FreightCar America, Inc. (Form: 10-Q, Received: 05/03/2018 15:57:11)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, 2018

☐	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 ☒ 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 ☒ NO ☐

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


Large accelerated filer ☐	Accelerated Filer ☒	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐

		(Do not check if a smaller reporting company)

If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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 ☒

As of April 27, 2018, there were 12,444,073 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 March 31, 2018 and December 31, 2017		3
	Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2018 and 2017		4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2018 and 2017		5
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three Months Ended March 31, 2018 and 2017		6
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2018 and 2017		7
	Notes to Condensed Consolidated Financial Statements (Unaudited)		8
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
3.	Quantitative and Qualitative Disclosures About Market Risk		22
4.	Controls and Procedures		23
	PART II – OTHER INFORMATION
1.	Legal Proceedings		23
1A.	Risk Factors		23
2.	Unregistered Sales of Equity Securities and Use of Proceeds		23
3.	Defaults Upon Senior Securities		23
4.	Mine Safety Disclosures		23
5.	Other Information		23
6.	Exhibits		24
	Signatures		25

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

FreightCar America, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


	March 31, 2018			December 31, 2017
	(in thousands, except for share and per share data)
Assets
Current assets
Cash and cash equivalents	$	65,255		$	87,788
Restricted certificates of deposit		5,452			5,720
Marketable securities		52,288			42,917
Accounts receivable, net of allowance for doubtful accounts of $67 and $56, respectively		12,911			7,581
Inventories, net		46,685			45,292
Inventory on lease		14,736			5,550
Income taxes receivable		329			815
Other current assets		7,693			4,284

Total current assets		205,349			199,947
Property, plant and equipment, net		53,023			38,253
Railcars available for lease, net		23,140			23,434
Goodwill		21,521			21,521
Deferred income taxes, net		11,428			9,446
Other long-term assets		3,169			3,303

Total assets	$	317,630		$	295,904

Liabilities and Stockholders’ Equity
Current liabilities
Accounts and contractual payables	$	26,273		$	23,329
Accrued payroll and other employee costs		2,147			1,809
Reserve for workers’ compensation		3,749			3,394
Accrued warranty		9,041			8,062
Deferred income state and local incentives, current		2,219			2,219
Deferred rent, current		5,215			178
Other current liabilities		2,747			1,326

Total current liabilities		51,391			40,317
Accrued pension costs		5,480			5,763
Accrued postretirement benefits, less current portion		5,385			5,556
Deferred income state and local incentives, long-term		8,606			9,161
Deferred rent, long-term		20,292			2,988
Accrued taxes and other long-term liabilities		394			387

Total liabilities		91,548			64,172

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 March 31, 2018 and December 31, 2017)		—			—
Common stock, $0.01 par value, 50,000,000 shares authorized, 12,731,678 shares issued at March 31, 2018 and December 31, 2017		127			127
Additional paid in capital		88,908			90,347
Treasury stock, at cost, 287,605 and 336,982 shares at March 31, 2018 and December 31, 2017, respectively		(10,398	)		(12,555	)
Accumulated other comprehensive loss		(7,531	)		(7,567	)
Retained earnings		154,976			161,380

Total stockholders’ equity		226,082			231,732

Total liabilities and stockholders’ equity	$	317,630		$	295,904

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended
	March 31,
	2018			2017
	(In thousands, except for share and per share data)
Revenues	$	82,973		$	139,536
Cost of sales		83,569			129,730

Gross (loss) profit		(596	)		9,806
Selling, general and administrative expenses		7,996			7,030
Restructuring and impairment charges		—			1,357

Operating (loss) income		(8,592	)		1,419
Interest expense and deferred financing costs		(32	)		(42	)
Other income (expense)		381			(299	)

(Loss) income before income taxes		(8,243	)		1,078
Income tax (benefit) provision		(1,839	)		440

Net (loss) income	$	(6,404	)	$	638

Net (loss) income per common share – basic	$	(0.51	)	$	0.05

Net (loss) income per common share – diluted	$	(0.51	)	$	0.05

Weighted average common shares outstanding – basic		12,306,011			12,269,555

Weighted average common shares outstanding – diluted		12,306,011			12,269,555

Dividends declared per common share	$	—		$	0.09

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)


	Three Months Ended
	March 31,
	2018			2017
	*(In thousands)*
Net (loss) income	$	(6,404	)	$	638

Other comprehensive income:
Pension liability adjustments, net of tax		88			77
Postretirement liability adjustments, net of tax		(52	)		(49	)

Other comprehensive income		36			28

Comprehensive (loss) income	$	(6,368	)	$	666

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(in thousands, except for share data)


														Accumulated
					Additional									Other						Total
	Common Stock				Paid In			Treasury Stock						Comprehensive			Retained			Stockholders’
	Shares		Amount		Capital			Shares			Amount			Loss			Earnings			Equity
Balance, December 31, 2016		12,731,678	$	127	$	92,025			(351,746	)	$	(14,583	)	$	(8,163	)	$	187,508		$	256,914

Cumulative effect of adoption of ASU 2016-09		—		—		215			—			—			—			(215	)		—
Net income		—		—		—			—			—			—			638			638
Other comprehensive income		—		—		—			—			—			28			—			28
Restricted stock awards		—		—		(2,097	)		50,983			2,097			—			—			—
Forfeiture of restricted stock awards		—		—		142			(9,585	)		(142	)		—			—			—
Employee stock settlement		—		—		—			(999	)		(14	)		—			—			(14	)
Stock-based compensation recognized		—		—		214			—			—			—			—			214
Cash dividends		—		—		—			—			—			—			(1,117	)		(1,117	)

Balance, March 31, 2017		12,731,678	$	127	$	90,499			(311,347	)	$	(12,642	)	$	(8,135	)	$	186,814		$	256,663

Balance, December 31, 2017		12,731,678	$	127	$	90,347			(336,982	)	$	(12,555	)	$	(7,567	)	$	161,380		$	231,732

Net loss		—		—		—			—			—			—			(6,404	)		(6,404	)
Other comprehensive income		—		—		—			—			—			36			—			36
Restricted stock awards		—		—		(2,392	)		64,457			2,392			—			—			—
Forfeiture of restricted stock awards		—		—		117			(7,991	)		(117	)		—			—			—
Employee stock settlement		—		—		—			(7,089	)		(118	)		—			—			(118	)
Stock-based compensation recognized		—		—		836			—			—			—			—			836

