2,171	)

Balance, September 30, 2014		12,731,678	$	127	$	99,794			(666,219	)	$	(30,004	)	$	(14,733	)	$	148,172		$	203,356


Balance, December 31, 2014		12,731,678	$	127	$	100,303			(665,869	)	$	(29,971	)	$	(24,017	)	$	152,253		$	198,695

Net income		—		—		—			—			—			—			20,151			20,151
Other comprehensive income		—		—		—			—			—			531			—			531
Stock options exercised		—		—		(5,728	)		238,475			10,613			—			—			4,885
Restricted stock awards		—		—		(2,880	)		64,317			2,880			—			—			—
Forfeiture of restricted stock awards		—		—		94			(4,635	)		(94	)		—			—			—
Employee stock settlement		—		—		—			(35,952	)		(1,051	)		—			—			(1,051	)
Stock-based compensation recognized		—		—		1,686			—			—			—			—			1,686
Excess tax benefit from stock-based compensation		—		—		13			—			—			—			—			13
Cash dividends		—		—		—			—			—			—			(3,310	)		(3,310	)

Balance, September 30, 2015		12,731,678	$	127	$	93,488			(403,664	)	$	(17,623	)	$	(23,486	)	$	169,094		$	221,600

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
	2015			2014
	*(In thousands)*
Cash flows from operating activities
Net income	$	20,151		$	1,098
Adjustments to reconcile net income to net cash flows used in operating activities
Depreciation and amortization		7,551			7,481
Recognition of deferred income from state and local incentives		(883	)		—
Gain on sale of railcars available for lease		(1,187	)		(653	)
Gain on sale of railcar repair and maintenance services business and facility		(4,578	)		(1,078	)
Deferred income taxes		296			116
Stock-based compensation recognized		1,686			1,576
Other non-cash items, net		1,555			795
Changes in operating assets and liabilities:
Accounts receivable		(27,514	)		(29,500	)
Inventories		(63,488	)		(37,509	)
Inventory on lease		116			(8,721	)
Other assets		(1,307	)		(4,380	)
Accounts and contractual payables		25,180			47,922
Accrued payroll and employee benefits		295			1,280
Income taxes receivable/payable		8,050			870
Accrued warranty		563			1,734
Customer deposits and other liabilities		(29,471	)		(90,794	)
Accrued pension costs and accrued postretirement benefits		1,972			1,422

Net cash flows used in operating activities		(61,013	)		(108,341	)

Cash flows from investing activities
Restricted cash deposits		—			(1,017	)
Restricted cash withdrawals		—			2,782
Purchase of restricted certificates of deposit		(2,165	)		—
Maturity of restricted certificates of deposit		1,284			—
Purchase of securities held to maturity		(17,997	)		(50,974	)
Proceeds from maturity of securities		36,004			42,002
Proceeds from sale of property, plant and equipment and railcars available for lease		7,654			5,907
Proceeds from sale of railcar repair and maintenance services business and facility		17,589			2,124
Purchases of property, plant and equipment		(16,161	)		(8,248	)
State and local incentives received		15,733			—

Net cash flows provided by (used in) investing activities		41,941			(7,424	)

Cash flows from financing activities
Stock option exercise		4,885			143
Employee stock settlement		(1,051	)		(224	)
Excess tax benefit from stock-based compensation		13			—
Cash dividends paid to stockholders		(3,310	)		(2,171	)
Reduction in customer advance for production of leased railcars		—			(1,035	)

Net cash flows provided by (used in) financing activities		537			(3,287	)

Net decrease in cash and cash equivalents		(18,535	)		(119,052	)
Cash and cash equivalents at beginning of period		113,532			145,506

Cash and cash equivalents at end of period	$	94,997		$	26,454

Supplemental cash flow information:
Interest paid	$	101		$	42

Income taxes paid	$	3,061		$	51

Income tax refunds received	$	646		$	573

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except for share and per share data)

Note 1 – Description of the Business

FreightCar America, Inc. (“FreightCar”) operates primarily in North America through its direct and indirect subsidiaries, JAC Operations, Inc., Johnstown America, LLC, Freight Car Services, Inc., JAIX Leasing Company (“JAIX”), FreightCar Roanoke, LLC, FreightCar Mauritius Ltd. (“Mauritius”), FreightCar Rail Services, LLC (“FCRS”), FreightCar Short Line, Inc. (“FCSL”), FreightCar Alabama, LLC and FreightCar (Shanghai) Trading Co., Ltd. (herein collectively referred to as the “Company”), and manufactures a wide range of railroad freight cars, supplies railcar parts and leases freight cars. The Company designs and builds high-quality railcars, including coal cars, bulk commodity cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars and boxcars. The Company is headquartered in Chicago, Illinois and has facilities in the following locations: Cherokee, Alabama; Danville, Illinois; Grand Island, Nebraska; Johnstown, Pennsylvania; Roanoke, Virginia; and Shanghai, People’s Republic of China.

The Company’s operations comprise two reportable segments, Manufacturing and Services. The Company and its direct and indirect subsidiaries are all Delaware corporations or Delaware limited liability companies except Mauritius, which is incorporated in Mauritius, and FreightCar (Shanghai) Trading Co., Ltd., which is organized in the People’s Republic of China. The Company’s direct and indirect subsidiaries are all wholly owned.

Note 2 – Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of FreightCar America, Inc. and subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The foregoing financial information has been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial reporting. The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year. The accompanying interim financial information is unaudited; however, the Company believes the financial information reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP. The 2014 year-end balance sheet data was derived from the audited financial statements as of December 31, 2014. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. These interim financial statements should be read in conjunction with the audited financial statements contained in the Company’s annual report on Form 10-K for the year ended December 31, 2014.

Note 3 – Recent Accounting Pronouncements

In July 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-11, Inventory (Topic 330), which requires entities to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. Under ASU 2015-11, inventory is measured at the lower of cost and net realizable value, which eliminates the need to determine replacement cost and evaluate whether it is above the ceiling (net realizable value) or below the floor (net realizable value less normal profit margin). ASU 2015-11 defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This standard is effective prospectively for annual reporting periods beginning after December 15, 2016 (early adoption is permitted). The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and related disclosures.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the debt issuance costs will continue to be reported as interest expense. This standard is effective retrospectively for annual reporting periods beginning after December 15, 2016 (early adoption is permitted). The adoption of these changes is not expected to have a material impact on the consolidated financial position, results of operations or cash flows of the Company.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810) Amendments to the Consolidation Analysis, which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The new guidance affects the following areas: (1) limited partnerships and similar legal entities; (2) evaluating fees paid to a decision maker or a service provider as a variable interest; (3) the effect of fee arrangements on the primary beneficiary determination; (4) the effect of related parties on the primary beneficiary determination; and (5) certain investment funds. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the guidance in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. A reporting entity may apply the amendments in this guidance using a modified retrospective approach by recording a cumulative effect adjustment to equity as of the beginning of the fiscal year of adoption. A reporting entity also may apply the amendments retrospectively. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition . ASU 2014-09 provides for a single five-step model to be applied to all revenue contracts with customers. ASU 2014-09 also requires additional financial statement disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance obligations. On July 9, 2015 the FASB voted to approve a one year delay of the effective date to annual reporting periods beginning after December 15, 2017, and to permit companies to voluntarily adopt the new standard as of the original effective date. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect that the standard is expected to have on its consolidated financial position, results of operations and cash flows and related disclosures.

Note 4 – Segment Information

The Company’s operations comprise two reportable segments, Manufacturing and Services. The Company’s Manufacturing segment includes new railcar manufacturing, used railcar sales, railcar leasing and major railcar rebuilds. Through September 30, 2015, the Company’s Services segment included general railcar repair and maintenance, inspections and parts sales. Corporate includes selling, general and administrative expenses not related to production of goods and services, retiree pension and other postretirement benefit costs, and all other non-operating activity.

Segment operating income is an internal performance measure used by the Company’s Chief Operating Decision Maker to assess the performance of each segment in a given period. Segment operating income includes all external revenues attributable to the segments as well as operating costs and income that management believes are directly attributable to the current production of goods and services. The Company’s management reporting package does not include interest revenue, interest expense or income taxes allocated to individual segments and these items are not considered as a component of segment operating income. Segment assets represent operating assets and exclude intersegment accounts, deferred tax assets and income tax receivables. The Company does not allocate cash and cash equivalents to its operating segments as the Company’s treasury function is managed at the corporate level. Intersegment revenues were not material in any period presented.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues:
Manufacturing	$	233,294	$	181,490	$	545,407	$	358,248
Services		7,820		8,790		24,148		27,806

Consolidated revenues	$	241,114	$	190,280	$	569,555	$	386,054


	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Operating income:
Manufacturing	$	25,817		$	16,185		$	44,910		$	18,584
Services ⁽¹⁾		5,229			1,633			7,917			2,277
Corporate		(8,124	)		(6,501	)		(22,126	)		(18,705	)

Consolidated operating income		22,922			11,317			30,701			2,156
Consolidated interest expense and deferred financing costs		(56	)		(284	)		(184	)		(854	)
Consolidated other income		8			7			91			48

Consolidated income before income taxes	$	22,874		$	11,040		$	30,608		$	1,350


Depreciation and amortization:
Manufacturing	$	1,807		$	1,740		$	5,185		$	5,060
Services		339			367			1,024			1,155
Corporate		457			429			1,342			1,266

Consolidated depreciation and amortization	$	2,603		$	2,536		$	7,551		$	7,481


Capital expenditures:
Manufacturing	$	5,176		$	2,460		$	14,640		$	7,591
Services		660			88			1,125			393
Corporate		162			55			396			264

Consolidated capital expenditures	$	5,998		$	2,603		$	16,161		$	8,248

⁽¹⁾

Results for the three and nine months ended September 30, 2015 included a $4,578 gain on sale of the Company’s railcar repair and maintenance services business. Results for the three and nine months ended September 30, 2014 included a $1,078 gain on sale of the Company’s Clinton repair shop assets (see Note 21).


	September 30, 2015		December 31, 2014

Assets:
Manufacturing	$	246,556	$	157,505
Services		8,846		18,085
Corporate		139,902		175,806

Total operating assets		395,304		351,396
Consolidated income taxes receivable		—		164
Consolidated deferred income taxes, current		10,214		12,139
Consolidated deferred income taxes, long-term		22,883		21,553

Consolidated assets	$	428,401	$	385,252

Note 5 – Fair Value Measurements

The following table sets forth by level within the ASC 820 fair value hierarchy the Company’s financial assets that were recorded at fair value on a recurring basis.


Recurring Fair Value Measurements	As of September 30, 2015
	Level 1		Level 2		Level 3		Total
ASSETS:
Cash equivalents	$	95	$	—	$	—	$	95
Restricted certificates of deposit	$	6,896	$	—	$	—	$	6,896
Escrow receivable	$	—	$	—	$	1,910	$	1,910


Recurring Fair Value Measurements	As of December 31, 2014
	Level 1		Level 2		Level 3		Total
ASSETS:
Cash equivalents	$	50,070	$	—	$	—	$	50,070
Restricted certificates of deposit	$	6,015	$	—	$	—	$	6,015

No non-financial assets were recorded at fair value on a non-recurring basis at each of September 30, 2015 and December 31, 2014.

Note 6 – Marketable Securities

The Company’s current investment policy is to invest in cash, certificates of deposit, U.S. treasury securities, U.S. government agency obligations and money market funds invested in U.S. government securities. Marketable securities as of September 30, 2015 of $30,009 consisted of U.S. treasury securities held to maturity and certificates of deposit with original maturities of greater than 90 days and up to one year. Marketable securities as of December 31, 2014 of $47,961 consisted of U.S. treasury securities held to maturity with original maturities of greater than 90 days and up to one year. Due to the short-term nature of these securities and their low interest rates, there is no material difference between their fair market values and amortized costs.

Note 7 – Inventories

Inventories, net of reserve for excess and obsolete items, consist of the following:


	September 30, 2015		December 31, 2014
Work in progress	$	134,487	$	76,453
Finished new railcars		2,809		—
Parts and service inventory		4,380		5,806

Total inventories	$	141,676	$	82,259

Inventory on the Company’s condensed consolidated balance sheets includes reserves of $3,916 and $2,381 relating to excess and obsolete inventory for parts and work in progress at September 30, 2015 and December 31, 2014, respectively. Amounts in the table above as of September 30, 2015 reflect reductions of $2,537 in parts and service inventory and total inventories related to the Company’s sale of its railcar repair and maintenance services business on September 30, 2015 (see Note 21).

Note 8 – Leased Railcars

Inventory on lease was $0 and $116 at September 30, 2015 and December 31, 2014, respectively. Railcars available for lease, net at September 30, 2015 was $16,126 (cost of $19,230 and accumulated depreciation of $3,104) and at December 31, 2014 was $22,897 (cost of $26,852 and accumulated depreciation of $3,955). The Company’s lease utilization rate for railcars in its lease fleet was 65% and 100% at September 30, 2015 and December 31, 2014, respectively.

Leased railcars at September 30, 2015 are subject to lease agreements with external customers with terms of up to six years and are accounted for as operating leases.

Future minimum rental revenues on leased railcars at September 30, 2015 are as follows:


Three months ending December 31, 2015	$	322
Year ending December 31, 2016		1,256
Year ending December 31, 2017		1,256
Year ending December 31, 2018		668
Year ending December 31, 2019		551
Thereafter		826

	$	4,879

Note 9 – Property, Plant and Equipment

Property, plant and equipment consists of the following:


	September 30, 2015			December 31, 2014
Buildings and improvements	$	2,361		$	10,731
Machinery and equipment		60,105			50,771
Software		8,826			8,299
Leasehold improvements		8,402			6,983

Cost of buildings and improvements, leasehold improvements, machinery, equipment and software		79,694			76,784
Less: Accumulated depreciation and amortization		(38,895	)		(38,747	)

Buildings and improvements, leasehold improvements, machinery, equipment and software, net of accumulated depreciation and amortization		40,799			38,037
Land (including easements)		151			1,976
Construction in process		3,105			3,226

Total property, plant and equipment, net	$	44,055		$	43,239

Amounts in the table above as of September 30, 2015 reflect reductions of $7,740 in total property, plant and equipment, net, related to the Company’s sale of its railcar repair and maintenance services business on September 30, 2015 (see Note 21).

Note 10 – Intangible Assets and Goodwill

Intangible assets consist of the following:


	September 30, 2015			December 31, 2014

Patents	$	13,097		$	13,097
Accumulated amortization		(12,590	)		(12,147	)

Patents, net of accumulated amortization		507			950


Customer-related intangibles		—			1,194
Accumulated amortization		—			(491	)

Customer-related intangibles, net of accumulated amortization		—			703

Total amortizing intangibles	$	507		$	1,653


Manufacturing segment goodwill	$	21,521		$	21,521
Services segment goodwill		—			607

Total goodwill	$	21,521		$	22,128

Patents are being amortized on a straight-line basis over their remaining legal life from the date of acquisition. The weighted average remaining life of the Company’s patents is approximately two years. Amortization expense related to patents, which is included in cost of sales, was $148 for each of the three months ended September 30, 2015 and 2014, and $443 for each of the nine months ended September 30, 2015 and 2014. Amortization expense related to customer intangibles, which is included in selling, general and administrative expenses, was $27 and $32 for the three months ended September 30, 2015 and 2014, respectively, and $81 and $97 for the nine months ended September 30, 2015 and 2014, respectively. Amounts in the table above as of September 30, 2015 reflect reductions of $623 in customer-related intangibles, net of accumulated amortization, and $607 in Services segment goodwill related to the Company’s sale of its railcar repair and maintenance services business on September 30, 2015 (see Note 21).

The estimated future intangible amortization at September 30, 2015 is as follows:


Three months ending December 31, 2015	$	147
Year ending December 31, 2016		360
Year ending December 31, 2017		—
Year ending December 31, 2018		—
Year ending December 31, 2019		—
Thereafter		—

	$	507

The Company assesses the carrying value of goodwill for impairment annually or more frequently whenever events occur and circumstances change indicating potential impairment. On August 1, 2015, the Company performed its annual assessment and concluded that the estimated fair value of the Company’s reporting units exceeded the carrying value as of the testing date.

Management determines the fair value of the reporting units using a combination of the income approach, utilizing the discounted cash flow method, and the market approach, utilizing the guideline company method. The negotiated sales price for the Company’s railcar maintenance and repair services business was used in evaluating goodwill impairment for the Services reporting unit as of August 1, 2015.

Note 11 – Product Warranties

Warranty terms are based on the negotiated railcar sales contracts. The Company typically warrants that new railcars produced by it will be free from defects in material and workmanship under normal use and service identified for a period of up to five years from the time of sale. The changes in the warranty reserve for the three and nine months ended September 30, 2015 and 2014, are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Balance at the beginning of the period	$	8,657		$	8,158		$	8,742		$	6,957
Provision for warranties issued during the period		998			711			2,234			1,501
Reductions for payments, cost of repairs and other		(327	)		(219	)		(1,308	)		(480	)
Adjustments to prior warranties		(23	)		41			(363	)		713

Balance at the end of the period	$	9,305		$	8,691		$	9,305		$	8,691

Note 12 – State and Local Incentives

The Company records state and local incentives when there is reasonable assurance that the incentive will be received and the Company is able to comply with the conditions attached to the incentives received. State and local incentives related to assets are recorded as deferred income and recognized on a straight-line basis over the useful life of the related assets of seven to nine years.

During the nine months ended September 30, 2015, the Company received cash payments of $15,733 for Alabama state and local incentives related to the Company’s capital investment and employment levels at its Cherokee, Alabama (“Shoals”) facility. Under the incentive agreements, a certain portion of the incentives may be repayable by the Company if targeted levels of employment are not maintained. The Company’s level of employment at its Shoals facility currently exceeds and is expected to continue to exceed the targeted levels of employment.

The changes in deferred income from state incentives for the three and nine months ended September 30, 2015 and 2014, are as follows:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Balance at the beginning of the period	$	4,556		$	—	$	—		$	—
State and local incentives received during the period		10,826			—		15,733			—
Recognition of state and local incentives as reduction of cost of sales		(532	)		—		(883	)		—

Balance at the end of the period, including current portion	$	14,850		$	—	$	14,850		$	—

Note 13 – Revolving Credit Facility

The Company entered into a $50,000 senior secured revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit Agreement dated as of July 26, 2013 (the “Credit Agreement”) by and among FreightCar and certain of its subsidiaries, as borrowers (together the “Borrowers”), and Bank of America, N.A., as lender. The Revolving Credit Facility can be used for general corporate purposes, including working capital. As of September 30, 2015, the Company had no borrowings under the Revolving Credit Facility. The Credit Agreement also contains a sub-facility for letters of credit not to exceed the lesser of $30,000 and the amount of the senior secured revolving credit facility at such time. As of September 30, 2015, the Company had $6,896 in outstanding letters of credit under the Revolving Credit Facility and therefore had $43,104 available for borrowing under the Revolving Credit Facility. The Credit Agreement has a term ending on July 26, 2016 and revolving loans outstanding thereunder will bear interest at a rate of LIBOR plus an applicable margin of 1.50% or at a base rate, as selected by the Company. Base rate loans will bear interest at the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate or (c) LIBOR plus 1.00%. The Company is required to pay a non-utilization fee of between 0.10% and 0.30% on the unused portion of the revolving loan commitment depending on the Company’s quarterly average balance of unrestricted cash and the Company’s consolidated leverage ratio. Borrowings under the Revolving Credit Facility are secured by a first priority perfected security interest in substantially all of the Borrowers’ assets excluding railcars held by the Company’s railcar leasing subsidiary, JAIX. The Borrowers also have pledged all of the equity interests in the Company’s direct and indirect domestic subsidiaries as security for the Revolving Credit Facility. The Credit Agreement has both affirmative and negative covenants, including, without limitation, a covenant requiring minimum consolidated net liquidity of $35,000 and limitations on indebtedness, liens and investments. The Credit Agreement also provides for customary events of default.

As of December 31, 2014, the Company had $6,015 in outstanding letters of credit under the Revolving Credit Facility and therefore had $43,985 available for borrowing under the Revolving Credit Facility. As of December 31, 2014, the Company had no borrowings under the Revolving Credit Facility.