Balance, March 31, 2018		12,731,678	$	127	$	88,908			(287,605	)	$	(10,398	)	$	(7,531	)	$	154,976		$	226,082

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
	2018			2017
	*(in thousands)*
Cash flows from operating activities
Net (loss) income	$	(6,404	)	$	638
Adjustments to reconcile net (loss) income to net cash flows (used in) provided by operating activities:
Net proceeds from Shoals transaction		2,655			—
Depreciation and amortization		2,550			2,337
Recognition of deferred income from state and local incentives		(555	)		(555	)
Gain on sale of railcars available for lease		38			—
Deferred income taxes		(1,992	)		408
Stock-based compensation recognized		836			214
Other non-cash items, net		235			84
Changes in operating assets and liabilities:
Accounts receivable		(5,330	)		1,630
Inventories		1,930			20,101
Inventory on lease		(9,186	)		(8,391	)
Other assets		(3,323	)		(1,481	)
Accounts and contractual payables		2,284			(1,170	)
Accrued payroll and employee benefits		338			1,098
Income taxes receivable/payable		650			48
Accrued warranty		979			267
Other liabilities		1,223			547
Accrued pension costs and accrued postretirement benefits		(418	)		185

Net cash flows (used in) provided by operating activities		(13,490	)		15,960

Cash flows from investing activities
Purchase of restricted certificates of deposit		(1,040	)		(4,668	)
Maturity of restricted certificates of deposit		1,308			1,558
Purchase of securities held to maturity		(41,244	)		(10,995	)
Proceeds from maturity of securities		32,005			—
Purchase of property, plant and equipment		(182	)		(296	)
Proceeds from sale of property, plant and equipment and railcars available for lease		228			119
State and local incentives received		—			1,410

Net cash flows used in investing activities		(8,925	)		(12,872	)

Cash flows from financing activities
Employee stock settlement		(118	)		(14	)
Cash dividends paid to stockholders		—			(1,117	)

Net cash flows used in financing activities		(118	)		(1,131	)

Net (decrease) increase in cash and cash equivalents		(22,533	)		1,957
Cash, cash equivalents and restricted cash equivalents at beginning of period		87,788			96,110

Cash, cash equivalents and restricted cash equivalents at end of period	$	65,255		$	98,067

Supplemental cash flow information
Interest paid	$	18		$	23

Income tax refunds received	$	487		$	—

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 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 months ended March 31, 2018 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 2017 year-end balance sheet data was derived from the audited financial statements as of December 31, 2017. 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, 2017.

Note 3 – Recent Accounting Pronouncements

In February 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of the recent U.S. tax reform to retained earnings. Companies that elect to reclassify these amounts must reclassify stranded tax effects for all items accounted for in accumulated other comprehensive income. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements and related disclosures.

On January 1, 2018, the Company adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This standard requires entities to present non-service cost components of net periodic benefit cost in a caption below operating income (loss) and provides that only service cost is eligible to be capitalized in inventory or construction of an asset. This standard requires retrospective application of the change in the statement of operations and prospective application for the capitalization of service cost in assets. Utilizing the practical expedient approach permitted under the standard, based on amounts previously disclosed, the Company reclassified non-service components of net periodic benefit cost from cost of sales, selling, general and administrative expenses and restructuring and impairment charges to other income (expense) in the Condensed Consolidated Statement of Operations . The service cost component is included in cost of sales and selling, general and administrative expenses.

The following table discloses the amount of net periodic benefit cost reclassified as other income (expense) for the prior period presented in the condensed consolidated financial statements as a result of the adoption of ASU 2017-07:


	Three months ended March 31, 2017
	As reported		Reclassifications			As adjusted
Cost of sales	$	129,646	$	84		$	129,730
Selling, general and administrative expenses	$	7,011	$	19		$	7,030
Restructuring and impairment charges	$	1,777	$	(420	)	$	1,357
Other income (expense)	$	18	$	(317	)	$	(299	)

On January 1, 2018, the Company adopted the changes required under ASU 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash . The ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. As a result, restricted cash and restricted cash equivalents are included in beginning-of-period and end-of-period total amounts shown on the statement of cash flows and changes in restricted cash and restricted cash equivalents are no longer included in cash flows from investing activities. The Company has applied these changes in presentation retrospectively, which resulted in an increase of $3,360 in the beginning-of-period balance and an increase of $3,360 in net cash flows used in investing activities in the Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2017. Restricted cash and restricted certificates of deposit are used to collateralize standby letters of credit with respect to performance guarantees and to support the Company’s workers’ compensation insurance claims. Restricted certificates of deposit with original maturities of up to 90 days are considered restricted cash equivalents and are included in beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Cash, cash equivalents and restricted cash equivalents in the Condensed Consolidated Statement of Cash Flows as of December 31, 2017 and March 31, 2018 include only cash and cash equivalents as there are no restricted cash equivalents included in the restricted certificates of deposit balances in the Condensed Consolidated Balance Sheets as of those dates.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Topic 350 currently requires an entity to perform a two-step test to determine the amount, if any, of goodwill impairment. The amendment in ASU 2017-04 removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. This standard is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee to record a right-of-use asset and a lease liability for all leases with a term greater than twelve months regardless of whether the lease is classified as an operating lease or a financing lease. Leases with a term of twelve months or less will be accounted for in a similar manner to existing guidance for operating leases. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. While the Company is still evaluating the impact that ASU 2016-02 will have on its consolidated financial statements, the new standard will reflect a significant increase in both assets and liabilities due to the requirement to recognize right-of-use assets and lease liabilities on the balance sheet for facility and equipment leases.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which was further clarified in March 2016. The ASU outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach

for the adoption of the new standard. The ASU is effective for annual reporting periods beginning after December 15, 2017 and early adoption for annual reporting periods beginning after December 15, 2016 is permitted. The Company adopted ASU 2014-09 effective January 1, 2018 using the modified retrospective method of adoption. Adoption of this standard did not have any significant impact on the Company’s revenue recognition methods or costs to fulfill its contracts. Additionally, no significant changes in business processes or systems were required as a result of the adoption of this new standard.