Note 14 – Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) consist of the following:


	Pre-Tax		Tax		Net of Tax
Three months ended September 30, 2015
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax cost of sales of $83 and selling, general and administrative expenses of $27)	$	110	$	39	$	71
Postretirement liability activity:
Reclassification adjustment for amortization of net loss (pre-tax cost of sales of $142 and selling, general and administrative expenses of $20)		162		56		106
Reclassification adjustment for amortization of prior service cost (pre-tax cost of sales of $9 and selling, general and administrative expenses of $1)		10		4		6

	$	282	$	99	$	183


	Pre-Tax		Tax		Net of Tax
Three months ended September 30, 2014
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax cost of sales of $44 and selling, general and administrative expenses of $9)	$	53	$	19	$	34
Postretirement liability activity:
Reclassification adjustment for amortization of net loss (pre-tax cost of sales of $82 and selling, general and administrative expenses of $10)		92		32		60
Reclassification adjustment for amortization of prior service cost (pre-tax cost of sales of $54 and selling, general and administrative expenses of $6)		60		21		39

	$	205	$	72	$	133


	Pre-Tax		Tax		Net of Tax
Nine months ended September 30, 2015
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax cost of sales of $250 and selling, general and administrative expenses of $80)	$	330	$	125	$	205
Postretirement liability activity:
Reclassification adjustment for amortization of net loss (pre-tax cost of sales of $426 and selling, general and administrative expenses of $60)		486		180		306
Reclassification adjustment for amortization of prior service cost (pre-tax cost of sales of $27 and selling, general and administrative expenses of $4)		31		11		20

	$	847	$	316	$	531


	Pre-Tax		Tax		Net of Tax
Nine months ended September 30, 2014
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax cost of sales of $133 and selling, general and administrative expenses of $26)	$	159	$	57	$	102
Postretirement liability activity:
Reclassification adjustment for amortization of net loss (pre-tax cost of sales of $248 and selling, general and administrative expenses of $30)		278		98		180
Reclassification adjustment for amortization of prior service cost (pre-tax cost of sales of $162 and selling, general and administrative expenses of $18)		180		63		117

	$	617	$	218	$	399

The components of accumulated other comprehensive loss consist of the following:


	September 30, 2015			December 31, 2014

Unrecognized pension cost, net of tax of $6,400 and $6,525	$	(10,433	)	$	(10,638	)
Unrecognized postretirement cost, net of tax of $7,795 and $7,986		(13,053	)		(13,379	)

	$	(23,486	)	$	(24,017	)

Note 15 – Stock-Based Compensation

The Company recognizes stock-based compensation expense for stock option awards based on the fair value of the award on the grant date using the Black-Scholes option valuation model. Expected life in years for all stock options awards was determined using the simplified method. The Company believes that it is appropriate to use the simplified method in determining the expected life for options because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for stock options and due to the limited number of stock option grants to date. Expected volatility was based on the historical volatility of the Company’s stock. The risk-free interest rate was based on the U.S. Treasury bond rate for the expected life of the option. The expected dividend yield was based on the latest annualized dividend rate and the current market price of the underlying common stock on the date of the grant. The Company recognizes stock-based compensation for restricted stock awards over the vesting period based on the fair market value of the stock on the date of the award, calculated as the average of the high and low trading prices for the Company’s common stock on the award date.

Total stock-based compensation was $508 and $476 for the three months ended September 30, 2015 and 2014, respectively, and $1,686 and $1,576 for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015, there was $2,556 of unearned compensation expense related to stock options and restricted stock awards, which will be recognized over the remaining requisite service period of 27 months.

Note 16 – Employee Benefit Plans

The Company has qualified, defined benefit pension plans that were established to provide benefits to certain employees. These plans are frozen and participants are no longer accruing benefits. The Company also provides certain postretirement health care benefits for certain of its salaried and hourly retired employees. Generally, employees may become eligible for health care benefits if they retire after attaining specified age and service requirements. These benefits are subject to deductibles, co-payment provisions and other limitations.

A substantial portion of the Company’s postretirement benefit plan obligation relates to an expired settlement agreement with the union representing employees at the Company’s and its predecessors’ Johnstown manufacturing facilities. The terms of that settlement agreement (the “2005 Settlement Agreement”) required the Company to pay until November 30, 2012 certain monthly amounts toward the cost of retiree health care coverage. The Company engaged in voluntary negotiations for two years in an effort to reach a consensual agreement related to the expired 2005 Settlement Agreement but no agreement was reached. The Company terminated, effective November 1, 2013, its contributions for medical coverage and life insurance benefits to affected retirees and thereafter sought declaratory relief to confirm the Company’s rights under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), to reduce or terminate retiree medical coverage and life insurance benefits pursuant to the plans that were the subject of the 2005 Settlement Agreement. On July 9, 2013, the union and certain retiree defendants filed suit in the United States District Court for the Western District of Pennsylvania regarding the same dispute (see Note 17). On August 15, 2015, the parties reached a settlement in principle of that dispute, which must be approved by the Court. Until final approval is obtained, the outcome of the pending litigation cannot be determined. The Company’s recorded postretirement benefit plan obligation assumes for accounting purposes a continuation of those monthly payments after November 30, 2012 (as was permitted under the settlement). However, the Company’s postretirement benefit plan obligation could significantly increase or decrease as a result of the litigation depending upon whether the parties’ preliminary settlement agreement is approved by the Pennsylvania court (see Note 17).

Generally, contributions to the plans are not less than the minimum amounts required under ERISA and not more than the maximum amount that can be deducted for federal income tax purposes. The plans’ assets are held by independent trustees and consist primarily of equity and fixed income securities.

The components of net periodic benefit cost (benefit) for the three and nine months ended September 30, 2015 and 2014, are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Pension Benefits
Interest cost	$	580		$	661		$	1,740		$	1,983
Expected return on plan assets		(761	)		(905	)		(2,283	)		(2,715	)
Amortization of unrecognized net loss		110			53			330			159

	$	(71	)	$	(191	)	$	(213	)	$	(573	)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Postretirement Benefit Plan
Service cost	$	17	$	16	$	51	$	48
Interest cost		743		750		2,229		2,250
Amortization of prior service cost		10		60		31		180
Amortization of unrecognized net loss		162		92		486		278

	$	932	$	918	$	2,797	$	2,756

The Company made contributions to the Company’s defined benefit pension plans of $0 and $108 for the three months ended September 30, 2015 and 2014, respectively, and $0 and $217 for the nine months ended September 30, 2015 and 2014, respectively. The Company expects to make no contributions to its pension plans in 2015.

The Company made contributions to the Company’s postretirement benefit plan of $99 and $107 for the three months ended September 30, 2015 and 2014, respectively, and $294 and $323 for the nine months ended September 30, 2015 and 2014, respectively. The Company expects to make $409 in contributions (including contributions already made) to its postretirement benefit plan in 2015 for salaried retirees. However, because the Company’s postretirement benefit plan obligation is currently subject to litigation, the postretirement benefit contributions for hourly retirees, if any, are unknown at this time.

The Company also maintains qualified defined contribution plans, which provide benefits to employees based on employee contributions, employee earnings or certain subsidiary earnings, with discretionary contributions allowed. Expenses related to these plans were $836 and $443 for the three months ended September 30, 2015 and 2014, respectively, and $2,199 and $1,142 for the nine months ended September 30, 2015 and 2014, respectively.

Note 17 – Contingencies

The Company is involved in various warranty and repair claims and, in certain cases, related pending and threatened legal proceedings with its customers in the normal course of business. In the opinion of management, the Company’s potential losses in excess of the accrued warranty and legal provisions, if any, are not expected to be material to the Company’s consolidated financial condition, results of operations or cash flows.

On July 8, 2013, the Company filed a Complaint for Declaratory Judgment (the “Complaint”) in the United States District Court for the Northern District of Illinois, Eastern Division (the “Illinois Court”). The case names as defendants the United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Services Workers International Union, AFL-CIO, CLC (the “USW”), as well as approximately 650 individual Retiree Defendants (as defined in the Complaint), and was assigned Case No 1:13-cv-4889.

As described in the Complaint, pursuant to the 2005 Settlement Agreement among the Company, the USW and the Retiree Defendants, the Company agreed to make certain levels of contributions to medical coverage for the Retiree Defendants and to continue to provide life insurance benefits at their amount at that time under certain of the Company’s employee welfare benefit plans. The 2005 Settlement Agreement expressly provided that, as of November 30, 2012, the Company could cease making these contributions. In June 2011, the Company and the USW began discussing the possibility of an extension beyond November 30, 2012 for the Company’s contributions to retiree medical coverage and life insurance benefits at a reduced amount and on other mutually acceptable terms. The Company engaged in voluntary negotiations for two years with the USW and counsel for the Retiree Defendants in an effort to reach a consensual agreement regarding such medical and life insurance benefits, but the parties were unable to reach a final agreement. The Company terminated, effective November 1, 2013, its contributions for medical coverage provided to the Retiree Defendants and the provision of life insurance benefits and is seeking declaratory relief to confirm its rights under ERISA to reduce or terminate retiree medical coverage and life insurance benefits pursuant to the plans that were the subject of the 2005 Settlement Agreement.

On July 9, 2013, the USW and certain Retiree Defendants (collectively, the “Pennsylvania Plaintiffs”) filed a putative class action in the United States District Court for the Western District of Pennsylvania (the “Pennsylvania Court”), captioned as Zanghi, et al. v. FreightCar America, Inc., et al., Case No. 3:13-cv-146. The complaint filed with the Pennsylvania Court alleges that the Company does not have the right to terminate welfare benefits previously provided to the Retiree Defendants and requests, among other relief, entry of a judgment finding that the Retiree Defendants have a vested right to specified welfare benefits.

On July 26, 2013, the Pennsylvania Plaintiffs filed with the Illinois Court a Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b) or in the Alternative, to Transfer Pursuant to 28 U.S.C. 1404(a), as well as a Motion to Stay and/or Prevent Plaintiff from Obtaining Defaults against the Retiree Defendants. On August 5, 2013, the Company filed with the Pennsylvania Court a Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b) or in the Alternative, to Transfer Pursuant to 28 U.S.C. 1404(a). On January 14, 2014, the Pennsylvania Court denied the Company’s motion to dismiss and, on January 16, 2014, the Illinois Court transferred the Company’s case to the Pennsylvania Court. On January 31, 2014, the Company filed a motion to consolidate both cases before the Pennsylvania Court. On April 3, 2014, the Pennsylvania Court entered an order (the “Initial Procedural Order”) that, among other things, consolidated both cases before the Pennsylvania Court, certified a class for purposes of the consolidated actions, established discovery parameters and deadlines and established a briefing schedule applicable to the parties’ cross motions for summary judgment as to liability only. On July 17, 2014, the parties filed with the Pennsylvania Court their respective motions for summary judgment as to liability. On March 30, 2015, the Pennsylvania Court issued an order denying both parties’ summary judgment motions. A trial was scheduled to commence on August 25, 2015 in the Pennsylvania Court but was postponed pending settlement discussions between the parties. On August 20, 2015, the Company reached a preliminary settlement agreement with the USW and the other plaintiffs and, on September 21, 2015, the class representatives, the USW and the Company filed a Joint Motion for Preliminary Approval of Class Action Settlement with the Pennsylvania Court. Pursuant to the proposed settlement agreement, the parties agreed that (1) USW will create a voluntary employee’s beneficiary association trust fund (the “VEBA”) that will administer the payment of health and welfare benefits to class members and will be administered independently of the Company, (2) the Company will make a one-time contribution to the VEBA of $31,450, (3) the Company will pay an award for plaintiffs’ attorneys’ fees in an amount approved by the Pennsylvania Court not to exceed $1,300 (and, if the amount approved by the Pennsylvania Court is less than $1,300, the Company will contribute an amount equal to the difference to the VEBA), (4) if the Company fails to make the required payments to the VEBA prior to February 16, 2016, interest on the unpaid amounts will accrue at a rate of 5% per annum, subject to a cap of $250, and (5) class members will fully and finally release all claims against the Company in accordance with the terms of the proposed Settlement Agreement. Settlement of the lawsuit requires preliminary approval by the Pennsylvania Court and notice of the proposed settlement to class members, followed by a fairness hearing in which the Pennsylvania Court determines whether the proposed settlement is fair, reasonable and adequate. Class members have the ability to object to the proposed settlement but not to opt out of the class. The Pennsylvania Court has granted preliminary approval to the proposed settlement and notice of the proposed settlement has been provided to class members. A fairness hearing on the proposed settlement has been scheduled for January 5, 2016. The ultimate outcome of the proceedings before the Pennsylvania Court cannot be determined at this time.

On September 5, 2013, the Pennsylvania Plaintiffs and certain putative class representatives filed a Plaintiffs’ Motion for Temporary Restraining Order and Preliminary Injunction (the “TRO Motion”) with the Pennsylvania Court. In the TRO Motion, the plaintiffs requested that the Pennsylvania Court enter an injunction requiring the Company to continue to make monthly contributions at the same rate established by the 2005 Settlement Agreement until the parties’ dispute is fully adjudicated on the merits. Following entry of the Initial Procedural Order, the Pennsylvania Court denied the TRO Motion without prejudice.

The Company has recorded postretirement benefit plan obligations, a substantial portion of which relates to the dispute now before the Pennsylvania Court (see Note 16).

On April 17, 2015 and September 30, 2015, National Steel Car Limited filed Complaints for Patent Infringement against the Company in the United States District Court for the Northern District of Illinois. The complaints seek injunctive relief and an unspecified amount of damages. The Company believes that the complaints are without merit and intends to vigorously defend against the allegations. While the ultimate outcome of these proceedings cannot be determined at this time, it is the opinion of management that the resolution of these actions will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

In addition to the foregoing, the Company is involved in certain other pending and threatened legal proceedings, including commercial disputes and workers’ compensation and employee matters arising out of the conduct of its business. While the ultimate outcome of these other legal proceedings cannot be determined at this time, it is the opinion of management that the resolution of these other actions will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Note 18 - Other Commitments

The Company leases certain property and equipment under long-term operating leases expiring at various dates through 2024. The leases generally contain specific renewal options at lease-end at the then fair market amounts.

Future minimum lease payments at September 30, 2015 are as follows:


Three months ending December 31, 2015	$	2,592
Year ending December 31, 2016		10,154
Year ending December 31, 2017		9,817
Year ending December 31, 2018		9,865
Year ending December 31, 2019		9,926
Thereafter		28,810

	$	71,164

The Company is liable for maintenance, insurance and similar costs under most of its leases and such costs are not included in the future minimum lease payments. Total rental expense for the three months ended September 30, 2015 and 2014, was approximately $2,606 and $2,331, respectively. Total rental expense for the nine months ended September 30, 2015 and 2014, was approximately $7,807 and $7,000, respectively.

The Company is party to non-cancelable agreements with its suppliers to purchase certain materials used in the manufacturing process. The commitments may vary based on the actual quantities ordered and be subject to the actual price when ordered. At September 30, 2015, the Company had purchase commitments under these agreements as follows:


Three months ending December 31, 2015	$	974
Year ending December 31, 2016		8,389
Year ending December 31, 2017		8,389
Year ending December 31, 2018		—
Year ending December 31, 2019		—
Thereafter		—

	$	17,752

Note 19 – Earnings Per Share

Shares used in the computation of the Company’s basic and diluted earnings per common share are reconciled as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Weighted average common shares outstanding		12,241,211		12,007,970		12,153,313		11,999,150
Dilutive effect of employee stock options and nonvested share awards		215		100,427		54,119		89,578

Weighted average diluted common shares outstanding		12,241,426		12,108,397		12,207,432		12,088,728

Weighted average diluted common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and the assumed vesting of nonvested share awards. For the three months ended September 30, 2015 and 2014, 637,022 and 366,964 shares, respectively, were not included in the weighted average common shares outstanding calculation as they were anti-dilutive. For the nine months ended September 30, 2015 and 2014, 465,636 and 441,098 shares, respectively, were not included in the weighted average common shares outstanding calculation as they were anti-dilutive.

Note 20 – Income Taxes

The Company’s income tax provision was $8,047 for the three months ended September 30, 2015 compared to $4,608 for the three months ended September 30, 2014. The Company’s effective tax rate for the three months ended September 30, 2015 was 35.2% and was higher than the statutory U.S. federal income tax rate of 35% primarily due to a blended state tax rate of 3.4%, the (2.1)% estimated impact of the domestic manufacturing deduction and the (1.1)% impact of state income tax credits. The Company’s effective tax rate for the three months ended September 30, 2014 was 41.7% and was higher than the statutory U.S. federal income tax rate of 35% primarily due to a 7.5% blended state tax rate and the 1.1% impact of other differences, which were partially offset by the (1.9)% impact of changes in the valuation allowance.

The Company’s income tax provision was $10,457 for the nine months ended September 30, 2015 compared to $252 for the nine months ended September 30, 2014. The Company’s effective tax rate for the nine months ended September 30, 2015 was 34.2% and was lower than the statutory U.S. federal income tax rate of 35% primarily due to the (2.3)% estimated impact of the domestic manufacturing deduction, the (1.8)% impact of state income tax credits and a blended state tax rate of 3.3%. The Company’s effective tax rate for the nine months ended September 30, 2014 was 18.8% and was lower than the statutory U.S. federal income tax rate of 35% primarily due to the (29.1)% impact of changes in the valuation allowance, which was partially offset by a 6.8% blended state tax rate, the 5.4% impact of changes in uncertain tax positions and 0.7% for the effect of other differences.

Note 21 – Sale of Repair and Maintenance Services Business

On September 30, 2015, the Company sold its railcar repair and maintenance services business for an aggregate purchase price of $20,000. The sale included assets of FCRS, which operated the Company’s railcar repair and maintenance services business, and FCSL, which owned a short-line railway. The net book value of assets that were sold was $14,283, which included accounts receivable of $2,776, inventory of $2,537, property plant and equipment of $7,740 and intangible assets of $1,230. Through September 30, 2015, FCRS and FCSL were included in the Company’s Services segment. The sale will allow the Company to increase its focus on its railcar manufacturing, parts and leasing business as the Company continues to broaden its product portfolio through the introduction of new railcar types and implements operational improvements, enhancing productivity through training, technology and automation. The asset purchase agreement relating to the sale (the “Asset Purchase Agreement”) contains customary representations, warranties, covenants and indemnities. On September 30, 2015, $1,960 of the aggregate purchase price was placed into escrow (which is recorded as a long-term receivable) in order to secure the indemnification obligations of FCRS and FCSL under the Asset Purchase Agreement and $451 was used to settle certain liabilities of FCRS and FCSL, resulting in cash proceeds to the Company of $17,589. Twenty-five percent (25%) of the escrow amount, reduced by the amount of any pending claims, will be released to FCRS on each of the dates that are 18 months and three years after the closing date of the transaction and the remaining amount, reduced by the amount of any pending claims, will be released to FCRS on the fifth anniversary of the closing date of the transaction. As a result of the sale, the Company recorded a pre-tax gain of $4,578.

In December 2013, the Company closed its underperforming maintenance and repair shop in Clinton, Indiana, reduced the carrying values of repair shop assets to their estimated fair market value, representing the estimated salvage values of building, equipment and rail at the facility and the estimated sales value of the associated land, and recorded restructuring and impairment charges of $1,741. Sale of the repair shop assets to a strategic buyer in September 2014 resulted in a pre-tax gain of $1,078.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW

You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this quarterly report on Form 10-Q. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”

We believe we are the leading manufacturer of aluminum-bodied railcars and coal cars in North America, based on the number of railcars delivered. Our railcar manufacturing facilities are located in Cherokee, Alabama (“Shoals”), Danville, Illinois and Roanoke, Virginia. Our Shoals facility is an important part of our long-term growth strategy as we continue to expand our railcar product and service offerings outside of our traditional coal car market. During the fourth quarter of 2014, we announced a $10 million expansion at our Shoals facility to add additional production capacity to meet demand for our new types of railcars. The new production capacity became operational in the second quarter of 2015. During the first nine months of 2015, we added approximately 375 employees to support increased production levels at our Shoals facility.

Additionally, we refurbish and rebuild railcars and sell forged, cast and fabricated parts for all of the railcars we produce, as well as those manufactured by others. We also lease freight cars through our JAIX Leasing Company subsidiary. As of September 30, 2015, the value of leased railcars, consisting of railcars available for lease, was $16.1 million. Our primary customers are railroads, financial institutions and shippers.

Between November 2010, when we acquired the business assets of DTE Rail Services, Inc., and September 2015, we provided railcar repair and maintenance for all types of freight railcars through our FCRS subsidiary. On September 30, 2015, we sold our railcar repair and maintenance services business. The sale will allow us to increase our focus on our railcar manufacturing, parts and leasing business as we continue to broaden our product portfolio through the introduction of new railcar types and implement operational improvements, enhancing productivity through training, technology and automation. FCRS had repair and maintenance facilities in Grand Island, Nebraska and Hastings, Nebraska and serviced freight cars and unit coal trains utilizing key rail corridors in the Western regions of the United States.

We have two reportable segments, Manufacturing and Services. Our Manufacturing segment includes new railcar manufacturing, used railcar sales, railcar leasing and major railcar rebuilds. Through September 30, 2015, our Services segment included railcar repair and maintenance and parts sales. Corporate includes administrative activities and all other non-operating activities.