Note 4 – Revenue Recognition

The following table disaggregates the Company’s revenues by major source:


	Three months ended
	March 31,
	2018		2017
Railcar sales	$	79,079	$	137,085
Parts sales		3,212		1,763
Other sales		56		54

Revenues from contracts with customers		82,347		138,902
Leasing revenues		626		634

Total revenues	$	82,973	$	139,536

The Company generally recognizes revenue at a point it time, as it satisfies a performance obligation, by transferring control over a product or service to a customer. Revenue is measured at the transaction price, which is based on the amount of consideration that the Company expects to receive in exchange for transferring the promised goods or services to the customer.

Railcar Sales

Performance obligations are typically completed and revenue is recognized for the sale of new and rebuilt railcars when a certificate of acceptance has been issued by the customer and title and risk of loss are transferred to the customer. At that time, the customer directs the use of, and obtains substantially all of the remaining benefits from, the asset. In certain sales contracts, the Company’s performance obligation includes transfer of the finished railcar to a specified railroad connection point. In these instances, the Company recognizes revenue from the sale when the railcar reaches the specified railroad connection point. When a railcar sales contract contains multiple performance obligations, the Company allocates the transaction price to the performance obligations based on the relative stand-alone selling price of the performance obligation determined at the inception of the contract based on an observable market price, expected cost plus margin or market price of similar items. The Company does not provide discounts or rebates in the normal course of business.

The Company provides warranties in connection with the sale of new and rebuilt railcars. Warranty terms are based on the negotiated railcar sales contracts. The Company generally warrants that new railcars 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 Company also provides limited warranties with respect to certain rebuilt railcars. With respect to parts and materials manufactured by others and incorporated by the Company in its products, such parts and materials may be covered by the warranty provided by the original manufacturer. The Company does not provide its customers the option to purchase additional warranties and, therefore, the Company’s warranties are not considered a separate service or performance obligation.

As a practical expedient, the Company recognizes the incremental costs of obtaining contracts, such as sales commissions, as an expense when incurred since the amortization period of the asset that the Company otherwise would have recognized is one year or less.

Parts Sales

The Company sells forged, cast and fabricated parts for all of the railcars it produces, as well as those manufactured by others. Performance obligations are satisfied and the Company recognizes revenue from most parts sales when the parts are shipped to customers.

Leasing Revenue

The Company recognizes operating lease revenue on Inventory on Lease on a contractual basis and recognizes operating lease revenue on Railcars Available for Lease on a straight-line basis over the contract term. The Company recognizes revenue from the sale of Inventory on Lease on a gross basis in manufacturing sales and cost of sales if the sales process is completed within 12 months of the manufacture of the leased railcars. The Company recognizes revenue from the sale of Railcars Available for Lease on a net basis as Gain (Loss) on Sale of Railcars Available for Lease since the sale represents the disposal of a long-term operating asset.

Contract Balances and Accounts Receivable

Accounts receivable payments for railcar sales are typically due within 5 to 10 business days of invoicing while payments from parts sales are typically due within 30 to 45 business days of invoicing. The Company has not experienced significant historical credit losses.

Contract assets represent the Company’s rights to consideration for performance obligations that have been satisfied but for which the terms of the contract do not permit billing at the reporting date. The Company has no contract assets as of March 31, 2018. The Company may receive cash payments from customers in advance of the Company satisfying performance obligations under its sales contracts resulting in deferred revenue or customer deposits, which are considered contract liabilities. Deferred revenue and customer deposits are classified as either current or long-term in the Condensed Consolidated Balance Sheet based on the timing of when the Company expects to recognize the related revenue. Deferred revenue and customer deposits included in other current liabilities and other long-term liabilities in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2018 were not material.

Performance Obligations

The Company is electing not to disclose the value of the remaining unsatisfied performance obligation with a duration of one year or less as permitted by the practical expedient in ASU 2014-09, Revenue from Contracts with Customers. The Company had no material remaining unsatisfied performance obligations as of March 31, 2018 with expected duration of greater than one year.

Note 5 – Segment Information

The Company’s operations comprise two operating segments, Manufacturing and Parts, and one reportable segment, Manufacturing. The Company’s Manufacturing segment includes new railcar manufacturing, used railcar sales, railcar leasing and major railcar rebuilds. The Company’s Parts operating segment is not significant for reporting purposes and has been combined with corporate and other non-operating activities as Corporate and Other.

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
	March 31,
	2018			2017
Revenues:
Manufacturing	$	79,733		$	137,740
Corporate and Other		3,240			1,796

Consolidated Revenues	$	82,973		$	139,536

Operating (Loss) Income:
Manufacturing	$	(3,816	)	$	7,249
Corporate and Other		(4,776	)		(5,830	)

Consolidated Operating (Loss) Income		(8,592	)		1,419
Consolidated interest expense and deferred financing costs		(32	)		(42	)
Consolidated other income (expense)		381			(299	)

Consolidated (Loss) Income Before Income Taxes	$	(8,243	)	$	1,078

Depreciation and Amortization:
Manufacturing	$	2,484		$	2,157
Corporate and Other		66			180

Consolidated Depreciation and Amortization	$	2,550		$	2,337

Capital Expenditures:
Manufacturing (1)	$	141		$	312
Corporate and Other		41			(16	)

Consolidated Capital Expenditures	$	182		$	296

(1)	Excluding assets acquired as part of a business acquisition of $17.2 million on February 28, 2018.(see Note 16)


	March 31,		December 31,
	2018		2017
Assets:
Manufacturing	$	166,284	$	136,448
Corporate and Other		137,822		149,195

Total Operating Assets		304,106		285,643
Consolidated income taxes receivable		329		815
Consolidated deferred income taxes, long-term		11,428		9,446
Consolidated income taxes receivable, long-term		1,767		—

Consolidated Assets	$	317,630	$	295,904

Note 6 – Fair Value Measurements

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


Recurring Fair Value Measurements	As of March 31, 2018
	Level 1		Level 2		Level 3		Total
ASSETS:
Cash equivalents	$	38,497	$	—	$	—	$	38,497
Restricted certificates of deposit	$	5,452	$	—	$	—	$	5,452
Escrow receivable	$	—	$	—	$	1,420	$	1,420


Recurring Fair Value Measurements	As of December 31, 2017
	Level 1		Level 2		Level 3		Total
ASSETS:
Cash equivalents	$	45,542	$	—	$	—	$	45,542
Restricted certificates of deposit	$	5,720	$	—	$	—	$	5,720
Escrow receivable	$	—	$	—	$	1,420	$	1,420


Non-Recurring Fair Value Measurements	As of December 31, 2017
	Level 1		Level 2		Level 3		Total
ASSETS:
Property, plant and equipment	$	—	$	—	$	1,434	$	1,434

The sale of the Company’s railcar repair and maintenance services business on September 30, 2015 resulted in $1,960 of the aggregate purchase price being placed into escrow in order to secure the indemnification obligations of FCRS and FCSL. The fair market value of the remaining escrow receivable above represents the escrow balance of $1,470 as of each of March 31, 2018 and December 31, 2017 net of the fair value of the indemnification obligations, which was estimated using the discounted probability-weighted cash flow method.

The carrying value of property, plant and equipment at the Company’s Johnstown, Pennsylvania administrative facility was reduced to its estimated fair market value during the third quarter of 2016, resulting in a non-cash impairment charge of $1,255. Fair market value was estimated using the market approach using market data such as recent sales of comparable assets in active markets and estimated salvage values. The proceeds from sale of the facility during the first quarter of 2017 and the resulting gain on sale were not material.

Note 7 – 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 of $52,288 and $42,917 as of March 31, 2018 and December 31, 2017, respectively, 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. 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 8 – Inventories

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


	March 31,		December 31,
	2018		2017
Work in process	$	43,454	$	42,460
Finished new railcars		—		85
Parts inventory		3,231		2,747

Total inventories, net	$	46,685	$	45,292

Inventory on the Company’s Condensed Consolidated Balance Sheets includes reserves of $6,448 and $6,160 relating to excess or slow-moving inventory for parts and work in process at March 31, 2018 and December 31, 2017, respectively.

Note 9 – Revolving Credit Facility

On June 13, 2016, the Company amended the credit agreement, dated as of July 26, 2013 (as so amended, the “Credit Agreement”), by and among FreightCar and certain of its subsidiaries, as borrowers and guarantors (together, the “Borrowers”), and Bank of America, N.A., as lender, administrative agent, swingline lender and letter of credit issuer (the “Bank”) to, among other things, extend the term of the Credit Agreement to July 26, 2019.

As of March 31, 2018 and December 31, 2017, the Company had no borrowings under the $50,000 senior secured revolving credit facility (the “Revolving Credit Facility”), provided under the Credit Agreement. As of March 31,2018 and December 31, 2017, the Company had $5,452 in outstanding letters of credit under the Revolving Credit Facility and therefore had $44,548 available for borrowing under the Revolving Credit Facility.

Note 10 – Accumulated Other Comprehensive Income (Loss)

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


	Pre-Tax			Tax			After-Tax
Three months ended March 31, 2018
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax other income (expense))	$	113		$	25		$	88
Postretirement liability activity:
Reclassification adjustment for amortization of net gain (pre-tax other income (expense))		(70	)		(15	)		(55	)
Reclassification adjustment for amortization of prior service cost (pre-tax other income (expense))		4			1			3

	$	47		$	11		$	36


	Pre-Tax			Tax			After-Tax
Three months ended March 31, 2017
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax other income (expense))	$	119		$	42		$	77
Postretirement liability activity:
Reclassification adjustment for amortization of net gain (pre-tax other income (expense))		(80	)		(28	)		(52	)
Reclassification adjustment for amortization of prior service cost (pre-tax other income (expense))		4			1			3

	$	43		$	15		$	28

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


	March 31,			December 31,
	2018			2017
Unrecognized pension cost, net of tax of $6,096 and $6,120	$	(9,618	)	$	(9,707	)
Unrecognized postretirement income, net of tax of $519 and $533		2,087			2,140

	$	(7,531	)	$	(7,567	)

Note 11 – Stock-Based Compensation

On January 12, 2018, the Company granted non-qualified stock options to purchase 146,590 shares of our common stock to executives of the Company. The award features a performance earning vesting schedule whereby the stock options will vest if the average closing price per share of the Company’s stock over the trailing 90 calendar days (the “Threshold Stock Price”) exceeds the closing price per share of the Company’s stock on January 12, 2018 (the “Reference Stock Price”) as follows: 34% of the stock options will vest if the Threshold Stock Price exceeds the Reference Stock Price by $5.00; another 33% of the stock options will vest if the Threshold Stock Price exceeds the Reference Stock Price by $10.00; and the remaining 33% of the stock options will vest if the Threshold Stock Price exceeds the Reference Stock Price by $15.00. Such stock price appreciation goals can be achieved at any point during the options’ ten-year contractual term. When vesting of an award of

stock-based compensation is dependent upon the attainment of a target stock price, the award is considered to be subject to a market condition. The Company recognizes stock-based compensation cost for stock options with market conditions over the derived service period of the stock options. The estimated fair value and derived service period for the stock options were calculated using a Monte Carlo simulation. Assumptions used in valuing the January 12, 2018 stock options include the expected stock option life, expected volatility, expected dividend yield and risk-free rate. The stock options were assumed to have an expected life equal to the midpoint of (a) the date the performance goal is attained and (b) the date the stock options expire. The expected volatility assumption of 49.33% was based on the Company’s historical stock price volatility over the ten-year period ended on the grant date. The expected dividend yield assumption of 0% was based on the Company’s suspension of its quarterly dividend payment in November 2017. The risk-free rate assumption of 2.55% was based on the yields on U.S. Treasury STRIPS with a remaining term that approximates the life assumed at the date of the grant. The estimated fair value of the three vesting tranches for the stock options ranged from $8.51 to $9.12 with derived service periods from 1.0 year to 2.43 years.

Total stock-based compensation was $836 and $214 for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, there was $1,406 of unearned compensation expense related to restricted stock awards, which will be recognized over the remaining weighed average service period of 28 months. As of March 31, 2018, there was $2,486 of unearned compensation related to performance stock options, which will be recognized over the remaining weighted average derived service period of 17 months. As of March 31, 2018, there was $609 of unearned compensation related to time-vested stock options, which will be recognized over the remaining service period of 33 months.