Total orders for railcars in the third quarter of 2015 were 1,008 units compared to 7,375 units ordered in the third quarter of 2014. All of the orders for the third quarter of 2015 were for new railcars while orders for the third quarter of 2014 consisted of 5,165 new railcars and 2,210 rebuilt railcars. Railcar deliveries totaled 2,846 units, consisting of 2,076 new railcars and 770 rebuilt railcars, in the third quarter of 2015 compared to 2,354 units, consisting of 1,554 new railcars and 800 rebuilt railcars, in the third quarter of 2014. Total backlog of unfilled orders was 12,237 units, consisting of 11,565 new railcars and 672 rebuilt railcars, at September 30, 2015, compared to 14,791 units, consisting of 12,191 new railcars and 2,600 rebuilt railcars, at December 31, 2014. The estimated sales value of the backlog was $1,117 million and $1,269 million, respectively, as of September 30, 2015 and December 31, 2014.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2015 compared to Three Months Ended September 30, 2014

Revenues

Our consolidated revenues for the three months ended September 30, 2015 were $241.1 million compared to $190.3 million for the three months ended September 30, 2014. Manufacturing segment revenues for the three months ended September 30, 2015 were $233.3 million compared to $181.5 million for the three months ended September 30, 2014. The increase in Manufacturing segment revenues for the 2015 period compared to the 2014 period reflects the increase in the number of railcars delivered and changes in product mix. Services segment revenues for the three months ended September 30, 2015 were $7.8 million compared to $8.8 million for the three months ended September 30, 2014. The decrease in Services segment revenues for the 2015 period compared to the 2014 period reflects lower parts sales revenue, which was partially offset by higher repair volumes.

Gross Profit

Our consolidated gross profit for the three months ended September 30, 2015 was $29.1 million compared to $18.8 million for the three months ended September 30, 2014. The increase reflects increases in gross profit from our Manufacturing segment of $10.1 million and from our Services segment of $0.3 million, which were partially offset by increases in Corporate costs of $0.2 million. The increase in gross profit for our Manufacturing segment reflects the increase in deliveries, a favorable product mix and improvement in production efficiencies. The increase in gross profit for our Services segment for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 reflects higher repair volumes and changes in the mix of repair work and parts sales, which were partially offset by lower parts sales volumes. Our consolidated gross profit margin was 12.1% for the three months ended September 30, 2015 compared to 9.9% for the three months ended September 30, 2014.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses for the three months ended September 30, 2015 were $10.7 million compared to $9.2 million for the three months ended September 30, 2014. Selling, general and administrative expenses for the three months ended September 30, 2015 included increases in third-party sales commissions, salaries and wages, incentive compensation and legal costs. Manufacturing segment selling, general and administrative expenses for the three months ended September 30, 2015 were $2.9 million compared to $3.0 million for the three months ended September 30, 2014. Services segment selling, general and administrative expenses were $0.9 million for the three months ended September 30, 2015 compared to $0.8 million for the three months ended September 30, 2014. Corporate selling, general and administrative expenses for the three months ended September 30, 2015 were $6.9 million compared to $5.4 million for the three months ended September 30, 2014, reflecting increases in incentive compensation and legal costs.

Gain on Sale of Railcars Available for Lease

Gain on sale of railcars available for lease for the three months ended September 30, 2014 was $0.6 million and primarily represented the gain on sale of leased railcars with a net book value of $5.2 million.

Gain on Sale of Railcar Repair and Maintenance Services Business and Facility

On September 30, 2015, we sold our railcar repair and maintenance services business for an aggregate purchase price of $20.0 million. The sale included assets of FCRS, which operated our railcar repair and maintenance services business, and FCSL, which owned a short-line railway. On September 30, 2015, $2.0 million of the aggregate purchase price was placed into escrow in order to secure the indemnification obligations of FCRS and FCSL under the Asset Purchase Agreement and $0.4 million was used to pay certain liabilities of FCRS and FCSL, resulting in cash proceeds to us of $17.6 million. As a result of the sale, we recorded a pre-tax gain of $4.6 million for the three months ended September 30, 2015.

In December 2013, we closed our underperforming maintenance and repair shop in Clinton, Indiana, reduced the carrying values of repair shop assets to their estimated fair market value, representing the estimated salvage values of building, equipment and rail at the facility and the estimated sales value of the associated land, and recorded restructuring and impairment charges of $1.7 million. As a result of the sale of the repair shop assets to a strategic buyer in September 2014, we recorded a pre-tax gain of $1.1 million for the three months ended September 30, 2014.

Operating Income

Our consolidated operating income for the three months ended September 30, 2015 was $22.9 million compared to $11.3 million for the three months ended September 30, 2014. Operating income for the Manufacturing segment was $25.8 million for the three months ended September 30, 2015 compared to $16.2 million for the three months ended September 30, 2014, reflecting the increase in deliveries, a favorable product mix and improvement in production efficiencies. Services segment operating income was $5.2 million for the three months ended September 30, 2015 compared to $1.6 million for the three months ended September 30, 2014. The increase in Services segment operating income reflects the $4.6 million gain on sale of our railcar repair and maintenance services business during 2015 and the $1.1 million gain on sale of our underperforming maintenance and repair shop during 2014. Corporate costs were $8.1 million for the three months ended September 30, 2015 compared to $6.5 million for the three months ended September 30, 2014, reflecting increases in incentive compensation and legal costs.

Interest Expense and Deferred Financing Costs

Interest expense and the amortization of deferred financing costs were $0.1 million for the three months ended September 30, 2015 compared to $0.3 million for the three months ended September 30, 2014. In addition to commitment fees on our revolving credit facility, letter of credit fees and amortization of deferred financing costs, results for the 2014 period included non-cash imputed interest on a customer advance for leased railcars delivered for which revenue could not be recognized until all contingencies had been resolved.

Income Taxes

Our income tax provision was $8.0 million for the three months ended September 30, 2015 compared to $4.6 million for the three months ended September 30, 2014. Our effective tax rate for the three months ended September 30, 2015 was 35.2% and was higher than the statutory U.S. federal income tax rate of 35% primarily due to a blended state tax rate of 3.4%, the (2.1)% estimated impact of the domestic manufacturing deduction and the (1.1)% impact of state income tax credits. Our effective tax rate for the three months ended September 30, 2014 was 41.7% and was higher than the statutory U.S. federal income tax rate of 35% primarily due to a 7.5% blended state tax rate and the 1.1% impact of other differences, which were partially offset by the (1.9)% impact of changes in the valuation allowance.

Net Income

As a result of the foregoing, our net income was $14.8 million for the three months ended September 30, 2015 compared to $6.4 million for the three months ended September 30, 2014. For the three months ended September 30, 2015, our basic and diluted net income per share were $1.20 on basic and diluted shares outstanding of 12,241,211 and 12,241,426, respectively. For the three months ended September 30, 2014, our basic and diluted net income per share was $0.53 on basic and diluted shares outstanding of 12,007,970 and 12,108,397, respectively.

Nine Months Ended September 30, 2015 compared to Nine Months Ended September 30, 2014

Revenues

Our consolidated revenues for the nine months ended September 30, 2015 were $569.6 million compared to $386.1 million for the nine months ended September 30, 2014. Manufacturing segment revenues for the nine months ended September 30, 2015 were $545.4 million compared to $358.2 million for the nine months ended September 30, 2014. The increase in Manufacturing segment revenues for the 2015 period compared to the 2014 period reflects the increase in the number of railcars delivered and changes in the product mix of new railcars. Our Manufacturing segment delivered 6,516 units, consisting of 4,588 new railcars and 1,928 rebuilt railcars, for the nine months ended September 30, 2015, compared to 4,742 units, consisting of 2,677 new railcars, 1,990 rebuilt railcars and 75 leased railcars, for the nine months ended September 30, 2014. Services segment revenues for the nine months ended September 30, 2015 were $24.1 million compared to $27.8 million for the nine months ended September 30, 2014. The decrease in Services segment revenues for the 2015 period compared to the 2014 period reflects lower parts sales revenue, which was partially offset by higher repair volumes.

Gross Profit

Our consolidated gross profit for the nine months ended September 30, 2015 was $55.4 million compared to $26.7 million for the nine months ended September 30, 2014. The increase reflects increases in gross profit from our Manufacturing segment of $27.1 million and from our Services segment of $2.3 million, which were partially offset by increases in Corporate costs of $0.7 million. The increase in gross profit for our Manufacturing segment for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 reflects the increase in deliveries, a higher mix of new versus rebuilt railcars, changes in the product mix of new railcars and improvement in production efficiencies. Gross profit for our Manufacturing segment for the nine months ended September 30, 2015 included approximately $2.3 million of costs associated with the continued ramp up of the additional production capacity at our Shoals facility. Manufacturing segment gross profit for the nine months ended September 30, 2014 included costs associated with the ramp up of production volumes at Shoals, carrying costs associated with our idled Danville facility and incremental costs associated with the restart of production at Danville, which together totaled $5.5 million. Manufacturing segment gross profit for the nine months ended September 30, 2014 also included the impact of multiple weather-related production shutdowns, supply disruptions and related inefficiencies totaling $1.9 million and a $0.8 million expense recorded to settle a warranty claim. The increase in gross profit for our Services segment for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 reflects higher repair volumes, which were partially offset by lower parts sales. Our consolidated gross profit margin was 9.7% for the nine months ended September 30, 2015 compared to 6.9% for the nine months ended September 30, 2014 as a result of the items noted above.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses for the nine months ended September 30, 2015 were $30.5 million compared to $26.3 million for the nine months ended September 30, 2014. Selling, general and administrative expenses for the nine months ended September 30, 2015 included increases in third-party sales commissions, salaries and wages, incentive compensation, legal costs and computer and data processing expenses. Manufacturing segment selling, general and administrative expenses for the nine months ended September 30, 2015 were $9.4 million compared to $8.1 million for the nine months ended September 30, 2014 primarily due to higher third-party sales commissions and salaries and wages. Services segment selling, general and administrative expenses were $2.6 million for the nine months ended September 30, 2015 compared to $2.4 million for the nine months ended September 30, 2014. Corporate selling, general and administrative expenses for the nine months ended September 30, 2015 were $18.5 million compared to $15.8 million for the nine months ended September 30, 2014, reflecting increases in salaries and wages, incentive compensation, legal costs and computer and data processing expenses.

Gain on Sale of Railcars Available for Lease

Gain on sale of railcars available for lease for the nine months ended September 30, 2015 was $1.2 million and represented the gain on sale of leased railcars with a net book value of $6.4 million. Gain on sale of railcars available for lease for the nine months ended September 30, 2014 was $0.7 million and primarily represented the gain on sale of leased railcars with a net book value of $5.2 million.

Gain on Sale of Railcar Repair and Maintenance Services Business and Facility

Operating Income

Our consolidated operating income for the nine months ended September 30, 2015 was $30.7 million compared to $2.2 million for the nine months ended September 30, 2014. Operating income for the Manufacturing segment was $44.9 million for the nine months ended September 30, 2015 compared to $18.6 million for the nine months ended September 30, 2014, reflecting the increase in deliveries, a higher mix of new versus rebuilt railcars, changes in the product mix of new railcars and improvement in production efficiencies. Manufacturing segment operating income for the nine months ended September 30, 2015 included approximately $2.3 million of costs associated with the continued ramp up of the additional production capacity at our Shoals facility. Manufacturing segment operating income for the nine months ended September 30, 2014 included costs associated with the ramp up of production volumes at Shoals, carrying costs associated with our idled Danville facility and incremental costs associated with the restart of production at Danville, which together totaled $5.5 million. Manufacturing segment operating income for the nine months ended September 30, 2014 also included the impact of multiple weather-related production shutdowns, supply disruptions and related inefficiencies totaling $1.9 million and a $0.8 million expense recorded to settle a warranty claim. Services segment operating income was $7.9 million for the nine months ended September 30, 2015 compared to $2.3 million for the nine months ended September 30, 2014. The increase in Services segment operating income reflects the $4.6 million gain on sale of our railcar repair and maintenance services business during 2015 and the $1.1 million gain on sale of our underperforming maintenance and repair shop during 2014. Corporate costs were $22.1 million for the nine months ended September 30, 2015 compared to $18.7 million for the nine months ended September 30, 2014, reflecting increases in salaries and wages, incentive compensation, legal costs and computer and data processing expenses.

Interest Expense and Deferred Financing Costs

Interest expense and the amortization of deferred financing costs were $0.2 million for the nine months ended September 30, 2015 compared to $0.9 million for the nine months ended September 30, 2014. In addition to commitment fees on our revolving credit facility, letter of credit fees and amortization of deferred financing costs, results for the 2014 period included non-cash imputed interest on a customer advance for leased railcars delivered for which revenue could not be recognized until all contingencies had been resolved.

Income Taxes

Our income tax provision was $10.5 million for the nine months ended September 30, 2015 compared to $0.3 million for the nine months ended September 30, 2014. Our effective tax rate for the nine months ended September 30, 2015 was 34.2% and was lower than the statutory U.S. federal income tax rate of 35% primarily due to the (2.3)% estimated impact of the domestic manufacturing deduction, the (1.8)% impact of state income tax credits and a blended state tax rate of 3.3%. Our effective tax rate for the nine months ended September 30, 2014 was 18.8% and was lower than the statutory U.S. federal income tax rate of 35% primarily due to the (29.1)% impact of changes in the valuation allowance, which was partially offset by a 6.8% blended state tax rate, the 5.4% impact of changes in uncertain tax positions and 0.7% for the effect of other differences.

Net Income

As a result of the foregoing, our net income was $20.2 million for the nine months ended September 30, 2015 compared to $1.1 million for the nine months ended September 30, 2014. For the nine months ended September 30, 2015, our basic and diluted net income per share was $1.65 and $1.64, respectively, on basic and diluted shares outstanding of 12,153,313 and 12,207,432, respectively. For the nine months ended September 30, 2014, our basic and diluted net income per share was $0.09 on basic and diluted shares outstanding of 11,999,150 and 12,088,728, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity for the nine months ended September 30, 2015 and 2014, were our cash and cash equivalent balances on hand, our securities held to maturity and our revolving credit facility.

We entered into a $50.0 million senior secured revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit Agreement dated as of July 26, 2013 (the “Credit Agreement”) by and among us and certain of our subsidiaries, as borrowers, and Bank of America, N.A., as lender. The Revolving Credit Facility can be used for general corporate purposes, including working capital. As of September 30, 2015, we had no borrowings under the Revolving Credit Facility. The Credit Agreement also contains a sub-facility for letters of credit not to exceed the lesser of $30.0 million and the amount of the senior secured revolving credit facility at such time. As of September 30, 2015, we had $6.9 million in outstanding letters of credit under the Revolving Credit Facility and therefore had $43.1 million available for borrowing under the Revolving Credit Facility. The Credit Agreement has a term ending on July 26, 2016 and revolving loans outstanding thereunder will bear interest at a rate of LIBOR plus an applicable margin of 1.50% or at a base rate, as selected by us. Base rate loans will bear interest at the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate or (c) LIBOR plus 1.00%. We are required to pay a non-utilization fee of between 0.10% and 0.30% on the unused portion of the revolving loan commitment depending on our quarterly average balance of unrestricted cash and our consolidated leverage ratio. Borrowings under the Revolving Credit Facility are secured by a first priority perfected security interest in substantially all of our and our subsidiaries’ assets excluding railcars held by our railcar leasing subsidiary, JAIX. We also have pledged all of the equity interests in our direct and indirect domestic subsidiaries as security for the Revolving Credit Facility. The Credit Agreement has both affirmative and negative covenants, including, without limitation, a covenant requiring minimum consolidated net liquidity of $35.0 million and limitations on indebtedness, liens and investments. The Credit Agreement also provides for customary events of default.

As of December 31, 2014, we had $6.0 million in outstanding letters of credit under the Revolving Credit Facility and therefore had $44.0 million available for borrowing under the Revolving Credit Facility. As of December 31, 2014, we had no borrowings under the Revolving Credit Facility.

Our restricted cash and restricted certificates of deposit balance was $6.9 million as of September 30, 2015 and $6.0 million as of December 31, 2014, and consisted of cash and certificates of deposit used to collateralize standby letters of credit with respect to performance guarantees and to support our worker’s compensation insurance claims. The increase in restricted cash and restricted certificates of deposit balance as of September 30, 2015 compared to December 31, 2014 was a result of increases in standby letters of credit with respect to performance guarantees and our corresponding obligation to collateralize them. The standby letters of credit outstanding as of September 30, 2015 are scheduled to expire at various dates through January 31, 2018. We expect to establish restricted cash balances and restricted certificates of deposit in future periods to minimize bank fees related to standby letters of credit.

As of September 30, 2015, the value of leased railcars, consisting of railcars available for lease, was $16.1 million. We continue to offer railcars for lease to certain customers and pursue opportunities to sell leased railcars in our portfolio.

Based on our current level of operations and known changes in planned volume based on our backlog, we believe that our operating cash flows, our marketable securities and our cash balances, together with amounts available under our revolving credit facility, will be sufficient to meet our expected liquidity needs. Our long-term liquidity is contingent upon future operating performance and our ability to continue to meet financial covenants under our revolving credit facility and any other indebtedness. We may also require additional capital in the future to fund working capital as demand for railcars increases, payments for contractual obligations, organic growth opportunities, including new plant and equipment and development of railcars, joint ventures, international expansion and acquisitions, and these capital requirements could be substantial.

Our long-term liquidity needs also depend to a significant extent on our obligations related to our pension and welfare benefit plans. We provide pension and retiree welfare benefits to certain salaried and hourly employees upon their retirement. Benefits under our pension plans are now frozen and will not be impacted by increases due to future service. The most significant assumptions used in determining our net periodic benefit costs are the discount rate used on our pension and postretirement welfare obligations and expected return on pension plan assets. As of December 31, 2014, our benefit obligation under our defined benefit pension plans and our postretirement benefit plan was $58.0 million and $73.9 million, respectively, which exceeded the fair value of plan assets by $7.2 million and $73.9 million, respectively. We made no contributions to our defined benefit pension plans during the nine months ended September 30, 2015. As disclosed in Note 16 to the condensed consolidated financial statements, we expect to make no contributions to our defined benefit pension plans in 2015. The Pension Protection Act of 2006 provides for changes to the method of valuing pension plan assets and liabilities for funding purposes as well as minimum funding levels. Our defined benefit pension plans are in compliance with the minimum funding levels established in the Pension Protection Act. Funding levels will be affected by future contributions, investment returns on plan assets, growth in plan liabilities, interest rates and mortality estimates. Assuming that the plans are fully funded as that term is defined in the Pension Protection Act, we will be required to fund the ongoing growth in plan liabilities on an annual basis.

We made contributions to our postretirement benefit plan of $0.3 million for the nine months ended September 30, 2015 for salaried retirees. We expect to make $0.4 million in contributions (including contributions already made) to our postretirement benefit plan in 2015 for salaried retirees. However, because our postretirement benefit plan obligation is currently subject to litigation the postretirement benefit payments for hourly retirees, if any, are unknown at this time. A substantial portion of our postretirement benefit plan obligation relates to an expired settlement agreement with the union representing employees at the Company’s and its predecessors’ Johnstown manufacturing facilities. The terms of that settlement agreement (the “2005 Settlement Agreement”), required us to pay until November 30, 2012 certain monthly amounts toward the cost of retiree health care coverage. We engaged in voluntary negotiations for two years in an effort to reach a consensual agreement related to the expired 2005 Settlement Agreement but no agreements were reached. We terminated, effective November 1, 2013, our contributions for medical coverage and life insurance benefits to affected retirees and are seeking declaratory relief to confirm our rights under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), to reduce or terminate retiree medical coverage and life insurance benefits pursuant to the plans that were the subject of the 2005 Settlement Agreement. On July 9, 2013, the union and certain retiree defendants filed suit in the United States District Court for the Western District of Pennsylvania regarding the same dispute (see Note 17 to the condensed consolidated financial statements). On August 20, 2015, we reached a preliminary settlement agreement with the United Steel Workers International Union and other plaintiffs in connection with the pending litigation and, on September 21, 2015, the parties filed a Joint Motion for Preliminary Approval of Class Action Settlement with the Pennsylvania Court. Under the terms of the preliminary settlement agreement, we will make a one-time cash payment of $32.8 million in exchange for full and final resolution of the matter. The court gave preliminary approval to the settlement on September 28, 2015 and a final fairness hearing is scheduled for January 5, 2016. Since the settlement will not be effective until full and final class action approval has been granted by the court, the ultimate outcome of this matter cannot be determined at this time. We anticipate funding pension plan contributions, postretirement benefit plan payments and payment of the $32.8 million settlement amount, following receipt of final court approval, with cash from operations and available cash.

Based upon our operating performance, capital requirements and obligations under our pension and welfare benefit plans, we may, from time to time, be required to raise additional funds through additional offerings of our common stock and through long-term borrowings. There can be no assurance that long-term debt, if needed, will be available on terms attractive to us, or at all. Furthermore, any additional equity financing may be dilutive to stockholders and debt financing, if available, may involve restrictive covenants. Our failure to raise capital if and when needed could have a material adverse effect on our results of operations and financial condition.

Contractual Obligations

The following table summarizes our contractual obligations as of September 30, 2015 and the effect that these obligations and commitments would be expected to have on our liquidity and cash flow in future periods:


	Payments Due by Period
Contractual Obligations	Total		1 Year		2-3 Years		4-5 Years		After 5 Years
	*(In thousands)*
Operating leases	$	71,164	$	10,223	$	19,738	$	19,894	$	21,309
Material and component purchases		17,752		7,266		10,486		—		—

Total	$	88,916	$	17,489	$	30,224	$	19,894	$	21,309

Material and component purchases consist of non-cancelable agreements with suppliers to purchase materials used in the manufacturing process. The estimated amounts above may vary based on the actual quantities and price.