Note 12 – 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. Generally, contributions to the plans are not less than the minimum amounts required under the Employee Retirement Income Security Act of 1974, as amended (“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 Company also provides certain postretirement health care benefits for certain of its salaried 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.

Additionally, as a result of the cost reduction program initiated in January 2017, certain employees participating in the salaried pension and postretirement benefit plans were impacted, which triggered curtailments of the respective plans during the three months ended March 31, 2017.

The components of net periodic benefit cost (benefit) for the three months ended March 31, 2018 and 2017, are as follows:


	Three Months Ended
	March 31,
	2018			2017
Pension Benefits
Interest cost	$	427		$	446
Expected return on plan assets		(711	)		(642	)
Amortization of unrecognized net loss		113			119
Plan curtailment and special termination benefits		—			270

	$	(171	)	$	193


	Three Months Ended
	March 31,
	2018			2017
Postretirement Benefit Plan
Service cost	$	8		$	12
Interest cost		45			50
Settlement income		—			—
Amortization of prior service cost		4			4
Amortization of unrecognized net (gain) loss		(70	)		(80	)
Plan curtailment and special termination benefits		—			150

	$	(13	)	$	136

The Company made no contributions to the Company’s defined benefit pension plans for each of the three months ended March 31, 2018 and 2017. The Company expects to make no contributions to its pension plans in 2018.

The Company made contributions to the Company’s postretirement benefit plan for salaried retirees of $225 and $128 for the three months ended March 31, 2018 and 2017, respectively. The Company expects to make $400 in contributions (including contributions already made) to its postretirement benefit plan in 2018 for salaried retirees.

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 $430 and $620 for the three months ended March 31, 2018 and 2017, respectively.

Note 13 – 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.

The Company received cash payments of $15,733 and $1,410, during 2015 and 2017, respectively, for Alabama state and local incentives related to its 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 for a period of up to six years from the date of the incentive. The Company’s level of employment at its Shoals facility currently exceeds the minimum targeted levels of employment. In the event that employment levels drop below the minimum targeted levels of employment and any portion of the incentives is required to be paid back, the amount is unlikely to exceed the deferred liability balance of $10,825 as of March 31, 2018.

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 14 – 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 March 31,
	2018		2017
Weighted average common shares outstanding		12,306,011		12,269,555
Dilutive effect of employee stock options and nonvested share awards		—		—

Weighted average diluted common shares outstanding		12,306,011		12,269,555

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 March 31, 2018 and 2017, 355,631 and 517,448 shares, respectively, were not included in the weighted average common shares outstanding calculation as they were anti-dilutive.

Note 15 – Restructuring and Impairment Charges

In the first quarter of 2017, in response to lower order trends in the industry, the Company announced reductions to its salaried workforce, initiatives to reduce discretionary spending and the idling of the Company’s Danville, Illinois facility. In connection with the Company’s cost reduction program during 2017, the Company recorded restructuring charges of $1,777 during the three months ended March 31, 2017, which consisted primarily of employee severance and other employment termination costs and pension and postretirement benefit plan curtailment and special termination benefits. As a result of implementing ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost , as of January 1, 2018, restructuring and impairment charges of $420 for the three months ended March 31, 2017 have been reclassified as other income (expense) in the Condensed Consolidated Statement of Operations. There were no restructuring and impairment charges during the three months ended March 31, 2018.

Note 16 – Business Acquisition

On February 28, 2018, the Company acquired substantially all of the operating assets at the Cherokee, Alabama (“Shoals”) facility, of Navistar, Inc. (“Navistar”) and its subsidiary, International Truck and Engine Investments Corporation, including their railcar business, and assumed the lease for the facility (the ”Acquisition”). The Company had subleased a portion of the Shoals facility since 2013. As a result of the Acquisition, the Company became the sole tenant of the approximately 2.2 million square-foot facility. Additionally, the Company offered employment opportunities to the majority of Navistar’s approximately 200 employees on site. Under the terms of the Acquisition, the total consideration due to Navistar for the purchase of the operating assets was $20,225. The parties also negotiated a $24,130 lease incentive in favor of the Company in exchange for the Company assuming all remaining contractual lease obligations. Consideration for the acquisition was settled on a net basis and after certain other closing payments resulted in a payment of $2,655 from Navistar to the Company. The $24,130 lease incentive is included in deferred rent, current and deferred rent, long-term in the Company’s Condensed Consolidated Balance Sheet and will be amortized over the remaining lease term as a reduction of rent expense. The Company incurred acquisition costs of approximately $400, which were primarily legal fees that were expensed as incurred.

The preliminary purchase price allocation is as follows:


Inventories	$	3,611
Other current assets		95
Property, plant and equipment, net		17,169
Accounts and contractual payables		(650	)

	$	20,225

The purchase price equaled the estimated fair value of the net assets acquired (fair value hierarchy level 3) and, therefore, no goodwill or bargain purchase was recorded. Substantially all of Navistar’s operations at the Shoals facility were in support of the Company’s activities. Therefore, it is impracticable to determine the amount of operating profit attributable to the acquired business included in the Company’s results of operations since the acquisition date as the Company has integrated the acquired business with our ongoing operations. Also, the pro-forma financial information for the Company’s historical business and the assets acquired was impracticable to calculate as a result of various service, cost sharing and sublease agreements that were in place at the Shoals facility with Navistar.

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 are a diversified manufacturer of railcars and railcar components. We design and manufacture a broad variety of railcar types for transportation of bulk commodities and containerized freight products primarily in North America.

We rebuild and convert 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. Our primary customers are railroads, shippers and financial institutions.

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. On February 28, 2018, we acquired substantially all of the operating assets of Navistar, Inc. (“Navistar”) and its subsidiary, International Truck and Engine Investments Corporation, at the Shoals facility, including their railcar business. Our Roanoke facility has the capacity to build a variety of railcar types in a cost-effective manner and will continue to support our coal car products as market conditions improve. Our Danville facility was idled for railcar production effective March 31, 2017.

Total orders for railcars in the first quarter of 2018 were 756 units, consisting of 156 new railcars and 600 rebuilt railcars, compared to orders for 68 units, consisting of 15 new railcars and 53 rebuilt railcars, in the first quarter of 2017. Total backlog of unfilled orders was 2,054 units at March 31, 2018, compared to 2,392 units at December 31, 2017. The estimated sales value of the backlog was $143 million and $181 million, respectively, as of March 31, 2018 and December 31, 2017.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2018 compared to Three Months Ended March 31, 2017

Revenues

Our consolidated revenues for the three months ended March 31, 2018 were $83.0 million compared to $139.5 million for the three months ended March 31, 2017. Manufacturing segment revenues for the three months ended March 31, 2018 were $79.7 million compared to $137.7 million for the three months ended March 31, 2017. Railcar deliveries totaled 1,094 units, consisting of 891 new railcars, 122 leased railcars and 81 rebuilt railcars, for the first quarter of 2018, compared to 1,525 units, consisting of 1,425 new railcars and 100 leased railcars, in the first quarter of 2017. The decrease in Manufacturing segment revenues for the 2018 period compared to the 2017 period reflects the 28% decrease in the number of railcars delivered and a lower average sales price. Corporate and Other revenues for the three months ended March 31, 2018 were $3.2 million compared to $1.8 million for the three months ended March 31, 2017, reflecting higher parts sales.

Gross (Loss) Profit

Our consolidated gross profit margin was (0.7)% for the three months ended March 31, 2018 compared to 7.0% for the three months ended March 31, 2017. Our consolidated gross loss for the three months ended March 31, 2018 was $0.6 million compared to gross profit of $9.8 million for the three months ended March 31, 2017, reflecting decreases in gross profit from our Manufacturing segment of $11.1 million, which were partially offset by increases in gross profit from Corporate and Other of $0.7 million. The decline in railcar deliveries contributed a $3.9 million decrease in gross profit in our Manufacturing segment and an unfavorable product mix of lower-margin railcars and higher production inefficiencies contributed another $7.2 million decrease in Manufacturing segment gross profit.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses for the three months ended March 31, 2018 were $8.0 million compared to $7.0 million for the three months ended March 31, 2017. Manufacturing segment selling, general and administrative expenses for the three months ended March 31, 2018 were $2.0 million compared to $1.7 million for the three months ended March 31, 2017 primarily due to higher third-party sales commissions of $0.2 million and higher professional fees of $0.1 million. Corporate and Other selling, general and administrative expenses were $5.9 million for the three months ended March 31, 2018 compared to $5.3 million for the three months ended March 31, 2017. Corporate and Other selling, general and administrative expenses for the three months ended March 31, 2018 included increases due to a $0.6 million provision for incentive compensation and increases in stock-based compensation of $0.5 million, which were partially offset by decreases in legal fees of $0.4 million. The decrease in legal fees was primarily due to the settlement of patent litigation during the fourth quarter of 2017.

Restructuring and Impairment Charges

There were no restructuring and impairment charges for the three months ended March 31, 2018. In the first quarter of 2017, in response to lower order trends in the industry, we announced reductions to our salaried workforce, initiatives to reduce discretionary spending and the idling of our Danville, Illinois facility. We recorded restructuring and impairment charges of $1.8 million during the first quarter of 2017. These charges consisted primarily of employee severance and other employment termination costs and pension and postretirement benefit plan curtailment and special termination benefits. As a result of implementing ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, as of January 1, 2018, restructuring and impairment charges of $0.4 million for the three months ended March 31, 2017 have been reclassified as other income (expense) in the Condensed Consolidated Statement of Operations.

Operating (Loss) Income

Our consolidated operating loss for the three months ended March 31, 2018 was $8.6 million compared to operating income of $1.4 million for the three months ended March 31, 2017. Operating loss for the Manufacturing segment was $3.8 million for the three months ended March 31, 2018 compared to operating income of $7.2 million for the three months ended March 31, 2017 reflecting the decrease in Manufacturing segment gross profit and increase in selling, general and administrative expenses described above, which were partially offset by the decrease in Manufacturing segment restructuring and impairment charges of $0.4 million. Corporate and Other operating loss was $4.8 million for the three months ended March 31, 2018 compared to an operating loss of $5.8 million for the three months ended March 31, 2017 primarily due to decreases in restructuring and impairment charges of $1.0 million.

Income Taxes

Our income tax benefit was $1.8 million for the three months ended March 31, 2018 compared to an income tax provision of $0.4 million for the three months ended March 31, 2017. Our effective tax rate for the three months ended March 31, 2018 was 22.3% compared to 40.8% for the three months ended March 31, 2017. The decrease in the effective tax rate was primarily due to the impact of the U. S. tax reform legislation commonly referred to as the Tax Cuts and Jobs Act, which reduced the U.S. corporate income tax rate from 35 percent to 21 percent.

Net (Loss) Income

As a result of the foregoing, our net loss was $6.4 million for the three months ended March 31, 2018 compared to net income of $0.6 million for the three months ended March 31, 2017. For the three months ended March 31, 2018, our diluted net loss per share was $0.51 compared to diluted earnings per share of $0.05 for the three months ended March 31, 2017.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity for the three months ended March 31, 2018 and 2017, were our cash provided by operations, cash and cash equivalent balances on hand, our securities held to maturity and our revolving credit facility.

On June 13, 2016, we amended the credit agreement, dated as of July 26, 2013 (as so amended, the “Credit Agreement”), by and among FreightCar and certain of its subsidiaries, as borrowers and guarantors (together, the “Borrowers”), and Bank of America, N.A., as lender, administrative agent, swingline lender and letter of credit issuer (the “Bank”) to, among other things, extend the term of the Credit Agreement to July 26, 2019.

As of March 31, 2018 and December 31, 2017, we had no borrowings under the $50 million senior secured revolving credit facility ( the “Revolving Credit Facility”), provided under the Credit Agreement. As of March 31, 2018 and December 31, 2017, we had $5.5 million in outstanding letters of credit under the Revolving Credit Facility and therefore had $44.5 million available for borrowing under the Revolving Credit

Our restricted certificates of deposit balance was $5.5 million as of March 31, 2018 and $5.7 million as of December 31, 2017, and consisted of certificates of deposit used to collateralize standby letters of credit with respect to performance guarantees and to support our workers’ compensation insurance claims. The standby letters of credit outstanding as of March 31, 2018 are scheduled to expire at various dates through February 4, 2019. 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.

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.