The above table excludes $4.2 million related to a reserve for unrecognized tax benefits and accrued interest and penalties at September 30, 2015 because the timing of the payout of these amounts cannot be determined. We are also required to make minimum contributions to our pension plans and postretirement welfare plans as described above. The above table also excludes the $32.8 million one-time cash payment related to the 2015 preliminary settlement agreement described above, since final court approval of the settlement has not yet been received.

Cash Flows

The following table summarizes our net cash (used in) provided by operating activities, investing activities and financing activities for the nine months ended September 30, 2015 and 2014:


	Nine Months Ended September 30,
	2015			2014
	(In thousands)
Net cash (used in) provided by:
Operating activities	$	(61,013	)	$	(108,341	)
Investing activities		41,941			(7,424	)
Financing activities		537			(3,287	)

Total	$	(18,535	)	$	(119,052	)

Operating Activities. Our net cash used in operating activities reflects net income or loss adjusted for non-cash charges and changes in operating assets and liabilities. Cash flows from operating activities are affected by several factors, including fluctuations in business volume, contract terms for billings and collections, the timing of collections on our contract receivables, processing of bi-weekly payroll and associated taxes, and payments to our suppliers. As some of our customers accept delivery of new railcars in train-set quantities, variations in our sales lead to significant fluctuations in our operating profits and cash from operating activities. We do not usually experience business credit issues, although a payment may be delayed pending completion of closing documentation.

Our net cash used in operating activities for the nine months ended September 30, 2015 was $61.0 million compared to $108.3 million for the nine months ended September 30, 2014. Net cash used in operating activities for the nine months ended September 30, 2015 was driven primarily by an increase in working capital, including a $63.5 million increase in inventory. The increase in inventory for the nine months ended September 30, 2015 included increases to support higher production levels and $2.8 million in finished railcars that were not yet delivered to customers. Net cash used in operating activities for the nine months ended September 30, 2015 also reflects a decrease in customer deposits of $33.3 million, reflecting the delivery of railcars during 2015 for which advance payments were received from customers during the fourth quarter of 2014. Net cash used in operating activities for the nine months ended September 30, 2014 was driven primarily by an increase in working capital, including a $46.2 million increase in inventory and inventory on lease, a $29.5 million increase in accounts receivable and a $91.1 million decrease in customer deposits, partially offset by a $47.9 million increase in accounts and contractual payables. Changes in inventory and accounts and contractual payables primarily represents purchases of materials to support increased production levels, while the reduction in customer deposits reflects the delivery of railcars during 2014 for which a prepayment was received from the customer during the fourth quarter of 2013. The increase in accounts receivable for the nine months ended September 30, 2014 reflects increased deliveries under customary payment terms.

Investing Activities. Net cash provided by investing activities for the nine months ended September 30, 2015 was $41.9 million compared to net cash used in investing activities for the nine months ended September 30, 2014 of $7.4 million. Net cash provided by investing activities for the nine months ended September 30, 2015 included proceeds from maturity of securities (net of purchases) of $18.0 million, proceeds from the sale of our railcar repair and maintenance services business and facility of $17.6 million, state and local incentives received of $15.7 million and proceeds from sale of railcars available for lease of $7.6 million, which were partially offset by purchases of property, plant and equipment of $16.2 million (primarily capital investments for our Shoals facility) and purchases of restricted certificates of deposit of $0.9 million (net of maturities). Net cash used in investing activities for the nine months ended September 30, 2014 included purchases of securities held to maturity of $9.0 million (net of proceeds from redemptions) and purchases of property, plant and equipment of $8.2 million (primarily purchases of equipment for our Shoals facility), which were partially offset by proceeds from the sale of our closed railcar maintenance and repair facility of $2.1 million and proceeds from the sale of railcars available for lease of $5.9 million. Net cash used in operating activities for the nine months ended September 30, 2014 also included restricted cash withdrawals (net of deposits) of $1.8 million related to decreases in collateralization obligations with respect to letters of credit for performance guarantees.

Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2015 was $0.5 million compared to net cash used in financing activities for the nine months ended September 30, 2014 of $3.3 million. Net cash provided by financing activities for the nine months ended September 30, 2015 included proceeds from exercise of employee stock options of $4.9 million, which were partially offset by cash dividends paid to our stockholders of $3.3 million. Net cash used in financing activities for the nine months ended September 30, 2014 primarily included cash dividends paid to our stockholders of $2.2 million and repayment of a customer advance of $1.0 million.

Capital Expenditures

Our capital expenditures were $16.2 million in the nine months ended September 30, 2015 compared to $8.2 million in the nine months ended September 30, 2014. Capital expenditures were primarily capital investments for our Shoals facility, which continued to ramp up production during 2014 and 2015. Excluding unforeseen expenditures, management expects that total capital expenditures will be approximately $18 million for 2015 (including amounts already paid). With the additional capital investment to add the new production capacity in our Shoals facility to meet demand for our new types of railcars, our total investment in the Shoals facility will be approximately $33 million. The new production capacity became operational early in the second quarter of 2015.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains certain forward-looking statements including, in particular, statements about our plans, strategies and prospects. We have used the words “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” and similar expressions in this report to identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. Our actual results could differ materially from those projected in the forward-looking statements.

Our forward-looking statements are subject to risks and uncertainties, including:

•

the cyclical nature of our business;

•

the competitive nature of our industry;

•

our reliance upon a small number of customers that represent a large percentage of our sales;

•

the variable purchase patterns of our customers and the timing of completion, delivery and customer acceptance of orders;

•

our ability to maintain relationships with our suppliers of railcar components;

•

the availability and price of used railcars offered for sale and new or used railcars offered for lease;

•

fluctuating costs of raw materials, including steel and aluminum, and delays in the delivery of raw materials;

•

limitations on the supply of railcar components;

•

our reliance on the sales of our coal cars;

•

international economic and political risks to the extent we expand our sales or products and services internationally;

•

the risk of lack of acceptance of our new railcar offerings by our customers;

•

our reported backlog may not indicate what our future sales will be;

•

potential significant warranty claims;

•

our ability to successfully integrate our Shoals facility or any acquired business with our existing business;

•

shortages of skilled labor;

•

our ability to manage our postretirement benefit and pension costs;

•

risks relating to our relationship with our unionized employees and their unions;

•

cybersecurity risks relating to our information technology and other systems;

•

the cost of complying with environmental laws and regulations; and

•

various covenants in the agreement governing our indebtedness that limit our management’s discretion in the operation of our businesses.

Our actual results could be different from the results described in or anticipated by our forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections and may be better or worse than anticipated. Given these uncertainties, you should not rely on forward-looking statements. Forward-looking statements represent our estimates and assumptions only as of the date that they were made. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events except to the extent required by applicable securities laws. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under Item 1A, “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

We have a $50.0 million senior secured revolving credit facility, the proceeds of which can be used for general corporate purposes, including working capital. On an annual basis, a 1% change in the interest rate in our revolving credit facility will increase or decrease our interest expense by $10,000 for every $1.0 million of outstanding borrowings. As of September 30, 2015, we had $6.9 million in outstanding letters of credit under the Revolving Credit Facility and therefore had $43.1 million available for borrowing under the Revolving Credit Facility.

The production of railcars and our operations require substantial amounts of aluminum and steel. The cost of aluminum, steel and all other materials (including scrap metal) used in the production of our railcars represents a significant majority of our direct manufacturing costs. Our business is subject to the risk of price increases and periodic delays in the delivery of aluminum, steel and other materials, all of which are beyond our control. Any fluctuations in the price or availability of aluminum or steel, or any other material used in the production of our railcars, may have a material adverse effect on our business, results of operations or financial condition. In addition, if any of our suppliers were unable to continue its business or were to seek bankruptcy relief, the availability or price of the materials we use could be adversely affected. When market conditions permit us to do so, we negotiate contracts with our customers that allow for variable pricing to protect us against future changes in the cost of raw materials. When raw material prices increase rapidly or to levels significantly higher than normal, we may not be able to pass price increases through to our customers, which could adversely affect our operating margins and cash flows.

We are not exposed to any significant foreign currency exchange risks as our general policy is to denominate foreign sales and purchases in U.S. dollars.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report on Form 10-Q (the “Evaluation Date”). Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings.

On July 8, 2013, we filed a Complaint for Declaratory Judgment (the “Complaint”) in the United States District Court for the Northern District of Illinois, Eastern Division (the “Court”). The case names as defendants the United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Services Workers International Union, AFL-CIO, CLC (the “USW”), as well as approximately 650 individual Retiree Defendants (as defined in the Complaint), and was assigned Case No. 1:13-cv-4889.

As described in the Complaint, pursuant to a settlement agreement (the “2005 Settlement Agreement”) among the Company, the USW and the Retiree Defendants, we agreed to make certain levels of contributions to medical coverage for the Retiree Defendants and to continue to provide life insurance benefits at their amount at that time under certain of our employee welfare benefit plans. The 2005 Settlement Agreement expressly provided that, as of November 30, 2012, we could cease making these contributions. In June 2011, the Company and the USW began discussing the possibility of an extension beyond November 30, 2012 for our contributions to retiree medical coverage and life insurance benefits at a reduced amount and on other mutually acceptable terms. We engaged in voluntary negotiations for two years with the USW and counsel for the Retiree Defendants in an effort to reach a consensual agreement regarding such medical and life insurance benefits, but the parties were unable to reach a final agreement. We terminated, effective November 1, 2013, our contributions for medical coverage provided to the Retiree Defendants and the provision of life insurance benefits and are seeking declaratory relief to confirm our rights under ERISA to reduce or terminate retiree medical coverage and life insurance benefits pursuant to the plans that were the subject of the 2005 Settlement Agreement.

On July 9, 2013, the USW and certain Retiree Defendants (collectively, the “Pennsylvania Plaintiffs”) filed a putative class action in the United States District Court for the Western District of Pennsylvania (the “Pennsylvania Court”), captioned as Zanghi, et al. v. FreightCar America, Inc., et al., Case No. 3:13-cv-146. The complaint filed with the Pennsylvania Court alleges that we do not have the right to terminate welfare benefits previously provided to the Retiree Defendants and requests, among other relief, entry of a judgment finding that the Retiree Defendants have a vested right to specified welfare benefits.

VEBA of $31,450,000, (3) the Company will pay an award for plaintiffs’ attorneys’ fees in an amount approved by the Pennsylvania Court not to exceed $1,300,000 (and, if the amount approved by the Pennsylvania Court is less than $1,300,000, the Company will contribute an amount equal to the difference to the VEBA), (4) if the Company fails to make the required payments to the VEBA prior to February 16, 2016, interest on the unpaid amounts will accrue at a rate of 5% per annum, subject to a cap of $250,000, and (5) class members will fully and finally release all claims against the Company in accordance with the terms of the proposed Settlement Agreement. Settlement of the lawsuit requires preliminary approval by the Pennsylvania Court and notice of the proposed settlement to class members, followed by a fairness hearing in which the Pennsylvania Court determines whether the proposed settlement is fair, reasonable and adequate. Class members have the ability to object to the proposed settlement but not to opt out of the class. The Pennsylvania Court has granted preliminary approval to the proposed settlement and notice of the proposed settlement has been provided to class members. A fairness hearing on the proposed settlement has been scheduled for January 5, 2016. The ultimate outcome of the proceedings before the Pennsylvania Court cannot be determined at this time.

On September 5, 2013, the Pennsylvania Plaintiffs filed a Plaintiffs’ Motion for Temporary Restraining Order and Preliminary Injunction (the “TRO Motion”) with the Pennsylvania Court. In the TRO Motion, the plaintiffs requested that the Pennsylvania Court enter an injunction requiring us to continue to make monthly contributions at the same rate established by the 2005 Settlement Agreement until the parties’ dispute is fully adjudicated on the merits. Following entry of the Initial Procedural Order, the Pennsylvania Court denied the TRO Motion without prejudice.

We have recorded postretirement benefit plan obligations, a substantial portion of which relate to the dispute now before the Pennsylvania Court (see Note 16 to the condensed consolidated financial statements).

On April 17, 2015 and September 30, 2015, National Steel Car Limited filed Complaints for Patent Infringement against us in the United States District Court for the Northern District of Illinois. The complaints seek injunctive relief and an unspecified amount of damages. We believe that the complaints are without merit and intend to vigorously defend against the allegations. While the ultimate outcome of these proceedings cannot be determined at this time, it is the opinion of management that the resolution of these actions will not have a material adverse effect on our financial position, results of operations or cash flows.

In addition to the foregoing, we are involved in certain other pending and threatened legal proceedings, including commercial disputes and workers’ compensation and employee matters arising out of the conduct of our business. While the ultimate outcome of these other legal proceedings cannot be determined at this time, it is the opinion of management that the resolution of these other actions will not have a material adverse effect on our financial condition, results of operations or cash flows.

Item 1A.

Risk Factors.

There have been no material changes from the risk factors previously disclosed in Item 1A of our 2014 annual report on Form 10-K.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures.

Not applicable.

Item 5.

Other Information.

None.

Item 6.

Exhibits.

(a)

Exhibits filed as part of this Form 10-Q:


2.1		Asset Purchase Agreement, dated September 30, 2015, by and among FreightCar Rail Services, LLC, FreightCar Short Line, Inc. and ARS Nebraska, LLC.

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	FREIGHTCAR AMERICA, INC.

Date: November 3, 2015	By:	/s/ JOSEPH E. MCNEELY
		Joseph E. McNeely, President and Chief Executive Officer (Principal Executive Officer)

	By:	/s/ CHARLES F. AVERY, JR.
		Charles F. Avery, Jr., Vice President, Finance, Chief Financial Officer and Treasurer (Principal Financial Officer)

	By:	/s/ JOSEPH J. MALIEKEL
		Joseph J. Maliekel, Vice President and Corporate Controller (Principal Accounting Officer)

EXHIBIT INDEX


Exhibit Number		Description

2.1		Asset Purchase Agreement, dated September 30, 2015, by and among FreightCar Rail Services, LLC, FreightCar Short Line, Inc. and ARS Nebraska, LLC.

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 2.1

Execution Version

ASSET PURCHASE AGREEMENT

by and among

FreightCar Rail Services, LLC,

FreightCar Short Line, Inc.

and

ARS Nebraska, LLC

Dated September 30, 2015

TABLE OF CONTENTS


		PAGE

ARTICLE I	DEFINITIONS		1

Section 1.1.	Defined Terms		1

Section 1.2.	Glossary		6

ARTICLE II	PURCHASE AND SALE OF ASSETS		7

Section 2.1.	Assets to be Transferred		7

Section 2.2.	Excluded Assets		8

Section 2.3.	Assumed Liabilities		9

Section 2.4.	Excluded Liabilities		10

Section 2.5.	Non-Assignable Assets		10

ARTICLE III	PURCHASE PRICE		11

Section 3.1.	Payment of the Purchase Price at Closing		11

Section 3.2.	Allocation		11

Section 3.3.	Closing		11

Section 3.4.	Transfer Taxes		11

Section 3.5.	Prorations		11

Section 3.6.	Closing Statement		12

ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF BUYER		12

Section 4.1.	Organization and Power		12

Section 4.2.	Authorization of Transaction		12

Section 4.3.	Non-contravention		12

Section 4.4.	Brokers’ Fees		12

Section 4.5.	Non-Inducement		12

Section 4.6.	Knowledge of Misrepresentation and Independent Investigation		12

Section 4.7.	Disclaimer of Other Representations and Warranties		12

ARTICLE V	REPRESENTATIONS AND WARRANTIES OF SELLERS		13

Section 5.1.	Organization, Qualification, and Power		13

Section 5.2.	Authorization of Transaction		13

Section 5.3.	Subsidiaries; Investments in Other Entities		13

Section 5.4.	Non-contravention		13

Section 5.5.	Brokers’ Fees		13

Section 5.6.	Title to Assets		13

Section 5.7.	Financial Statements		14

Section 5.8.	Absence of Certain Changes		14

Section 5.9.	Accounts Receivable		14

Section 5.10.	Legal Compliance		14

Section 5.11.	Tax Matters		15

Section 5.12.	Real Property		15

TABLE OF CONTENTS


		PAGE

Section 5.13.	Intellectual Property and Software		16

Section 5.14.	Material Contracts		17

Section 5.15.	Litigation		17

Section 5.16.	Employees and Independent Contractors		17

Section 5.17.	Employee Benefits		18

Section 5.18.	Environmental, Health, and Safety Requirements		18

Section 5.19.	Inventory		18

Section 5.20.	Disclaimer of Other Representations and Warranties		19

ARTICLE VI	POST-CLOSING COVENANTS		19

Section 6.1.	Further Assurances		19

Section 6.2.	Litigation Support		19

Section 6.3.	Confidentiality		19

Section 6.4.	Non-Competition		20

Section 6.5.	Employee Matters		20

Section 6.6.	Tax Matters		21

Section 6.7.	Assumption of Environmental Liabilities		21

ARTICLE VII	CONDITIONS TO CLOSING		21

Section 7.1.	Conditions to Buyer’s Obligations		21

Section 7.2.	Conditions to Sellers’ Obligations		23

ARTICLE VIII	INDEMNIFICATION		24

Section 8.1.	Survival of Representations, Warranties, Covenants and Agreements		24

Section 8.2.	Indemnification Provisions for Buyer’s Benefit		24

Section 8.3.	Indemnification Provisions for Sellers’ Benefit		25

Section 8.4.	Matters Involving Third Parties		26

Section 8.5.	Exclusive Remedy		27

Section 8.6.	After-Tax Calculations		27

ARTICLE IX	MISCELLANEOUS		28

Section 9.1.	Press Releases and Public Announcements		28

Section 9.2.	No Third-Party Beneficiaries		28

Section 9.3.	Entire Agreement		28

Section 9.4.	Succession and Assignment		28

Section 9.5.	Bulk Sales		28

Section 9.6.	Counterparts		29

Section 9.7.	Headings		29

Section 9.8.	Notices		29

Section 9.9.	Dispute Resolution; Governing Law; Venue; Waiver of Jury Trial		30

Section 9.10.	Amendments and Waivers		30

TABLE OF CONTENTS


		PAGE

Section 9.11.	Severability		30

Section 9.12.	Expenses		31

Section 9.13.	Construction		31

Section 9.14.	Injunctive Relief		31

Section 9.15.	Disclosure Schedule and Exhibits		31

EXHIBITS


Exhibit A	—	Form of Bill of Sale

Exhibit B	—	Form of Assignment and Assumption Agreement

Exhibit C	—	Form of Transition Services Agreement

Exhibit D	—	Form of Escrow Agreement

Exhibit E	—	Form of Assumption Agreement

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of September 30, 2015, by and among FreightCar Rail Services, LLC, a Delaware limited liability company (“ FCRS ”), FreightCar Short Line, Inc., a Delaware corporation (“ FCSL ” and together with FCRS, “ Sellers ” and each individually “ Seller ”), and ARS Nebraska, LLC, a Delaware limited liability company (“ Buyer ”). Sellers and Buyer are referred to collectively herein as the “ Parties ” and each individually as a “ Party ”.

R E C I T A L S

WHEREAS, FCRS is engaged in the business of railcar maintenance and repair, including full service repair, storage, certain limited fabrication and finishing services in shops located near major rail corridors; on-site mobile services; maintenance management; inspection and consulting; and car repair billing (the “ Business ”);

WHEREAS, FCSL owns, but has never commercially operated, a short-line railway in Grand Island, Hall County, Nebraska (the “ Railway ”); and

WHEREAS, Buyer desires to purchase and assume from Sellers and Sellers desire to sell and assign to Buyer certain assets and liabilities of the Business and the Railway as further described herein.

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.

ARTICLE I

DEFINITIONS

Section 1.1. Defined Terms . As used in this Agreement, the following terms have the following meanings:

“ Adverse Consequences ” means actual out-of-pocket losses, damages, costs or expenses (including reasonable attorneys’ fees) incurred or sustained by, or imposed on, an Indemnified Party; provided, that “Adverse Consequences” shall not include any damages calculated based on a diminution in value, consequential, multiple, incidental, special or punitive damages, or lost profits.

“ Affiliate ” shall mean, with respect to any Person: (a) any other Person that controls, is controlled by, or is under common control with such Person or (b) any officer, director or shareholder of such Person. For purposes of this definition, the term “control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, whether through the ownership of voting securities, by contract or otherwise.

“ Base Consideration ” means $20,000,000.00.

“ Business Day ” means a day other than Saturday, Sunday or any other day on which commercial banks in Chicago, Illinois are authorized or required by law to close.

“ Closing Date ” means the date on which the Closing occurs.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Competitive Activity ” means any activity that is competitive with the railcar maintenance and repair as conducted by the Business as of the Closing; provided , however , in no event shall the Parts Business, any other existing business of the Sellers, any future business activities involving the construction of new customer railcars, the re-bodying of customer railcars, or fundamental rebuild of customer railcars, or any Danville Activities, be deemed a Competitive Activity.

“ Confidential Information ” means any information or data concerning the Business or the Railway not already generally available to the public or that later becomes public knowledge other than through Sellers or their Affiliates in violation of this Agreement.

“ Confidentiality Agreement ” means that certain Non-Disclosure and Confidentiality Agreement dated February 12, 2015, by and among Seller Parent and Buyer.

“ Danville Activities ” means all business activities at the Sellers’ (or its Affiliates’) Danville, Illinois facility pertaining to construction of new customer railcars, the re-bodying of customer railcars, the modification of customer railcars, or the rebuild of customer railcars, including associated maintenance and repair.

“ Data Room ” means the electronic data room containing documents and materials relating to the Business and the Railway, maintained by Republic Partners, LLC, on behalf of Sellers, and made available to Buyer. The documents and materials relating to the Business, and the Railway that are contained therein are not intended to constitute, and shall not be construed as constituting, any representation or warranty or covenant of Sellers.

“ Debt ” means, with respect to any Person, any of the following: (a) indebtedness for borrowed money, (b) any unpaid interest, premiums, penalties accrued, bank overdrafts and bank fees owing on any such indebtedness, (c) obligations in respect of capitalized leases (calculated in accordance with GAAP) and obligations for the deferred purchase price of goods or services (other than trade payables incurred in the Ordinary Course of Business), (d) obligations in respect of banker’s acceptances or letters of credit, (e) guarantees of obligations of the type described in clauses (a) through (d) above of any other Person by the referenced Person, (f) any obligation in respect of interest under any existing interest rate swap or hedge agreement entered into by such Person, (g) obligations for the deferred purchase price owed in connection with any acquisitions, and (h) any Off-Balance Sheet Financing of such Person in existence, in each case to the extent secured by any Lien on any of the Purchased Assets.

“ Disclosure Schedule ” means the disclosure schedule delivered by Sellers to Buyer on the Closing Date.

“ DTE ” means DTE Rail Services, Inc., a Michigan corporation, DTE Rail Holdings II, LLC, a Michigan limited liability company f/k/a Cornhusker Railways, LLC, and their Affiliates and respective permitted successors and assigns, stockholders, officers, directors, employees, agent and representatives.

“ Easements ” means, collectively, the easements included in the documents identified in Section 5.12(b) of the Disclosure Schedule in favor of Sellers.

“ Employee Benefit Plan ” means any “employee benefit plan” (as such term is defined in ERISA §3(3)) and any other profit sharing, deferred compensation, incentive, bonus, option or other compensation or benefit plan, program or arrangement of any kind.

“ Environmental, Health, and Safety Requirements ” means all federal, state, and local statutes, regulations, ordinances, and similar provisions, and all administrative orders and determinations issued to a Seller or with respect to any Real Property, relating to any of the Purchased Assets or the operation of the Business, concerning public health and safety, worker health and safety, natural resources, or pollution or protection of the environment, including all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any Hazardous Substances, materials, or wastes, chemical substances, or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, noise or radiation; including without limitation, the federal Comprehensive Environmental Response, Compensation, and Liability Act (“ CERCLA ”), 42 U.S.C. §§9601 et seq., the federal Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., the federal Water Pollution Control Act, 33 U.S.C. §§1251 et seq., the federal Clean Air Act, 42 U.S.C. §§ 7401 et seq., the Toxic Substances Control Act, 7 U.S.C. §§ 136 et seq., the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq., the Occupation Safety and Health Act of 1970, 29 U.S.C. §§ 651 et seq.

“ Environmental Laws ” means any present or future federal, state or local law or regulation, ordinance or international treaty signed by the United States, relating to the handling, use, control, management, treatment, storage, disposal, release or threat of release of any Hazardous Substances.

“ Environmental Liabilities ” means, collectively, obligations or liabilities of the Business or the Railway, whether contractual or legal, fixed or contingent, existing or resulting from any action, omission, condition or circumstance existing on or prior to, whether or not discovered prior to or after the Closing Date with respect to (a) any treatment, possession, storage, disposition, transport, handling or release of any Hazardous Substance prior to the Closing Date which would give rise to an obligation or liability; (b) any exposure of any employee, contractor, advisor or other person to any Hazardous Substance in connection with the Business, the Railway or the Real Property which would give rise to an obligation or liability; (c) the presence of any Hazardous Substances on, at, under or emanating from any of the Real Property; (d) any legal or contractual obligation to investigate, mitigate, remediate, clean up, or take any corrective action with respect to, any Hazardous Substance; (e) any pre-closing disposal or release of any Hazardous Substances or waste at, on or under the Real Property or any other location or facility relating in any way to the Business, the Railway, or the Real Property that after the Closing Date becomes subject to liability or a claim or notice of potential liability under any Environmental, Health, and Safety Requirement; (f) asbestos, asbestos-containing materials, silica or mixed dust (or any combination thereof) used by the Railway or the Business as a raw material, component or otherwise in connection with any of their respective products (including products used in sandblasting or mixed dust applications) or businesses; or (g) an obligation or liability of the Business or the Railway to remediate any Hazardous Substance or change or modify any practice, procedure, or facility regarding the treatment, possession, storage, disposition, transport, handling or release of any Hazardous Substance, if, absent a change in an Environmental, Health, and Safety Requirement after the Closing Date, remediation or change or modification to any practice, procedure, or facility would not have been necessary; provided , however , any claim or demand by Buyer against DTE (including, without limitation, any claims subrogated to any insurance carrier) which results in DTE making a claim or demand against either of the Sellers shall not be considered an Environmental Liability for purposes of this Agreement.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ Escrow Agent ” means the entity mutually designated to serve as escrow agent under the Escrow Agreement.

“ Escrow Agreement ” means the Escrow Agreement by and among Buyer, Sellers and the Escrow Agent, in the form attached hereto as Exhibit E .

“ Escrow Amount ” means the sum of $1,960,000.00 to be deposited with the Escrow Agent and held in escrow pursuant to the Escrow Agreement.

“ Fiduciary ” has the meaning set forth in ERISA §3(21).

“ GAAP ” means United States generally accepted accounting principles as in effect from time to time, consistently applied in accordance with historical company policies, practices and procedures.

“ GIEDC Note ” means that certain Promissory Note dated June 22, 2015, in the original principal amount of $400,000.00, issued by FCRS in favor of Grand Island Area Economic Development Corporation.

“ GIEDC Trust ” means that certain Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement dated June 23, 2015, by FCRS, to and in favor of Matthew D. Maser, Attorney at Law and member of the Nebraska State Bar Association, as Successor Trustee, for the benefit of Grand Island Area Economic Development Corporation, a Nebraska non-profit corporation.

“ Hazardous Substances ” means (a) any material, substance, pollutant, toxic substance, hazardous substance, hazardous waste, or hazardous material as currently or hereafter regulated by or addressed pursuant to any Environmental Law, including, without limitation, any of the foregoing specifically defined as “hazardous waste,” “industrial waste,” “hazardous substance,” “solid waste,” “hazardous material,” “pollutant,” “contaminant,” or “source material” under any Environmental, Health, and Safety Requirements; (b) asbestos; (c) polychlorinated

biphenyls; (d) urea formaldehyde; (e) radon; (f) radioactive or material; (g) toxigenic mold; (h) any substance, the presence of which on, under or in the Real Property, or contained in any structure thereon, is prohibited or regulated by Environmental Law or which requires investigation or remediation under any Environmental Law; (i) oil, petroleum or any petroleum products or by-product, including, without limitation, gasoline, diesel fuel or any other petroleum hydrocarbon product or waste, natural gas, natural gas liquids, liquefied natural gas, and synthetic gas, as well as any mixtures thereof; and/or (j) any material or substance that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous to human health or the environment.

“ Intellectual Property ” means all of the following in the United States: (a) all know-how, processes and inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, divisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, Internet domain names, and rights in telephone numbers, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, excluding, for purposes of this clause (b), any of the foregoing to the extent such item (y) includes “FreightCar” or any derivation thereof or “OMNIS” or any derivation thereof or (z) contains a symbol or logo associated with Seller Parent (or an Affiliate thereof), (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including technical information, research and development, know-how, formulas, compositions, processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all material advertising and promotional materials, (g) all other proprietary rights, and (h) all copies and tangible embodiments thereof (in whatever form or medium), excluding, for purposes of this definition, any website maintained by any Seller or an Affiliate thereof.

“ Key Employees ” means Jeff Fisher, Kevin Koepke, Cindy Gulzow, Rocky Salpas, and Randy Quafie.

“ Knowledge ” means, with respect to a Seller, that which is actually or constructively known by the Key Employees after due inquiry.

“ Leased Real Property ” means all real property leasehold or subleasehold estates held by Sellers.

“ Leases ” means all leases or subleases, licenses and other agreements including all amendments, extensions, renewals, guaranties, and other agreements with respect thereto, pursuant to which Sellers hold any Leased Real Property.

“ Lien ” means any encumbrance, pledge, restrictive agreement, claim, security interest, mortgage, charge, escrow, option, right of first refusal, indenture, security agreement, or similar restriction.

“ Material Adverse Effect ” means any actual effect or change that has a material adverse effect on the Purchased Assets, the Assumed Liabilities, the financial condition or the operations of the Business or the Railway; provided , however , that the term “ Material Adverse Effect ” shall not include any effect or change, directly or indirectly, arising out of or attributable to: (a) any general deterioration in the economy or change in financial market conditions; (b) conditions generally affecting the industries in which the Business or Railway operates; (c) any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (d) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (e) any action required or permitted by this Agreement or any action taken (or omitted to be taken) with the written consent of or at the written request of Buyer; (f) any matter set forth in the Disclosure Schedule; (g) any changes in applicable law, statute, law, regulation, rule or accounting rule (including GAAP); (h) any natural or man-made disaster or acts of God; or (i) any failure by the Business or Railway to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded). All references to dollar-amount thresholds in this Agreement shall not be deemed to be evidence of the existence or non-existence of materiality or of a Material Adverse Effect.

“ Most Recent Month End ” means August 31, 2015.

“ Off-Balance Sheet Financing ” means (a) any liability of Sellers under any sale and leaseback transactions which does not create a liability on the consolidated balance sheet of Sellers and (b) any liability of Sellers under any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where the transaction is considered indebtedness for borrowed money for federal income tax purposes but is classified as an operating lease in accordance with GAAP for financial reporting purposes.

“ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“ Owned Real Property ” means all land, buildings, structures, improvements, fixtures or other interest in real property owned by Sellers.

“ Parts Business ” means the business conducted by Seller Parent and any of its current or future Affiliates of manufacturing and distributing railcar parts and components and providing fabrication and finishing services for all rail car types whether manufactured by Seller Parent or any of its Affiliates or any other third parties.

“ Permit ” means any license (other than a license of Intellectual Property), import license, export license, franchise, consent, permit, certificate, certificate of occupancy, order, authorization, approval or registration with any governmental body.

“ Permitted Lien ” means the following Liens: (a) statutory landlord’s liens and liens for current taxes, assessments and governmental charges not yet due and payable or, if due, set forth on Section 1.1 of the Disclosure Schedule and being contested in good faith by appropriate proceedings during which collection or enforcement against the property is stayed; (b) zoning laws and ordinances and similar laws to the extent not violated or breached; (c) statutory liens or other encumbrances or imperfections of title or technical defects in title that individually or in the aggregate do not impair the value, marketability or utility of the related asset as presently utilized in the Business or by the Railway; (d) liens of carriers, warehousemen, mechanics, laborers and materialmen and other similar statutory liens incurred in the Ordinary Course of Business for sums not yet due or being diligently contested in good faith; and (e) non-exclusive licenses of Seller Intellectual Property Assets granted in the Ordinary Course of Business which do not, individually or in the aggregate, impair the value, marketability or utility of such Seller Intellectual Property Assets as currently used in the Business or the Railway, and are set forth on Section 1.1 of the Disclosure Schedule .

“ Permitted Encumbrance ” means the items listed as such in Section 5.12(a) of the Disclosure Schedule .

“ Person ” means an individual, a partnership, a corporation, limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity, or a governmental entity (or any department, agency, or political subdivision thereof).

“ Real Property ” means, collectively, the Leased Real Property, the Easements and Owned Real Property.

“ Seller Intellectual Property ” means all Intellectual Property which is owned exclusively by Sellers.

“ Sellers’ Knowledge ” means the Knowledge of either Seller, collectively.

“ Seller Lease ” means each Lease required to be listed in Section 5.12(c) of the Disclosure Schedule .

“ Seller Parent ” means FreightCar America, Inc., a Delaware corporation.

“ Seller Software ” means application source code and databases for the repair shop operating modules only of Sellers’ proprietary system OMNIS.

“ Subsidiary ” means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (b) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons owns a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any manager, management board, managing director or general partner of such business entity (other than a corporation). The term “ Subsidiary ” shall include all Subsidiaries of such Subsidiary.

“ Tax ” or “ Taxes ” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“ Tax Return ” means any return (including any information return), report, statement, schedule, notice, form, declaration, claim for refund or other document or information filed with or submitted to, or required to be filed with or submitted to, any governmental authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any law relating to any Tax, including any amendment thereto.

“ Third Party IP ” means Intellectual Property that is material to the operation of the Business that any third party owns that is licensed to Sellers for use in the conduct of the Business as currently conducted or with respect to the Railway, other than “off the shelf” software.

“ Transaction Documents ” means this Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the Transition Services Agreement, the Parts Supply Agreement, the Assumption Agreement, and all other documents and agreements delivered pursuant hereto.

“ WARN Act ” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.

Section 1.2. Glossary . The following Glossary of Defined Terms sets forth the section reference of the definitions of certain other defined terms used in the Agreement:


AAA		9.9(a)
Agreement		Preamble
Assignment and Assumption Agreement		7.1(e)(iii)
Assumed Liabilities		2.3
Assumption Agreement		7.1(e)(vii)
Back Office Services and Assets		5.13(b)
Beneficial Rights		2.5
Bill of Sale		7.1(e)(ii)
Business		Recitals
Buyer		Preamble
Buyer Environmental Liabilities		8.3(a)
Buyer Indemnitees		8.2(a)
Buyer Plans		6.5(b)
CERCLA		1.1
Closing		3.3
COBRA Obligations		6.5(d)


Delayed Transfer Asset Consents		2.5(b)
Delayed Transfer Assets		2.5(a)
Direct Claim		8.4(e)
Effective Time		3.3
Employees		5.16(b)
Excluded Assets		2.2
Excluded Intellectual Property Assets		2.2(n)
Excluded Liabilities		2.4
FCRS		Preamble
FCSL		Preamble
Group A		2.5(b)
Group B		2.5(b)
Financial Statements		5.7
Improvements		5.12(d)
Indemnified Party		8.4(a)
Indemnifying Party		8.4(a)
Indemnity Notice		8.4(e)
Inventory		2.1(c)
Material Contract		5.14
Most Recent Financial Statements		5.7
Most Recent Fiscal Year End		5.7
Parts Supply Agreement		7.1(e)(xii)
Party or Parties		Preamble
Purchased Assets		2.1
Railcar Storage Agreement		7.1(e)(xii)
Receivables		2.1(a)
Seller Indemnitees		8.3(a)
Seller Indemnity Cap		8.2(b)
Seller Intellectual Property Assets		2.1(f)
Seller Threshold Amount		8.2(c)
Sellers		Preamble
Third Party Claim		8.4(a)
Transferred Employees		6.5(a)
Transition Services Agreement		7.1(e)(iv)

ARTICLE II

PURCHASE AND SALE OF ASSETS

Section 2.1. Assets to be Transferred . Subject to the terms and conditions of this Agreement and for the consideration herein stated, on the Closing Date, Sellers shall sell, transfer, convey, assign, and deliver to Buyer, and Buyer shall purchase and accept, all of Sellers’ right, title and interest in the following assets to the extent that such assets exist as of the Closing Date and exclusively relate to the Business or the Railway, free and clear of all Liens, other than Permitted Liens and Permitted Encumbrances, (collectively, the “ Purchased Assets ”):

(a) All accounts receivable not aged greater than sixty (60) days past invoice due date listed on Section 2.1(a) of the Disclosure Schedule (the “ Receivables ”);

(b) All machinery, equipment, building improvements, fixtures, vehicles, furniture, tools, dies, patterns, parts and other personal property and fixed assets, including all those listed on Section 2.1(b) of the Disclosure Schedule ;

(c) All inventories, including all raw materials and work in process, held by Sellers for twelve (12) months or less, as determined on a first-in first-out basis, listed or otherwise described on Section 2.1(c) of the Disclosure Schedule (“ Inventory ”);

(d) All Owned Real Property;

(e) All Seller Leases;

(f) All Seller Software listed on Section 2.1(f) of the Disclosure Schedule , Seller Intellectual Property listed on Section 2.1(f) of the Disclosure Schedule and Sellers’ rights to use any Third Party IP licenses listed on Section 2.1(f) of the Disclosure Schedule (collectively, “ Seller Intellectual Property Assets ”);

(g) All packing and shipping materials and office supplies, including invoices, brochures, catalogs, and pamphlets;

(h) All current lists of customers, customer files and rights under sales contracts and customer orders;

(i) All records, documents and books relating to the Purchased Assets, excluding (i) all records and returns relating to Taxes, assessments and similar governmental levies concerning Sellers (other than personal property taxes, assessments and levies imposed on the Purchased Assets); (ii) all corporate records of Sellers, such as corporate minute books and stock transfer records; and (iii) all records and documents relating to any of the Excluded Assets or Excluded Liabilities; provided , however , if any of the foregoing include books and records relating to any of the Purchased Assets, copies of all such books and records shall be provided to Buyer at Closing;

(j) All rights under, interests in and deposits under all supplier agreements and orders, purchase orders, rebate agreements, leases and all other agreements, contracts and commitments, including those contracts with an Affiliate of either Seller as set forth on Section 2.1(j) of the Disclosure Schedule ;

(k) All contracts and covenants of Transferred Employees and consultants with respect to confidentiality, secrecy, non-solicitation, and/or proprietary information of a Seller, and all applicable rights thereunder;

(l) All computer equipment and systems, software, programs and data, telephone numbers and internet domain name registrations (other than those which (i) include “FreightCar” or any derivation thereof or (ii) contain a symbol or logo associated with Seller Parent) (or an Affiliate thereof)), identified on Section 2.1(l) of the Disclosure Schedule ;

(m) All rights under, interests in and deposits under all licenses, permits, product registrations, filings, authorizations, approvals and indicia of authority issued by any governmental entity or agency (and pending applications for any thereof) to the extent transferable;

(n) All rights and claims against others to the extent that such rights and claims against others arise from or are in connection with the Purchased Assets or Assumed Liabilities; and

(o) All advances, prepaid expenses and deposits paid with respect to Purchased Assets, other than advances, prepaid expenses and deposits made by Sellers with respect to insurance.

Section 2.2. Excluded Assets . The provisions of Section 2.1 notwithstanding, it is expressly understood and agreed that the Purchased Assets shall not include the following (collectively, the “ Excluded Assets ”):

(a) Corporate accounting journals and corporate books of account which comprise Sellers’ permanent accounting or tax records;

(b) Corporate minute books, records and any corporate seals of Sellers; provided , however , copies of all such books and records relating to the Purchased Assets shall be provided to Buyer at Closing.

(d) Items included in the definition of Purchased Assets sold, transferred or disposed of in the Ordinary Course of Business prior to Closing;

(e) Corporate records included in the definition of Purchased Assets that Sellers wish to maintain, provided copies of such records are made available to Buyer and further provided that such records will be included in Confidential Information as referenced in Section 6.3;

(f) Any rights, claims, and interest of Sellers in and to this Agreement and the Transaction Documents;

(g) All claims, counterclaims and rights of Sellers against third parties to the extent such claims relate to Excluded Assets or Excluded Liabilities;

(h) All right, title and interest in and to the name or mark “FreightCar” or “OMNIS”;

(i) Any agreement, contract or commitment with an Affiliate of either Seller that is not set forth on Section 2.1(j) of the Disclosure Schedule ;

(j) All insurance policies of Sellers and all rights to applicable claims and proceeds thereunder;

(k) Any capital stock or equity interests, including any capital stock or equity interests of FreightCar Rail Services, LLC, FreightCar Rail Management Services, LLC, FreightCar Alabama, LLC and FreightCar Roanoke, LLC;

(l) All cash and cash equivalents, bank accounts, intercompany accounts, securities and investments of Sellers;

(m) Any attorney-client privileges, rights, and materials related thereto; including, any and all attorney-client privileges, rights, and materials related to the transactions contemplated by this Agreement and any other previously proposed conveyances of the stock or assets of Sellers (whether by merger or otherwise);

(n) Any Seller Intellectual Property and Third Party IP not listed on Section 2.1(f) of the Disclosure Schedule , including commercially available “off the shelf” software (collectively, the “ Excluded Intellectual Property Assets ”);

(o) All accounts receivable aged greater than sixty (60) days past invoice due date;

(p) All inventories, including all raw materials and work in process, held by Sellers for more than twelve (12) months, as determined on a first-in first-out basis;

(q) All other Excluded Assets set forth on Section 2.2(q) of the Disclosure Schedule .