Based upon our operating performance and capital requirements, 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 March 31, 2018 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
					2-3		4-5		After
Contractual Obligations	Total		1 Year		Years		Years		5 Years
	*(In thousands)*
Operating leases	$	80,392	$	18,711	$	37,892	$	18,279	$	5,510

The above table excludes $0.2 million related to a reserve for unrecognized tax benefits and accrued interest and penalties at March 31, 2018 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.

Cash Flows

The following table summarizes our net cash (used in) provided by operating activities, investing activities and financing activities for the three months ended March 31, 2018 and 2017:


	Three Months Ended March 31,
	2018			2017
	(In thousands)
Net cash provided by (used in):
Operating activities	$	(13,490	)	$	15,960
Investing activities		(8,925	)		(12,872	)
Financing activities		(118	)		(1,131	)

Total	$	(22,533	)	$	1,957

Operating Activities. Our net cash provided by or 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 three months ended March 31, 2018 was $13.5 million compared to net cash provided by operating activities of $16.0 million for the three months ended March 31, 2017. Our net cash used in operating activities for the three months ended March 31, 2018 reflects changes in working capital, including a $9.2 million increase in inventory on lease and a $5.3 million increase in accounts receivable. Our net cash provided by operating activities for the three months ended March 31, 2017 reflects decreases in working capital, including a $20.1 million decrease in inventory, which were partially offset by an $8.4 million increase in inventory on lease.

Investing Activities. Net cash used in investing activities for the three months ended March 31, 2018 was $8.9 million and primarily represented the $9.2 million purchase of U.S. Treasury securities and certificates of deposit (net of maturities). Net cash used in investing activities for the three months ended March 31, 2017 was $12.9 million and primarily represented the $14.1 million purchase of U.S. Treasury securities and certificates of deposit (net of maturities), which was partially offset by $1.4 million of state and local incentives received.

Financing Activities. Net cash used in financing activities was $0.1 million for the three months ended March 31, 2018 compared to $1.1 million for the three months ended March 31, 2017, reflecting the suspension of our quarterly cash dividend to our stockholders in November 2017.

Capital Expenditures

Our capital expenditures were $0.2 million in the three months ended March 31, 2018 compared to $0.3 million in the three months ended March 31, 2017. During the three months ended March 31, 2018, we also acquired $17.2 million of equipment as part of the net settlement of our acquisition of Navistar’s business at our Shoals facility. Excluding unforeseen expenditures, management anticipates that total capital expenditures for 2018 will be between $3.0 million and $4.0 million, including amounts already paid.

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;

•

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;

•

international economic and political risks to the extent we expand our sales of 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;

•

acquisitions may fail to perform to expectations or we may fail to successfully integrate acquired businesses into our existing business;

•

the risk of losing key personnel;

•

shortages of skilled labor;

•

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

•

our reliance on a single supplier for our roll-formed center sills;

•

the risk of equipment failures, delays in deliveries or extensive damage to our facilities;

•

the risk that we are unable to renew our lease arrangements at our manufacturing facilities at commercially acceptable terms;

•

the risk of failing to adequately protect our intellectual property;

•

cybersecurity risks relating to our information technology and other systems;

•

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

•

the risk of changes in U.S. tax law and rates;

•

the cost of complying with environmental laws and regulations; and

•

various covenants in the agreements 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, 2017 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 March 31, 2018, we had $5.5 million in outstanding letters of credit under the Revolving Credit Facility and therefore had $44.5 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.

The information in response to this item is included in Note 13 – Contingencies to our condensed consolidated

financial statements included in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors.

There have been no material changes from the risk factors previously disclosed in Item 1A of our 2017 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 February 26, 2018, by and among Navistar, Inc, International Truck and Engine Investments Corporation and FreightCar Alabama, LLC.

10.1		Assignment and Assumption of Lease, dated as of February 28, 2018, by and between Navistar, Inc. and FreightCar Alabama, LLC.

10.2		Industrial Facility Lease dated as of September 29, 2011, by and between Teachers’ Retirement Systems of Alabama and Employees’ Retirement System of Alabama and Navistar, Inc.*

10.3		Amendment to Industrial Facility Lease and Consent to Sublease, dated as of February 19, 2013, by and among Teachers’ Retirement Systems of Alabama, Employees’ Retirement System of Alabama, Navistar, Inc. and FreightCar Alabama, LLC.

10.4		Fifth Amendment to Lease Agreement dated March 1, 2018 by and between Norfolk Southern Railway Company and Johnstown America Corporation.

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

*	Confidential treatment has been requested for the redacted portions of this exhibit. A complete copy of the exhibit, including the redacted portions, has been filed separately with the Securities and Exchange Commission.

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: May 3, 2018	By:	/ S / J AMES R. M EYER
		James R. Meyer, President and Chief Executive Officer (Principal Executive Officer)

	By:	/ S / M ATTHEW S. K OHNKE
		Matthew S. Kohnke, Vice President, Finance, Chief Financial Officer and Treasurer (Principal Financial Officer)

	By:	/ S / J OSEPH J. M ALIEKEL
		Joseph J. Maliekel, Vice President and Corporate Controller (Principal Accounting Officer)

EXHIBIT INDEX


Exhibit Number		Description

2.1		Asset Purchase Agreement dated February 26, 2018, by and among Navistar, Inc., International Truck and Engine Investments Corporation and FreightCar Alabama, LLC.

10.1		Assignment and Assumption of Lease, dated as of February 28, 2018, by and between Navistar, Inc. and FreightCar Alabama, LLC.

10.2		Industrial Facility Lease, dated as of September 29, 2011, by and between Teachers’ Retirement Systems of Alabama and Employees’ Retirement System of Alabama and Navistar, Inc.*

10.3		Amendment to Industrial Facility Lease and Consent to Sublease, dated as of February 19, 2013, by and among Teachers’ Retirement Systems of Alabama, Employees’ Retirement System of Alabama, Navistar, Inc. and FreightCar Alabama, LLC.

10.4		Fifth Amendment to Lease Agreement dated March 1, 2018, by and between Norfolk Southern Railway Company and Johnstown America Corporation.

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

*	Confidential treatment has been requested for the redacted portions of this exhibit. A complete copy of the exhibit, including the redacted portions, has been filed separately with the Securities and Exchange Commission.