Section 2.3. Assumed Liabilities . At the Closing, Buyer shall assume and pay, perform and discharge, as the same shall become due all the liabilities and obligations, of every kind or nature, except for the Excluded Liabilities, to the extent arising out of or relating to the Business or the Railway, whether arising before or after the Closing Date, including the following (collectively, the “ Assumed Liabilities ”):

(a) Obligations and liabilities under any contract included in the Purchased Assets (other than any obligations or liabilities of Sellers that arise due to any failure by either Seller to perform prior to the Closing);

(b) Environmental Liabilities arising from or in connection with the actions or inactions of Buyer after the Closing Date;

(d) Any other obligations and liabilities of Sellers set forth on Section 2.3(d) of the Disclosure Schedule .

Section 2.4. Excluded Liabilities . Buyer shall not assume and shall not be liable or responsible for any of the following liabilities or obligations of either Seller (collectively, the “ Excluded Liabilities ”, subject to Section 6.7 ):

(a) Obligations or liabilities arising out of or based on any violation, on or prior to the Closing Date, of any statute, law, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which either Seller is subject;

(b) Obligations or liabilities related to the Excluded Assets;

(c) Obligations or liabilities for Taxes assessed on the income of the Business or the Railway or the existence of any Seller as of the Closing Date;

(d) Obligations or liabilities related to any failure to maintain, fund or administer any Employee Benefit Plan in accordance with its terms and applicable laws and regulations;

(e) Environmental Liabilities arising from or in connection with the actions or inactions of any Person on or prior to the Closing Date;

(f) Obligations or liabilities related to any retention letter or agreement, restricted share award agreement, bonus, deferred compensation plan, incentive compensation plan or similar Employee Benefit Plan related to periods on or prior to the Closing Date, except to the extent accrued on the Most Recent Financial Statements;

(g) Obligations or liabilities related to any Debt on the part of either Seller; and

(h) Any other obligations or liabilities not expressly set forth in Section 2.3 of this Agreement.

Section 2.5. Non-Assignable Assets .

(a) In the event that a contract, property, right or other asset of Sellers constitutes a part of the Purchased Assets and if the attempted sale, transfer or assignment thereof to Buyer without the consent or approval of another party or governmental entity would be ineffective or would constitute a breach of contract or a violation of laws or would in any other way adversely affect the rights of Buyer as transferee or assignee and such consent or approval is not obtained on or prior to the Closing Date (the “ Delayed Transfer Assets ”), to the extent possible, (i) Sellers shall transfer a beneficial interest in or to such contracts, properties, rights or other assets (collectively, the “ Beneficial Rights ”) to Buyer, (ii) Buyer shall assume or discharge the obligations of Sellers under each such Beneficial Right as agent for Sellers, and Sellers shall act as Buyer’s agent in the receipt of any benefits, rights or interest received from the Beneficial Rights, and (iii) Sellers shall transfer control over the administration and enforcement of such contracts, properties, rights or other assets to Buyer. Sellers shall use commercially reasonable efforts (and bear the costs of its efforts), to obtain and secure any and all consents and approvals that may be necessary to effect the legal and valid sale, transfer or assignment of the contracts, properties, rights or other assets underlying the Beneficial Rights, including their formal assignment or novation, if, as determined in writing in the sole discretion of Buyer, advisable. The Delayed Transfer Assets are listed on Section 2.5 to the Disclosure Schedule .

(b) In the event any of the consents or approvals for the Delayed Transfer Assets listed as items 1-5 on Section 2.5 of the Disclosure Schedule (“ Group A ”) and items 6-7 on Section 2.5 of the Disclosure Schedule (“ Group B ”) (each of the consents or approvals in Group A and Group B, a “ Delayed Transfer Asset Consent ”) are not obtained within ninety (90) days after the Closing Date, Sellers shall pay an administrative fee to Buyer determined as follows:

(i) with respect to the Delayed Transfer Asset Consents in Group A, (A) if none are obtained, the administrative fee shall be equal to $150,000.00, and (b) if some, but not all, of such Delayed Transfer Asset Consents are obtained, the administrative fee shall be $150,000.00, prorated based on the number of Delayed Transfer Asset Consents listed under Group A not obtained, divided by five (5); and

(ii) with respect to the Delayed Transfer Asset Consents in Group B, (a) if none are obtained, the administrative fee shall be equal to $50,000, and (b) if only one (1) such Delayed Transfer Asset Consent is obtained, the administrative fee shall be $50,000, prorated based on the number of Delayed Transfer Asset Consents in Group B not obtained, divided by two (2).

Notwithstanding the foregoing, no administrative fee (or portion thereof) shall be due and owing with respect to any Delayed Transfer Asset Consent if, within such ninety (90) day period, the applicable Delayed Transfer Asset has otherwise expired, or Buyer has otherwise entered into a contract with the counterparty to the applicable Delayed Transfer Asset.

ARTICLE III

PURCHASE PRICE

Section 3.1. Payment of the Purchase Price at Closing . At the Closing, Buyer shall (a) assume the Assumed Liabilities, (b) deliver to Sellers by wire transfer the Base Consideration less the Escrow Amount, and (c) deliver to the Escrow Agent by wire transfer the Escrow Amount, which shall be held and disbursed in accordance with the terms of the Escrow Agreement.

Section 3.2. Allocation . The sum of the Base Consideration and the Assumed Liabilities shall be allocated among the Purchased Assets for all Tax purposes by Sellers and Buyer pursuant to a written notice by Buyer to Sellers following the Closing Date, but no later than December 31, 2015. Such written notice shall be prepared by Buyer in consultation with Sellers and in accordance with 26 U.S.C. § 1060 and all administrative rules promulgated thereunder. Neither Sellers nor Buyer shall take any position (whether in Tax audits, Tax Returns or otherwise) that is inconsistent with the allocations set forth in such written notice, unless otherwise required to do so by applicable law.

Section 3.3. Closing . The consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall occur at the offices of Kelley Drye & Warren LLP, in Chicago, Illinois, at 10:00 AM local time, on the date hereof or at such other time and place as Buyer and Sellers may agree. All transactions contemplated herein to occur on and as of the Closing Date shall be deemed to have occurred simultaneously and to be effective as of 12:01 AM on such date (the “ Effective Time ”).

Section 3.4. Transfer Taxes . All transfer, documentary, sales, use, registration and other similar Taxes and related fees (including penalties, interest and additions to Taxes) incurred in connection with this Agreement and the transactions contemplated hereby will be borne exclusively by the Sellers.

Section 3.5. Prorations . All prorations provided to be made “as of the Closing Date” shall be made as of the Effective Time and shall be deemed final at Closing. The following items shall, as applicable, be prorated between Buyer and Sellers or credited to Buyer or Sellers: real estate taxes, annual installments of special assessments payable therewith, and utilities that are payable in the year in which the Closing occurs shall be prorated between Buyer and Sellers as of the Closing Date.

Section 3.6. Closing Statement . At least two (2) Business Days prior to the Closing Date, Sellers shall deliver to Buyer a written statement describing the flow of funds contemplated under this Agreement as of the Closing Date, including, without limitation, the flow of funds contemplated under Sections 3.1 , 3.4 and 3.5 .

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Sellers that the statements contained in this Article IV are correct and complete as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such date).

Section 4.1. Organization and Power . Buyer is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, and all necessary limited liability company power and authority and all necessary rights, licenses, permits and franchises to own, lease and operate its assets and to carry on its business.

Section 4.2. Authorization of Transaction . Buyer has all necessary limited liability company power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder. This Agreement constitutes, and the other Transaction Documents to which Buyer is a party constitute, the legal, valid and binding obligation of Buyer, enforceable in accordance with their terms and conditions. Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement and the other Transaction Documents. The execution, delivery and performance of this Agreement and the other Transaction Documents have been duly authorized by Buyer.

Section 4.3. Non-contravention . Neither the execution and the delivery of this Agreement nor any of the other Transaction Documents, nor the consummation of the transactions contemplated hereby and thereby, will (a) violate or breach any constitution, statute, law, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Buyer is subject, (b) violate or conflict with any provision of its charter, bylaws, or similar governing documents or (c) conflict with, result in a breach of, constitute a default under, or result in the acceleration of, any agreement, contract, lease, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of its assets is subject.

Section 4.4. Brokers’ Fees . Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Sellers could become liable or obligated.

Section 4.5. Non-Inducement . Buyer has not (a) been induced to enter into this Agreement by any statement, representation, warranty, or covenant that is not specifically set forth in this Agreement, and (b) relied on any projection of Sellers regarding the future profitability of the Business.

Section 4.6. Knowledge of Misrepresentation and Independent Investigation . Buyer acknowledges and agrees that (a) in making its decision to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby, Buyer has relied solely upon its own investigation and the express representations and warranties of Sellers set forth in Article V of this Agreement (including the related portions of the Disclosure Schedule), and (b) neither Seller nor any other Person has made any representation or warranty as to either Seller, the Business, the Railway, or this Agreement, except as expressly set forth in Article V of this Agreement (including the related portions of the Disclosure Schedule).

Section 4.7. Disclaimer of Other Representations and Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE IV , BUYER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY. THE REPRESENTATIONS OR

WARRANTIES SET FORTH IN THIS ARTICLE IV HEREOF ARE IN LIEU OF ANY AND ALL REPRESENTATIONS AND WARRANTIES SELLERS MAY HAVE UNDER ANY APPLICABLE LAW.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLERS

Subject to the disclosures set forth in the corresponding sections of the Disclosure Schedule, Sellers jointly and severally represent and warrant to Buyer that the statements contained in this Article V are correct and complete as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such date).

Section 5.1. Organization, Qualification, and Power . Each Seller is duly organized, validly existing, and in good standing under the laws of the State of Delaware. Each Seller has all necessary corporate or limited liability company power and authority and all licenses and permits necessary to carry on any businesses in which it is engaged and to own, lease and use the properties owned, leased and used by it, except where the failure to have such licenses and permits would not have a Material Adverse Effect.

Section 5.2. Authorization of Transaction . The transactions contemplated by this Agreement have been approved by all necessary corporate or limited liability company, as applicable, action of each Seller, including approval of the transactions contemplated by this Agreement by each Seller’s stockholders or members. No additional authorization on the part of either Seller is necessary in connection with the consummation of the transactions contemplated by this Agreement.

Section 5.3. Subsidiaries; Investments in Other Entities . Except as set forth on Section 5.3 of the Disclosure Schedule , each Seller has no Subsidiaries and does not own, directly or indirectly, any interest or investment, whether debt or equity (other than an interest as a creditor holding a trade account receivable), or any obligation, option or right to acquire any interest, direct or indirect, in any other corporation or other entity.

Section 5.4. Non-contravention . Neither the execution and the delivery of this Agreement nor any of the other Transaction Documents, nor the consummation of the transactions contemplated hereby or thereby, will (a) to the Knowledge of Sellers, violate or breach any constitution, statute, law, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which either Seller is subject, (b) violate or breach any constitution, statute, law, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which either Seller is subject which gives rise to any right of rescission by any Person, (c) violate or conflict with any provision of the charter or bylaws, or similar governing documents, of either Seller, or (d) conflict with, result in a breach of, constitute a default under or result in the acceleration of a Material Contract, except as set forth in Section 5.4 of the Disclosure Schedule . Except as set forth on Section 5.4 of the Disclosure Schedule , neither Seller is required to give any notice to, make any filing with, or obtain any authorization, consent, Permit or approval of any government or governmental agency in connection with the consummation of the transactions contemplated hereby.

Section 5.5. Brokers’ Fees . Except for any obligations to Republic Partners, LLC, neither Seller has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

Section 5.6. Title to Assets . Except as set forth in Section 5.6 of the Disclosure Schedule , each Seller has good and transferable title to all of the Purchased Assets free and clear of all Liens, other than Permitted Liens and Permitted Encumbrances. Except as set forth in Section 5.6 of the Disclosure Schedule , each material tangible asset included in the Purchased Assets has been maintained in accordance with standard industry practice of the Business or the Railway, as applicable, and is in operating condition (ordinary course wear and tear excepted) adequate for the operation of the Business. Subject to Section

5.13(b) , and except as set forth in Section 5.6 of the Disclosure Schedule , the Purchased Assets are all the assets, properties and rights necessary to operate the Business and the Railway, consistent with past practice in all material respects.

Section 5.7. Financial Statements . Attached hereto as Section 5.7 of the Disclosure Schedule are true and complete copies of the following financial statements (collectively the “ Financial Statements ”): (a) unaudited pro forma consolidated balance sheet and statements of income of Sellers as of and for the fiscal year ended December 31, 2014 (the “ Most Recent Fiscal Year End” ); and (b) unaudited pro forma consolidated balance sheet and statements of income of Sellers (the “ Most Recent Financial Statements ”) as of and for the year-to-date period ended as of the Most Recent Month End. The Financial Statements have been prepared in accordance with GAAP, subject to normal and recurring year-end adjustments and the absence of notes, and fairly present in all material respects the financial condition of the Business and the Railway as of the respective dates thereof and the results of operations for the periods indicated.

Section 5.8. Absence of Certain Changes . Except as set forth in Section 5.8 of the Disclosure Schedule and except as expressly contemplated by this Agreement, since the Most Recent Month End, the Business and the Railway have been conducted in the Ordinary Course of Business and there has not been any event, change or occurrence that has had a Material Adverse Effect. In addition, except as set forth in Section 5.8 of the Disclosure Schedule , since the Most Recent Month End, neither Seller has:

(a) sold, leased, transferred, or assigned (or entered into any agreement to do the foregoing) any of the Purchased Assets other than in the Ordinary Course of Business;

(b) allowed any Lien, other than a Permitted Lien or Permitted Encumbrance, upon any Purchased Asset;

(c) made any capital expenditure in an aggregate amount exceeding $250,000.00 which would constitute an Assumed Liability;

(d) incurred any indebtedness for borrowed money in connection with the Business or the Railway in an aggregate amount exceeding $250,000.00, except unsecured current obligations and liabilities incurred in the Ordinary Course of Business;

(e) adopted, terminated, amended or modified any Employee Benefit Plan, the effect of which in the aggregate would materially increase the obligations of Sellers of any existing annual obligation to such plans;

(f) increased the compensation of any Employee, other than in the Ordinary Course of Business; or

(g) agreed or committed to do any of the foregoing which would bind any of the Parties.

Section 5.9. Accounts Receivable . All Receivables constitute bona fide receivables resulting from the sale of products or services as to which full performance has been rendered, are not aged greater than sixty (60) days past invoice due date, are at least equal to the sum of $2,000,000.00, and are valid and to Sellers’ Knowledge are enforceable claims. To Sellers’ Knowledge, the Receivables are not subject to any pending or threatened defense, counterclaim, right of offset, returns, allowances or credits, except to the extent reserved against the Most Recent Financial Statements.

Section 5.10. Legal Compliance .

(a) Except as set forth in Section 5.10 of the Disclosure Schedule , each Seller and the operation of the Business and the Railway are currently, and have been since three (3) years prior to the Closing Date, in material compliance with all applicable laws (including rules, regulations, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, and local governments (and

all agencies thereof). No action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced or, to Sellers’ Knowledge, threatened against either Seller alleging any failure so to comply.

(b) All Permits necessary for the operation of the Business or the Railway have been obtained and are in full force and effect, except where the failure to obtain or maintain such Permits would not have a Material Adverse Effect.

(c) None of the representations and warranties in this Section 5.10 shall be deemed to relate to environmental matters (which are governed by Section 5.18 ), employee benefits matters (which are governed by Section 5.17 ), employment matters (which are governed by Section 5.16 ) or tax matters (which are governed by Section 5.11 ).

Section 5.11. Tax Matters .

(a) Each Seller has filed with the appropriate taxing authorities all material Tax Returns that it was required to file relating to the Business or the Railway. All Taxes shown on such Tax Returns as due and owing by each Seller with respect to the Business or the Railway have been paid.

(b) There are no Liens for Taxes upon the Purchased Assets, except Liens for current Taxes not yet due.

(c) No claim has been made in writing or, to Sellers’ Knowledge, threatened by any taxing authority in any jurisdiction in which Sellers do not file Tax Returns that they are or may be subject to tax Liens in that jurisdiction.

(d) The representations and warranties set forth in this Section 5.11 are Sellers’ sole and exclusive representations and warranties regarding Tax matters.

Section 5.12. Real Property .

(a) Section 5.12(a) of the Disclosure Schedule sets forth the address, legal description and owner of record, and identifies any material encumbrance(s) relating thereto as shown on the applicable title commitment of all Owned Real Property used in connection with the Business or the Railway. Each Seller has fee simple title to such Owned Real Property and such Owned Real Property is free and clear of all Liens, other than Permitted Liens and Permitted Encumbrances. There is no condemnation, expropriation or other proceeding in eminent domain pending or, to Sellers’ Knowledge, threatened affecting any Owned Real Property or any portion thereof. There is no other proceeding pending or, to Sellers’ Knowledge threatened which relates to any Owned Real Property that would reasonably be expected to materially and adversely affect the current ownership, use and/or possession of any Owned Real Property. Other than this Agreement and the Transaction Documents, there are no contracts or other obligations outstanding for the sale, exchange or other transfer of any Owned Real Property or any portion thereof. True and complete copies of each Deed or other conveyance document by which Sellers obtained their ownership of the Owned Real Property have been provided in the Data Room.

(b) Section 5.12(b) of the Disclosure Schedule sets forth the description of each Easement. Each Seller has good title to all of the Easements and all of the Easements are free and clear of all Liens, other than Permitted Liens and Permitted Encumbrances. Sellers have made available to Buyer in the Data Room true and complete copies of each such Easement document. There is no condemnation, expropriation or other proceeding in eminent domain pending or, to Sellers’ Knowledge, threatened affecting any Easements or any portion thereof. There is no other proceeding pending or, to Sellers’ Knowledge, threatened which relates to any Easements that would reasonably be expected to materially and adversely affect the current use or possession of any Easements. Other than this Agreement and the Transaction Documents, there are no contracts or other obligations outstanding for the sale, exchange or other transfer

of any Easements or any portion thereof. True and complete copies of the Easements have been provided in the Data Room.

(c) Section 5.12(c) of the Disclosure Schedule sets forth the address of each parcel of Leased Real Property used in connection with the Business or the Railway, and a true and complete list of the Leases for each such parcel of Leased Real Property. There is no condemnation, expropriation or other proceeding in eminent domain pending or, to Sellers’ Knowledge, threatened affecting any Leased Real Property or any portion thereof. There is no other proceeding pending or, to Sellers’ Knowledge, threatened which relates to any Leased Real Property that would reasonably be expected to materially and adversely affect the current use or possession of any Leased Real Property. Other than this Agreement and the Transaction Documents, there are no contracts or other obligations outstanding for the sale, exchange or other transfer of any Leased Real Property or any portion thereof. True and complete copies of each Lease document have been made available to Buyer in the Data Room. All oral leases are described in Section 5.12(c) of the Disclosure Schedule .

(d) Except as set forth on Section 5.12(d) of the Disclosure Schedule , all buildings, structures, fixtures, rail line improvements, building systems and equipment, and all components thereof (including the roof, foundation and structural elements), included in the Real Property (the “ Improvements ”) are in condition and repair sufficient for the ordinary and customary operation of the Business and the Railway. Except as set forth on Section 5.12(d) of the Disclosure Schedule , there are no facts or conditions affecting any of the Improvements which would individually or in the aggregate, interfere in any material respect with the use or occupancy of the Improvements or any portion thereof in the operation of the Business or the Railway.

(e) Except as set forth in Section 5.12(e) of the Disclosure Schedule , the Real Property has been sufficient for the ordinary and customary operation of the Business and the Railway as currently conducted by Sellers.

Section 5.13. Intellectual Property and Software .

(a) Section 5.13(a)(i) of the Disclosure Schedule identifies all Seller Intellectual Property Assets, including without limitation, all Seller Software. Except as otherwise set forth in Section 5.13(a)(ii) of the Disclosure Schedule , the Sellers own all Seller Intellectual Property Assets free and clear of any Lien, other than Permitted Liens. Section 5.13(a)(iii) of the Disclosure Schedule identifies all Seller Intellectual Property Assets that are registered or filed in the name of each respective Seller with any applicable Person to perfect each respective Seller’s rights with respect thereto. Sellers have not received any written claim challenging the validity or effectiveness of the Seller Intellectual Property Assets and, to Sellers’ Knowledge, no circumstances exist and no claim is being threatened that challenges the validity or effectiveness of the Seller Intellectual Property Assets.

(b) Buyer acknowledges and agrees that Sellers are not providing back office services, hardware, communications, or network infrastructure that may be required to utilize the Seller Intellectual Property Assets (including, without limitation, the following business functions and assets: human resources, information technology, legal, finance, accounting, treasury, operations, computer hardware or infrastructure, other information technology or telecommunications hardware or services or other back office functions) (collectively, “ Back Office Services and Assets ”) pursuant to this Agreement. Back Office Services and Assets are held, used, or performed by Sellers or their Affiliates in the Ordinary Course of Business, none of which is primarily held, used, or performed for or in connection with the Business or with respect to the Railway. Subject to the foregoing sentence, the Seller Intellectual Property Assets together with Excluded Intellectual Property Assets comprise all Intellectual Property used by Sellers in connection with the conduct of the Business and the Railway. This Section 5.13(b) does not restrict Seller from being able to provide limited agreed upon transition services pursuant to the Transition Services Agreement during the limited term of the Transition Services Agreement.

(c) Except as set forth in Section 5.13(c) of the Disclosure Schedule , or as would not have a Material Adverse Effect: (i) the conduct of the Business or the Railway as currently conducted does not

infringe, misappropriate, dilute or otherwise violate the Intellectual Property of any Person; and (ii) no Person is infringing, misappropriating or otherwise violating any Seller Intellectual Property Assets. During the past five (5) years, neither Sellers nor any of their directors or officers have received any written charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation or violation of Intellectual Property of any third party (including any claim that Sellers must license or refrain from using any Intellectual Property of any third party). To Sellers’ Knowledge, no third party has interfered with, challenged, infringed upon, misappropriated or violated any Seller Intellectual Property Assets.

(d) Except as set forth in Section 5.13(d) of the Disclosure Schedule , no settlements, consents, covenant not to sue or nonassertion assurances or releases have been entered into by Sellers or to which either Seller is bound that adversely affect Sellers’ right to own or use Seller Intellectual Property Assets.

(e) Except as set forth in Section 5.13(e) of the Disclosure Schedule , no third party has any marketing rights with respect to Seller Intellectual Property Assets.

(f) Except as set forth in Section 5.13(f) of the Disclosure Schedule , Sellers have not assigned, licensed or otherwise transferred any rights with respect to the Seller Intellectual Property Assets to any third party conducting any Competitive Activity in the Mid-West, and Sellers have not obligated themselves to assign, license or otherwise transfer any rights with respect to the Seller Intellectual Property Assets to any third party conducting any Competitive Activity in the Mid-West.

(g) Notwithstanding anything to the contrary in this Agreement, this Section 5.13 constitutes Sellers’ sole and exclusive representations and warranties regarding any actual or alleged infringement, misappropriation or other violation by Sellers of any Intellectual Property of any other Person.

Section 5.14. Material Contracts . Section 5.14(a) of the Disclosure Schedule lists all material contracts which relate primarily to the Business or the Railway (collectively, the “ Material Contracts ”). Sellers have delivered or made available to Buyer in the Data Room true and complete copies of all Material Contracts. Except as set forth in Section 5.14(b) of the Disclosure Schedule , (i) all Material Contracts are valid and enforceable in accordance with their respective terms, and (ii) no Seller is, and to Sellers’ Knowledge, no other party is, in material breach or default, under any Material Contract.

Section 5.15. Litigation . Section 5.15 of the Disclosure Schedule sets forth each instance in which either Seller (a) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge, (b) is a party to, or to Sellers’ Knowledge, is threatened to be made a party to, or was a party to since January 1, 2015 or, to Sellers’ Knowledge, was threatened to be made a party to since January 1, 2015, any action, suit, proceeding, claim, hearing, or investigation of, in, or before any arbitrator, court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction, in each case with respect to the Business or the Railway.

Section 5.16. Employees and Independent Contractors .

(a) Except as set forth on Section 5.16 of the Disclosure Schedule , neither Seller is a party to, or bound by, any collective bargaining agreement or other contract with any labor organization with respect to the Business or the Railway. Except as set forth in Section 5.16 of the Disclosure Schedule , there has not been, nor to Sellers’ Knowledge has there been any threat of, any strike, slow down, work stoppage with respect to the Business or the Railway.

(b) Sellers are in material compliance with all applicable laws pertaining to employment and employment practices to the extent they relate to the employees of the Business or the Railway (collectively, the “ Employees ”).

(c) The representations and warranties set forth in this Section 5.16 are Sellers’ sole and exclusive representations and warranties regarding employment matters.

Section 5.17. Employee Benefits .

(a) Section 5.17(a) of the Disclosure Schedule lists each material Employee Benefit Plan that each Seller maintains or to which a Seller contributes or has any obligation to contribute or with respect to which such Seller has any liabilities with respect to the Business or the Railway, in each case only to the extent applicable to the Employees.

(b) Except as set forth in Section 5.17(b) of the Disclosure Schedule , neither Sellers nor any person or entity required to be aggregated with Sellers under Sections 414(b), (c), (m), (n) or (o) of the Code currently or in the past has ever maintained, established, sponsored, participated in or contributed to any of the following: (i) a plan subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code, (ii) a multiemployer plan (within the meaning of Sections 3(37) or 4001(a)(3) of ERISA) or a single employer pension plan (within the meaning of Section 4001(a)(15) of ERISA), or (iii) a “multiple employer plan” within the meaning of Section 413(c) of the Code.

(c) The representations and warranties set forth in this Section 5.17 are Sellers’ sole and exclusive representations and warranties regarding employee benefit matters.

Section 5.18. Environmental, Health, and Safety Requirements .

(a) Except as set forth in Section 5.18(a) of the Disclosure Schedule , to Sellers’ Knowledge, each Seller has complied with, and is in material compliance with all Environmental, Health, and Safety Requirements related to the Business, the Railway and the Real Property.

(b) Except as set forth in Section 5.18(b)(i) of the Disclosure Schedule , each Seller has obtained, has materially complied with, and is in material compliance with all, Permits, licenses and other authorizations that are required pursuant to Environmental, Health, and Safety Requirements for the occupation of the Real Property and the operation of the Business or the Railway. A list of all such material Permits, licenses and other authorizations is set forth in Section 5.18(b)(ii) of the Disclosure Schedule . True and complete copies of all such material Permits, licenses, and other authorizations have been delivered or made available to Buyer in the Data Room.

(c) Except as set forth in Section 5.18(c) of the Disclosure Schedule , none of the Real Property is listed on, or has been proposed for listing on, the National Priorities List under CERCLA, or any similar state list.

(d) The representations and warranties set forth in this Section 5.18 are Sellers’ sole and exclusive representations and warranties regarding environmental matters.

Section 5.19. Inventory . All Inventory (i) consists of a usable quality in the Ordinary Course of Business in all material respects, (ii) has been held by Sellers for twelve (12) months or less, as determined on a first-in first-out basis, and (iii) is at least equal in value to the sum of $2,000,000.00, as

determined on the book value of Sellers; provided , however , in the event that the value of the Inventory exceeds $2,000,000.00, Sellers make no representation that the portion of the Inventory exceeding $2,000,000.00 in value consists of a usable quality in the Ordinary Course of Business.

Section 5.20. Disclaimer of Other Representations and Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE V , NO SELLER MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, WITH RESPECT TO SELLERS, THE BUSINESS, THE RAILWAY, OR WITH RESPECT TO ANY OF THE ASSETS, LIABILITIES OR OPERATIONS OF A SELLER, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED AND ARE HEREBY WAIVED BY BUYER. THE REPRESENTATIONS OR WARRANTIES SET FORTH IN THIS ARTICLE V HEREOF ARE IN LIEU OF ANY AND ALL REPRESENTATIONS AND WARRANTIES BUYER MAY HAVE UNDER ANY APPLICABLE LAW. BUYER IS ACQUIRING THE PURCHASED ASSETS AS IS, WHERE IS, and without limiting Buyer’s ability to rely on the representations and warranties set forth herein, Buyer further agrees that no Seller nor any other person or entity shall have or be subject to any liability to Buyer or any other person or entity resulting from the distribution to Buyer, or Buyer’s use, of any such information, including any information, document or material made available or provided to Buyer in certain “data rooms,” management presentations or offering or information memoranda, or in any other form, in expectation of the transactions contemplated hereby.

ARTICLE VI

POST-CLOSING COVENANTS

Section 6.1. Further Assurances . Sellers agree that, at any time and from time to time on and after the Closing Date, they will, upon the reasonable request of Buyer and without further consideration, take all steps reasonably necessary to place Buyer or its Affiliates (as directed by Buyer) in possession and operating control of the Purchased Assets, and Sellers will do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all further acts, deeds, assignments, conveyances, transfers or powers of attorney as reasonably required to sell, assign, convey, transfer, grant, assure and confirm to Buyer, all of the Purchased Assets, or to vest in Buyer good title to the Purchased Assets. Buyer agrees that, at any time and from time to time on and after the Closing Date, it will, upon the request of Sellers and without further consideration, take all steps reasonably necessary to confirm its assumption of and obligation to perform any of the Assumed Liabilities. Buyer further agrees that after the Closing Date it shall provide Sellers with reasonable access to the books and records transferred to Buyer hereunder necessary for Sellers’ tax, accounting and other corporate purposes.

Section 6.2. Litigation Support . In the event and for so long as any Party is actively contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (a) any transaction contemplated under this Agreement or (b) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the Business or the Railway, each of the other Parties will assist such defending Party’s counsel in the contest or defense, make available their personnel, and provide such testimony and access to their books and records as shall be reasonably necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending party is entitled to indemnification therefor under Article VIII ); provided that the foregoing shall not apply to actions or claims between the Parties.

Section 6.3. Confidentiality . Sellers will treat and hold as confidential all of the Confidential Information, refrain from using any of the Confidential Information except as needed for Sellers’ internal or government-reporting purposes and destroy all Confidential Information retained by it in accordance with its record retention policies. In the event that Sellers are requested or required pursuant to a written or oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigation demand, or similar process to disclose any Confidential Information, Sellers will notify Buyer promptly of the request or requirement so that Buyer may seek an appropriate protective order or

waive compliance with the provisions of this Section 6.3 . If, in the absence of a protective order or the receipt of a waiver hereunder, Sellers are, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, either Seller may disclose the Confidential Information to the tribunal; provided , however , that such Seller shall use its reasonable best efforts to obtain an order or other assurance that confidential treatment will be accorded to such Confidential Information required to be disclosed and Seller shall use its reasonable best efforts to disclose only such Confidential Information as is necessary to comply with such written or oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigation demand, or similar process.

Section 6.4. Non-Competition . Without the prior written consent of Buyer, Sellers shall not, directly or indirectly, for a period of three (3) years from the Closing Date, (a) engage in any Competitive Activity in the States of Nebraska, North Dakota, South Dakota, Kansas, Minnesota, Iowa, Missouri, Wisconsin, Illinois, Indiana, Michigan and Ohio (the “ Mid-West ”), or (b) own more than ten percent (10%) of the outstanding capital stock or other ownership interests of an entity engaged in any Competitive Activity in the Mid-West. Notwithstanding the broad prohibition contained in this Section 6.4 , Sellers direct or indirect ownership of more than ten percent (10%) of an entity or business that derives less than ten percent (10%) of its revenue from Competitive Activities, calculated on a rolling twelve (12) month basis shall not constitute a breach of this Section 6.4 . Sellers acknowledge and agree that they have independently consulted with their counsel and after such consultation agree that the covenants set forth in this Section 6.4 are reasonable and proper and are necessary to protect Buyer’s interest in, and value of, the Business or the Railway (including the goodwill inherent therein).

Section 6.5. Employee Matters .

(a) Buyer shall make each of the Employees an offer of employment effective on the Closing Date at the same salary level each such Employee had ninety (90) days prior to the Closing Date (the Employees who accept such employment, the “ Transferred Employees ”). The offer of employment shall also include coverage of the Transferred Employees under Buyer’s Employee Benefit Plans pursuant to the terms thereof.

(b) With respect to Transferred Employees, Buyer shall (i) waive all limitations as to pre-existing condition exclusions and waiting periods under any Employee Benefit Plans of Buyer in which such employees may be eligible to participate as of or following the Closing Date (“ Buyer Plans ”), other than limitations or waiting periods that would not be met by such employees based on their service with Sellers as of the Closing Date; (ii) provide each Transferred Employee with credit for any payments toward out of pocket limits, deductibles, and all similar items paid prior to the Closing and in the calendar year in which the Closing occurs, in satisfying any applicable deductible, out-of-pocket, or similar requirements under any Buyer Plan, (iii) credit each employee’s service accrued with the Sellers as of the Closing Date, including any service Sellers recognized on behalf of an Employee due to any prior corporate transaction, for all purposes, including, but not limited to, under any Buyer Plan and any other benefit plan or fringe benefit plan, statutory or otherwise, other than (A) in respect of accrual of benefits under an employee pension benefit plan within the meaning of Section 3(2) of ERISA, whether or not subject to ERISA, of Buyer or (B) to the extent such credit would result in a duplication of benefits for the same period; and (iv) assume all obligations relating to, and give full credit for all unused vacation and sick leave of each Transferred Employee, accrued as of the Closing Date (except any extraordinary bonus of vacation or sick leave granted by Sellers to such employee during the ninety (90) day period prior to the Closing Date, which shall not be assumed by Buyer).

(c) Buyer shall not take any action following the Closing that could result in WARN Act liability and shall bear any and all obligations and liability under the WARN Act resulting from employment losses relating to the sale of the Business or the Railway.

(d) Effective as of the Closing Date, the Sellers shall assume all responsibilities and obligations for continuation coverage under Sections 601 et seq. of ERISA (“ COBRA Obligations ”) and any state continuation coverage requirements with respect to Seller employees not hired by Buyer and their

beneficiaries. Sellers agree to retain responsibility for COBRA Obligations to all individuals for whom a “qualifying event” under COBRA occurs prior to the Closing.

(e) Notwithstanding anything herein to the contrary, this Agreement shall not alter the at-will nature of any Transferred Employee’s employment.

Section 6.6. Tax Matters .

(a) Each Seller and Buyer agree to cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the preparation and filing of any Tax Return, claim for refund or audit and the prosecution or defense of any claim, suit or proceeding relating to any proposed adjustment that relates to any Seller, the Purchased Assets, or the Assumed Liabilities. Such cooperation shall include the retention of records and information relating to the Purchased Assets and the Assumed Liabilities, and upon the other Party’s request, furnishing or causing to be furnished to each other as promptly as practicable, such information and assistance (including access to books and records) relating to the Purchased Assets or the Assumed Liabilities as is reasonably necessary for the preparation and filing of any Tax Return, claim for refund or audit and the prosecution or defense of any claim, suit or proceeding relating to any proposed adjustment and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

(b) The Parties agree to treat all payments made pursuant to the indemnification provisions set forth in Article VIII , as adjustments to the purchase price for Tax purposes.

Section 6.7. Assumption of Environmental Liabilities . The Assumption Agreement shall provide for the assumption by Buyer upon the fifth anniversary of the Closing Date, of all the Environmental Liabilities. Upon the assumption of the Environmental Liabilities by Buyer pursuant to the Assumption Agreement, such Environmental Liabilities shall constitute an Assumed Liability.

ARTICLE VII

CONDITIONS TO CLOSING

Section 7.1. Conditions to Buyer’s Obligations . The obligations of Buyer to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions as of the Closing Date (any or all of which may be waived in whole or in part by Buyer):

(a) The representations and warranties of Sellers, set forth in Article V shall be true and correct in all material respects as of the Closing Date; provided , however , that those representations and warranties which address matters only as of a particular date shall remain true and correct in all material respects as of such date;

(b) Sellers shall have performed in all material respects all of their obligations required to be performed under this Agreement at or prior to Closing;

(c) No temporary restraining order, preliminary or permanent injunction or other order or issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect, nor shall any proceeding be pending, which would reasonably be expected to prohibit the consummation of the transactions contemplated hereby; and there shall not be any action taken, or any statute, rule, regulation or order (whether temporary, preliminary or permanent) enacted, entered or enforced which makes the consummation of the transactions contemplated hereby illegal or prevents or prohibits them;

(d) Buyer shall have received an ALTA Owner’s Standard Coverage Title Insurance Policy with respect to all Owned Real Property, issued by Fidelity National Title Insurance Company, written and marked up as of the Closing Date, insuring Buyer’s interest in each Owned Real Property (and any Easement appurtenant thereto). Except as set forth in Schedule 7.1(d) of the Disclosure Schedule , such title

insurance policy shall insure fee simple title (or Easement interest, as the case may be) to each Owned Real Property and Easement, free and clear of all Liens and other matters other than Permitted Liens and Permitted Encumbrances, but subject to the standard exception for survey matters; and

(e) Sellers shall have delivered or caused to be delivered to Buyer the following, in form and substance reasonably acceptable to Buyer:

(i) a certificate of Sellers dated the Closing Date stating that the preconditions specified in Section 7.1(a) , (b) and (c) have been satisfied;

(ii) the Bill of Sale, in the form of Exhibit A (the “ Bill of Sale ”), executed by Sellers;

(iii) the Assignment and Assumption Agreement, in the form of Exhibit B (the “ Assignment and Assumption Agreement ”), executed by Sellers;

(iv) the Transition Services Agreement, in the form of Exhibit C (the “ Transition Services Agreement ”), executed by Seller Parent;

(v) the Escrow Agreement, in the form of Exhibit D executed by Sellers;

(vi) the Assumption Agreement, in the form of Exhibit E (the “ Assumption Agreement ”), executed by Sellers;

(vii) Special Warranty Deeds (or the applicable jurisdiction’s equivalent thereof to convey the Owned Real Property to Buyer with limited warranties) for all Owned Real Property and quitclaim deeds or assignments of easements for the transfer of all easements running to the benefit of Sellers. Sellers shall have prepared, executed and filed all returns, questionnaires, applications or other documents required by the applicable jurisdiction in which the Owned Real Property is located, if any, regarding (A) any transfer taxes related to the Owned Real Property that are required to be filed prior to or upon Closing, or (B) the conveyance of the Owned Real Property to Buyer. Sellers shall furnish such customary undertakings and assurances reasonably necessary to cause the issuance of the title insurance policy referred to in Section 7.1(d) ;

(viii) all consents or approvals of third-parties set forth on Section 7.1(e)(ix) of the Disclosure Schedule , if any, but in no event with respect to any Delayed Transfer Asset (collectively, the “ Required Consents ”), shall have been obtained, and shall be satisfactory to Buyer or otherwise waived thereby;

(ix) a certificate of Sellers certifying (A) the resolutions duly adopted by Sellers authorizing and adopting the execution, delivery and performance of this Agreement and the Transaction Documents and the consummation of all transactions contemplated hereby and thereby and (B) the names and signatures of the officers of Sellers authorized to sign this Agreement and the Transaction Documents;

(x) non-foreign affidavits dated as of the Closing Date, sworn under penalty of perjury and in form and substance required under Treasury Regulations issued pursuant to Code § 1445 stating that each Seller is not a “foreign person” as defined in Code § 1445;

(xi) a Railcar Storage and Switching Agreement in a form mutually agreeable to Buyer and Seller Parent (the “ Railcar Storage Agreement ”), executed by Seller Parent;

(xii) a Parts Supply Agreement in a form mutually agreeable to Buyer and Seller Parent (the “ Parts Supply Agreement ”), executed by Seller Parent;

(xiii) evidence all outstanding indebtedness under the GIEDC Note shall be deemed paid in full and the security interest held for the benefit of Grand Island Area Economic Development Corporation pursuant to the GIEDC Trust shall be released and terminated;

(xiv) such other documents and instruments as counsel for Buyer may reasonably request to consummate the transactions contemplated herein.

Section 7.2. Conditions to Sellers’ Obligations . The obligations of Sellers to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions as of the Closing Date (any or all of which may be waived in whole or in part by Sellers):

(a) The representations and warranties of Buyer, set forth in Article IV , shall be true and correct in all respects as of the Closing Date; provided , however , that those representations and warranties which address matters only as of a particular date shall remain true and correct as of such date;

(b) Buyer shall have performed all of its obligations required to be performed under this Agreement at or prior to Closing;

(c) No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect, nor shall any proceeding brought by a governmental entity be pending, which would reasonably be expected to prohibit the consummation of the transactions contemplated hereby; and there shall not be any action taken, or any statute, rule, regulation or order (whether temporary, preliminary or permanent) enacted, entered or enforced which makes the consummation of the transactions contemplated hereby illegal or prevents or prohibits the them;

(d) This Agreement and each other Transaction Document and the transactions contemplated hereunder and thereunder shall have been approved and adopted by the Board of Directors of Seller Parent;

(e) Buyer shall have delivered or caused to be delivered to Sellers the following, in form and substance reasonably acceptable to Sellers:

(i) a certificate of Buyer dated the Closing Date stating that the preconditions specified in Section 7.2(a) , (b) and (c) have been satisfied;

(ii) the Assignment and Assumption Agreement, in the form of Exhibit B executed by Buyer;

(iii) the Transition Services Agreement, in the form of Exhibit C executed by Buyer;

(iv) the Escrow Agreement, in the form of Exhibit D executed by Buyer;

(v) the Assumption Agreement, in the form of Exhibit E executed by Buyer;

(vi) the customary documents required by the applicable jurisdiction in which the Owned Real Property is located, if any, regarding: (A) any transfer taxes related to the Owned Real Property that are required to be filed prior to or upon Closing, or (B) the conveyance of the Owned Real Property to Buyer;

(vii) the Parts Supply Agreement, executed by Buyer;

(viii) the Railcar Storage Agreement, executed by Buyer; and

(ix) such other documents and instruments as counsel for Sellers may reasonably request to consummate the transactions contemplated herein.

ARTICLE VIII

INDEMNIFICATION

Section 8.1. Survival of Representations, Warranties, Covenants and Agreements . All covenants and agreements contained in this Agreement shall survive the Closing until fully performed. All of the representations and warranties of Sellers contained in Sections 5.1 , 5.2 , 5.5 , and 5.11 shall survive Closing hereunder and continue in full force and effect for one day beyond the applicable statute of limitations involving any obligation or liability arising thereunder, the representations and warranties of Sellers contained in Section 5.18 shall survive Closing hereunder and continue in full force and effect for a period of three (3) years, and all other representations and warranties of Sellers under this Agreement shall survive Closing hereunder and continue in full force and effect for a period of eighteen (18) calendar months thereafter. The representations and warranties of Buyer contained in Sections 4.1 , 4.2 , and 4.5 shall survive the Closing hereunder and continue in full force and effect for one day beyond the applicable statute of limitations involving any obligation or liability arising thereunder, and all other representations and warranties of Buyer under this Agreement shall survive Closing hereunder and continue in full force and effect for a period of eighteen (18) calendar months thereafter. The obligation of any Party to indemnify another Party shall terminate when the applicable representation or warranty terminates. Notwithstanding the foregoing, any representation or warranty in respect of which indemnity may be sought hereunder, and the indemnity with respect thereto, shall survive the time at which it would otherwise terminate pursuant to this Section 8.1 if notice describing in reasonable detail the basis for any alleged inaccuracy or breach giving rise to such right or potential right of indemnity shall have been given to the Party against whom such indemnity may be sought on or before 5:00 P.M., Chicago time, on the date on which such representation or warranty expires pursuant to this Section 8.1 (regardless of when the Adverse Consequences in respect thereof may actually be incurred).

Section 8.2. Indemnification Provisions for Buyer’s Benefit .

(a) Sellers agree to indemnify, defend and hold harmless Buyer and its Affiliates, officers, directors, and employees (collectively, the “ Buyer Indemnitees ”) from and against any Adverse Consequences Buyer Indemnitees may incur or suffer resulting from, arising out of, relating to, or caused by (i) the breach of any representation or warranty of Sellers in this Agreement, (ii) the nonperformance or breach of any covenant or agreement made by Sellers under this Agreement, and (iii) any Excluded Liabilities; provided , however , Sellers shall not be obligated to indemnify, defend and hold harmless Buyer Indemnitees for Buyer Environmental Liabilities (as defined below). Sellers shall not have any obligation to indemnify Buyer Indemnitees unless Buyer delivers a written claim for indemnification to Sellers pursuant to Section 9.8 . In addition, Sellers shall not have any obligation to indemnify Buyer Indemnitees under Section 8.2(a)(i) , unless such written claim for indemnification is made by Buyer pursuant to Section 9.8 within the survival period pursuant to Section 8.1 . To the extent any claim for indemnification arises under Section 8.2(a)(i) and the representation or warranty is qualified by reference to materiality or a Material Adverse Effect, such representation or warranty shall be treated as if it did not contain any limitation as to materiality or Material Adverse Effect for the purposes of determining the amount of Adverse Consequences.

(b) Subject to Section 8.2(c) , the aggregate liability of Sellers pursuant to Section 8.2(a) of this Agreement shall not exceed $1,960,000.00 (the “ Seller Indemnity Cap ”).

(c) Sellers shall not be liable to the Buyer Indemnitees under Section 8.2(a) unless and until the aggregate amount of all Adverse Consequences pursuant to such section exceeds One Hundred Thousand Dollars ($100,000.00) (the “ Seller Threshold Amount ”), in which event Sellers shall only be required to pay or be liable for Adverse Consequences in excess of the Seller Threshold Amount.

(d) Payments by Sellers pursuant to Section 8.2(a) in respect of any Adverse Consequences shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment received or reasonably expected to be received by the Buyer Indemnitees in respect of any such Adverse Consequence. The Buyer Indemnitees shall use commercially reasonable efforts to recover under insurance policies or indemnity,

contribution or other similar agreements for any Adverse Consequences prior to seeking indemnification under this Agreement.

(e) Notwithstanding anything contained elsewhere in this Agreement, the Parties agree that the Buyer Indemnitees shall not be entitled to recover for any breach of a representation or warranty (and the term “Adverse Consequences” shall not be construed to include damages related to such a breach) which breach is described with reasonable particularity in the Disclosure Schedule.

(f) To the extent that Buyer becomes aware that Buyer is entitled to indemnification for a matter pursuant to this Agreement, Buyer will use its commercially reasonable efforts to mitigate any Adverse Consequences it may suffer with respect to such matter.

(g) Any liability for indemnification under this Section 8.2 shall be determined without duplication of recovery in the event that a state of facts gives rise to the same Adverse Consequences arising from a breach of more than one representation, warranty, covenant or agreement or for which recovery has been obtained pursuant to any other provision of this Agreement.

Section 8.3. Indemnification Provisions for Sellers’ Benefit .

(a) Buyer shall be obligated to indemnify, defend and hold harmless Sellers and their respective Affiliates, officers, directors and employees (the “ Seller Indemnitees ”) from and against the entirety of any Adverse Consequences they may suffer resulting from, arising out of, relating to or caused by (i) the breach of any representation or warranty of Buyer under this Agreement, (ii) the nonperformance or breach of any covenant or agreement made by Buyer under this Agreement, (iii) the Assumed Liabilities, and (iv) any claim or demand by Buyer against DTE (including, without limitation, any claims subrogated to any insurance carrier) which results in DTE making a claim or demand against either of the Sellers; provided , however , Buyer shall not be obligated to indemnify, defend and hold harmless the Seller Indemnitees from and against any Environmental Liabilities other than any of the following Environmental Liabilities (collectively, the “ Buyer Environmental Liabilities ”): (A) a claim or demand by a governmental authority or other third party as a result of any voluntary communication between Buyer or its agents, representatives, employees, or successors and assigns and such governmental authority or other third party, or (B) a claim or demand by a third party against DTE resulting from Buyer’s successful assertion of any defense in event of a claim or demand against Buyer by such third party that ultimately results in DTE making a claim or demand against either of the Sellers. For purposes of this Agreement, Environmental Liabilities which arise directly from communications between Buyer or its agents and a governmental authority or other third party in response to an inquiry, request for information or similar demand initiated by a governmental authority or third party, but only where such response is legally mandated and in writing, shall not constitute Buyer Environmental Liabilities. Buyer shall not have any obligation to indemnify the Seller Indemnitees unless Sellers deliver a written claim for indemnification to Buyer pursuant to Section 9.8 . In addition, Buyer shall not have any obligation to indemnify Seller Indemnitees under Section 8.3(a)(i) , unless such written claim for indemnification is made by Sellers pursuant to Section 9.8 within the survival period pursuant to Section 8.1 . To the extent any claim for indemnification arises under Section 8.3(a)(i) and the representation or warranty is qualified by reference to materiality or a Material Adverse Effect, such representation or warranty shall be treated as if it did not contain any limitation as to materiality or Material Adverse Effect for the purposes of determining the amount of Adverse Consequences.

(b) Subject to Section 8.3(c) and except for any Buyer Environmental Liabilities and any liabilities under Section 8.3(a)(iv) , the aggregate liability of Buyer pursuant to Section 8.3(a) of this Agreement shall not exceed an amount equal to $1,960,000.00 (the “ Buyer Indemnity Cap ”).

(c) Buyer shall not be liable to the Seller Indemnitees under Section 8.3(a) unless and until the aggregate amount of all Adverse Consequences pursuant to such section exceeds One Hundred Thousand Dollars ($100,000.00) (the “ Buyer Threshold Amount ”), in which event Buyer shall only be required to pay or be liable for Adverse Consequences in excess of the Buyer Threshold Amount.

(d) Payments by Buyer pursuant to Section 8.3(a) in respect of any Adverse Consequences shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment received or reasonably expected to be received by the Seller Indemnitees in respect of any such Adverse Consequence. The Seller Indemnitees shall use commercially reasonable efforts to recover under insurance policies or indemnity, contribution or other similar agreements for any Adverse Consequences prior to seeking indemnification under this Agreement.

(e) To the extent that either (or both) of the Sellers becomes aware that it (or they) is entitled to indemnification for a matter pursuant to this Agreement, such Seller(s) will use its (or their) commercially reasonable efforts to mitigate any Adverse Consequences it (or they) may suffer with respect to such matter.

(f) Any liability for indemnification under this Section 8.3 shall be determined without duplication of recovery in the event that a state of facts gives rise to the same Adverse Consequences arising from a breach of more than one representation, warranty, covenant or agreement.

Section 8.4. Matters Involving Third Parties .

(a) If any third party shall notify any Party (the “ Indemnified Party ”) with respect to any matter (a “ Third Party Claim ”) which, if true (without any responsibility for independent investigation of the facts or law contained in such notice from the third party), would give rise to a claim for indemnification against any other Party (the “ Indemnifying Party ”) under this Article VIII , then the Indemnified Party shall promptly notify each Indemnifying Party in writing; provided , however , that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless the Indemnifying Party thereby is prejudiced (and then solely to the extent of such prejudice). Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Adverse Consequence that has been or may be sustained by the Indemnified Party.

(b) Any Indemnifying Party will have the right to participate in or assume, at the Indemnifying Party’s sole cost and expense, the defense of the Third Party Claim with counsel of its choice if such Indemnifying Party notifies the Indemnified Party in writing within fifteen (15) days after receipt of the notice of the Third Party Claim that it intends to assume the defense of the Third Party Claim. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 8.4(c) , it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party and the Indemnified Party shall cooperate in good faith in the defense of the Third Party Claim. The Indemnified Party may retain separate co-counsel and participate in the defense of the Third Party Claim, but the fees and expenses of such counsel employed by the Indemnified Party shall be at the expense of the Indemnified Party subject to the Indemnifying Party’s right to control the defense thereof; provided , however , in the event that the interests of the Indemnifying Party and the Indemnified Party diverge to the extent that a conflict of interest would exist for counsel of the Indemnifying Party to represent both the Indemnifying Party and the Indemnified Party, Indemnified Party may retain separate co-counsel, participate through such counsel in the defense of the Third Party Claim, and at the expense of the Indemnifying Party. Sellers and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of the Confidentiality Agreement) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

(c) The Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably) unless the judgment or proposed settlement involves only the payment of

money damages by one or more of the Indemnifying Parties and does not impose an injunction or other equitable relief upon the Indemnified Party and such judgment or proposed settlement includes the giving by the claimant or the plaintiff of a release of the Indemnified Party, reasonably satisfactory to the Indemnified Party, from all Adverse Consequences with respect to such Third Party Claim. The Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably).

(d) In the event the Indemnifying Party does not elect to compromise or defend the Third Party Claim or fails to notify the Indemnified Party in writing within fifteen (15) days after receipt of the notice of the Third Party Claim in accordance with Sections 8.4(b) (i) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party in connection therewith) and (ii) the Indemnifying Party will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, or caused by the Third Party Claim to the fullest extent provided in this Article VIII .

(e) Any claim by an Indemnified Party on account of Adverse Consequences which does not result from a Third Party Claim (“ Direct Claim ”) shall be asserted by the Indemnified Party giving the Indemnifying Party prompt written notice thereof (the “ Indemnity Notice ”). The failure to give the Indemnity Notice promptly shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Adverse Consequence that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have sixty (60) days after its receipt of the Indemnity Notice to respond in writing to such Direct Claim. During such sixty (60)-day period, the Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Indemnified Party’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such sixty (60)-day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

(f) Amounts payable by the Indemnifying Party to the Indemnified Party in respect of any Adverse Consequences for which any Party is entitled to indemnification hereunder shall be payable by the Indemnifying Party as incurred by the Indemnified Party.

Section 8.5. Exclusive Remedy . Subject to Sections 9.9(a) and 9.14 , the Parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement (including any Environmental Liabilities), shall be pursuant to the indemnification provisions set forth in this Article VIII . In furtherance of the foregoing, each Party hereby waives, to the fullest extent permitted under law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other Parties hereto and their Affiliates and each of their respective representatives arising under or based upon any law, except pursuant to the indemnification provisions set forth in this Article VIII .

Section 8.6. After-Tax Calculations . The amount of any liability indemnified under this Article VIII shall be reduced by the amount of any net reduction in U.S. federal, state and local and foreign income Taxes that has actually been realized by the indemnified party as a result of the event giving rise to

the indemnity payment. If such net reduction in Taxes is actually realized after the indemnification payment has been made and with respect to the taxable year of the indemnified party in which the indemnification payment was made or the indemnified party’s next taxable year, the indemnified party shall repay to the indemnifying party the amount of that net Tax reduction (but not to exceed the indemnity payment). For purposes of the two (2) immediately preceding sentences, the net Tax reduction actually realized shall be as set forth in a certificate to be provided by the accountant (and the indemnified party shall cause such accountant to deliver such certificate on or before the due date for the indemnified party’s Tax Return for each year that a net Tax reduction therefrom has been realized) that prepares the indemnified party’s federal income Tax Return, and the indemnifying party shall not have any right to examine the indemnified party’s Tax Return.

ARTICLE IX

MISCELLANEOUS

Section 9.1. Press Releases and Public Announcements . No Party or Seller Parent shall issue any press release or make any public announcement relating to the subject matter of this Agreement or any Transaction Document without the prior written approval of Buyer and Sellers. Notwithstanding anything herein to the contrary, the provisions of this Section 9.1 shall not apply to disclosures required by law or the rules and regulations of any applicable national securities exchange or the Securities and Exchange Commission.

Section 9.2. No Third-Party Beneficiaries . This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. No provision of this Agreement (including the documents and instruments referred to herein) creates any rights in any employee or former employee of either Seller (including any beneficiary or dependent thereof) in respect of continued employment or resumed employment, and no provision of this Agreement creates any rights in any such Persons in respect of any benefits that may be provided, directly or indirectly, under any Employee Benefit Plan or arrangement.

Section 9.3. Entire Agreement . This Agreement and the other Transaction Documents (including the documents referred to herein and therein) and the Confidentiality Agreement constitute the entire agreement among the Parties and supersede any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof.

Section 9.4. Succession and Assignment .

(a) This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of Buyer and Sellers; provided , however , that Buyer may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (ii) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder), or (iii) assign its rights under this Agreement for collateral security purposes to any lenders providing financing to Buyer or any of its Affiliates, provided that, in each such case, Buyer remains liable under this Agreement to the same extent as though the assignment or designation had not occurred.

(b) For purposes of clarity, the foregoing limitation on the Parties’ ability to assign either this Agreement or any of its rights, interests, or obligations shall not under any circumstances prohibit, limit or otherwise interfere with Buyer’s ability to sell, assign, convey or otherwise transfer any of the Purchased Assets after Closing.

Section 9.5. Bulk Sales . Each Party hereby waives compliance by the other with the provisions of the bulk transfer, bulk sales or similar law of any jurisdiction with respect to the transactions contemplated by this Agreement.

Section 9.6. Counterparts . This Agreement may be executed in one or more counterparts (including by means of facsimile), each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Agreement, to the extent signed and delivered by means of a facsimile machine or by other electronic transmission of a manual signature (by portable document format (pdf) or other method that enables the recipient to reproduce a copy of the manual signature), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.

Section 9.7. Headings . The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 9.8. Notices . All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (a) when delivered personally to the recipient, (b) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), (c) on the date sent by facsimile (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) four (4) Business Days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below:


If to Sellers:		FreightCar Rail Services, LLC c/o FreightCar America, Inc. 2 North Riverside Plaza, Suite 1300 Chicago, Illinois 60606 Attn: General Counsel Facsimile: (312) 928-0890

		FreightCar Short Line, Inc. c/o FreightCar America, Inc. 2 North Riverside Plaza, Suite 1300 Chicago, Illinois 60606 Attn: General Counsel Facsimile: (312) 928-0890

Copy to:		Kelley Drye & Warren LLP 333 West Wacker Drive, Suite 2600 Chicago, Illinois 60606 Attn: Andrew Pillsbury Facsimile: (312) 857-7095

If to Buyer:		ARS Nebraska, LLC P.O. Box 800 Eleanor, West Virginia 25070 Attn: Kurt Higginbotham Facsimile: (304) 586-7087

Copy to:

Steptoe & Johnson PLLC

Overnight Mail

Chase Tower, 8th Floor

707 Virginia Street, East

Charleston, West Virginia 25301

Attn: Fred Williams

Other Delivery

P.O. Box 1588

Charleston, West Virginia 25326-1588

Attn: Fred Williams

Facsimile: (304) 353-8180

Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.

Section 9.9. Dispute Resolution; Governing Law; Venue; Waiver of Jury Trial .

(a) If a dispute arises relating to this Agreement (including a dispute involving the indemnification obligations due by either party pursuant to Article VIII ), either party may give written notice to the other party and the executives from each of Buyer and Sellers who are senior (when possible) to the people with responsibility for administering this Agreement and who have the authority to resolve the dispute shall meet face to face at a mutually agreeable location and time and attempt in good faith to resolve the dispute (the “ Good Faith Meeting ”). The notice shall include the applicable party’s position and a summary of reasons supporting that position. In the event that the Parties are unable to resolve a dispute pursuant to a Good Faith Meeting within thirty (30) days after the Good Faith Meeting, the Parties agree to submit the dispute or controversy to binding arbitration conducted by an independent arbitrator mutually selected by the Parties within fourteen (14) days after the commencement of arbitration or, in the event the parties cannot agree upon such an arbitrator, then by the American Arbitration Association (the “ AAA ”). The arbitration shall be administered by AAA pursuant to its then-existing Commercial Arbitration Rules and shall be held in Chicago, Illinois. Any decision so rendered in arbitration shall be binding and final on both Parties, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The award shall be made within six (6) months after the commencement of arbitration, unless extended by mutual agreement of the Parties or by the arbitrator if necessary. Each Party shall bear its own costs and expenses and an equal share of the arbitrator’s and administrative fees of arbitration.

(b) This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each Party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement, the other Transaction Documents or the transactions contemplated hereby and thereby.

Section 9.10. Amendments and Waivers . No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by Buyer and Sellers. No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the Party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

Section 9.11. Severability . Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

Section 9.12. Expenses . Except as otherwise provided herein, Buyer and Sellers will pay all of their own fees, costs and expenses (including fees, costs and expenses of legal counsel, investment bankers, brokers or other representatives and consultants and appraisal fees, costs and expenses) incurred in connection with the negotiation of this Agreement, the performance of their respective obligations hereunder, and the consummation of the transactions contemplated hereby.

Section 9.13. Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation.

Section 9.14. Injunctive Relief . The Parties hereby agree that the Business and the Railway are unique and recognize and affirm that in the event of a breach of this Agreement money damages may be inadequate and that they may have no adequate remedy at law. It is accordingly agreed that, in addition to and without limiting any other remedy or right it may have, each Party shall be entitled to seek an injunction, specific performance, or other equitable relief in any court of competent jurisdiction, without any necessity of proving damages or any requirement for the posting of a bond or other security, to enforce its rights and the other Parties’ obligations hereunder. Each Party hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction, specific performance, or other equitable relief hereunder.

Section 9.15. Disclosure Schedule and Exhibits . The Disclosure Schedule and Exhibits to this Agreement are qualified in their entirety by reference to specific provisions of this Agreement. References in the Disclosure Schedule to any contract, Employee Benefit Plan, order, instrument, document or legal proceeding are qualified in their entirety by reference to more detailed information in documents attached thereto or previously delivered or made available to Buyer and its representatives.

[Signature page to follow]

IN WITNESS WHEREOF, the Parties hereto have executed this Asset Purchase Agreement as of the date first above written.


BUYER:

ARS NEBRASKA, LLC

	By:	Appalachian Railcar Services, Inc.
	Its:	Sole Member

By:	/s/ Warren K. Higginbotham
Name:	Warren K. Higginbotham
Title:	President & Secretary

SELLERS:

FREIGHTCAR RAIL SERVICES, LLC

By:	/s/ Joseph E. McNeely
Name:	Joseph E. McNeely
Title:	President

FREIGHTCAR SHORT LINE, INC.

By:	/s/ Joseph E. McNeely
Name:	Joseph E. McNeely
Title:	President

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Joseph E. McNeely, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of FreightCar America, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Charles F. Avery, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of FreightCar America, Inc.;

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Exhibit 32

Certification pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of FreightCar America, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Joseph E. McNeely, President and Chief Executive Officer, and Charles F. Avery, Jr., Vice President, Finance, Chief Financial Officer and Treasurer, respectively, of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

(1)

the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: November 3, 2015	By:	/s/ J OSEPH E. M C N EELY
		Joseph E. McNeely
		President and Chief Executive Officer (Principal Executive Officer)

Date: November 3, 2015	By:	/s/ C HARLES F. A VERY , J R .
		Charles F. Avery, Jr.
		Vice President, Finance, Chief Financial Officer and Treasurer (Principal Financial Officer)

A signed copy of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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