Exhibit 2.1

EXECUTION COPY

ASSET PURCHASE AGREEMENT

by and among

NAVISTAR, INC.,

INTERNATIONAL TRUCK AND ENGINE INVESTMENTS CORPORATION,

and

FREIGHTCAR ALABAMA, LLC

Dated February 26, 2018

TABLE OF CONTENTS


		PAGE

Article I DEFINITIONS			1

Section 1.01	Defined Terms		1

Section 1.02	Glossary		11

Article II PURCHASE AND SALE OF ASSETS			12

Section 2.01	Assets to be Transferred		12

Section 2.02	Excluded Assets		14

Section 2.03	Assumed Liabilities		15

Section 2.04	Excluded Liabilities		15

Section 2.05	Nonassignable Contracts and Rights		17

Article III PURCHASE PRICE			17

Section 3.01	Aggregate Purchase Price		17

Section 3.02	Closing Payment		17

Section 3.03	Closing Statement		18

Section 3.04	Inventory Adjustment		18

Section 3.05	Allocation of Purchase Price		19

Section 3.06	Closing		19

Section 3.07	Transfer Taxes and Related Expenses		19

Section 3.08	Prorations		20

Article IV REPRESENTATIONS AND WARRANTIES OF BUYER			20

Section 4.01	Organization and Power		20

Section 4.02	Authorization of Transaction		20

Section 4.03	Non-contravention		21

Section 4.04	Brokers’ Fees		21

Section 4.05	Acknowledgements of Buyer		21

Article V REPRESENTATIONS AND WARRANTIES OF SELLER			21

Section 5.01	Organization and Good Standing		21

Section 5.02	Due Authorization; No Conflict		22

Section 5.03	Brokers’ Fees		22

Section 5.04	Title to and Sufficiency of Assets		23

Section 5.05	Financial Statements		23

Section 5.06	Absence of Certain Changes		23

Section 5.07	Compliance with Laws; Permits		24

TABLE OF CONTENTS


		PAGE

Section 5.08	Tax Matters		25

Section 5.09	Real Property		26

Section 5.10	Intellectual Property and Software		27

Section 5.11	Acquired Contracts		29

Section 5.12	Litigation		29

Section 5.13	Employees and Independent Contractors		29

Section 5.14	Employee Benefits		31

Section 5.15	Environmental Matters		31

Section 5.16	Inventory		32

Section 5.17	Affiliate Transactions		32

Section 5.18	Books and Records		33

Section 5.19	Insurance		33

Section 5.20	Warranty Claims		33

Section 5.21	Customer List; Significant Customers and Suppliers		33

Section 5.22	Governmental Incentives		33

Article VI COVENANTS AND AGREEMENTS			34

Section 6.01	Buyer’s Investigation		34

Section 6.02	Consents of Third Parties; Governmental Authorizations		34

Section 6.03	Operations of the Business Prior to the Closing		35

Section 6.04	Notification of Certain Matters		35

Section 6.05	No Solicitation		36

Section 6.06	Satisfaction of Closing Conditions		36

Section 6.07	Further Assurances; Incentive Assignment		36

Section 6.08	Transition Cooperation		37

Section 6.09	Litigation Support		37

Section 6.10	Confidentiality		37

Section 6.11	Covenant Not to Compete		38

Section 6.12	Employee Matters		39

Section 6.13	Tax Matters		41

Section 6.14	Transfer of Warranties		41

Section 6.15	Equipment Repair Credit		41

TABLE OF CONTENTS


		PAGE

Section 6.16	Publicity		42

Section 6.17	Use of Name		42

Section 6.18	Data Room Record		42

Article VII CONDITIONS TO CLOSING			42

Section 7.01	Conditions to Buyer’s Obligations		42

Section 7.02	Conditions to Seller’s Obligations		44

Article VIII TERMINATION			45

Section 8.01	Termination		45

Section 8.02	Notice of Termination; Effect of Termination		46

Section 8.03	Return of Documentation		46

Article IX INDEMNIFICATION			46

Section 9.01	Survival of Representations, Warranties, Covenants and Agreements		46

Section 9.02	Indemnification Provisions for Buyer’s Benefit		47

Section 9.03	Indemnification Provisions for Seller’s Benefit		48

Section 9.04	Certain Limitations		48

Section 9.05	Matters Involving Third Parties		49

Section 9.06	Direct Claims		50

Section 9.07	Payments		51

Section 9.08	Buyer Right of Set Off		51

Section 9.09	Exclusive Remedy		51

Section 9.10	Adjustment to Purchase Price		51

Article X MISCELLANEOUS			51

Section 10.01	No Third-Party Beneficiaries		51

Section 10.02	Entire Agreement		52

Section 10.03	Succession and Assignment		52

Section 10.04	Bulk Sales		52

Section 10.05	Counterparts		53

Section 10.06	Headings		53

Section 10.07	Notices		53

Section 10.08	Dispute Resolution; WAIVER OF JURY TRIAL		54

iii

TABLE OF CONTENTS


		PAGE

Section 10.09	Governing Law; Jurisdiction		54

Section 10.10	Amendments and Waivers		55

Section 10.11	Severability		55

Section 10.12	Expenses		55

Section 10.13	Construction		55

Section 10.14	Interpretation		56

Section 10.15	Seller		56

Section 10.16	Injunctive Relief		56

EXHIBITS


Exhibit A	—	Form of Incentive Assignment
Exhibit B	—	Form of Lease Assignment Agreement
Exhibit C	—	Form of Bill of Sale
Exhibit D	—	Form of Assignment and Assumption Agreement
Exhibit E	—	Form of Transition Services Agreement

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of February 26, 2018, by and among Navistar, Inc., a Delaware corporation (“ Navistar ”), International Truck and Engine Investments Corporation, a Delaware corporation (“ International Truck ” and collectively with Navistar, “ Seller ”), and FreightCar Alabama, LLC, a Delaware limited liability company (“ Buyer ”). Seller 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, Navistar leases the Facility under the terms of the Master Lease by and between Navistar and the Master Lease Landlord;

WHEREAS, Buyer subleases a portion of the Facility under the terms of the Sublease by and between Navistar and Buyer;

WHEREAS, Seller is engaged in the business of manufacturing, distributing and selling railcar parts and components at the Facility (the “ Business ”); and

WHEREAS, Buyer desires to purchase and assume from Seller, and Seller desires to sell and assign to Buyer, certain assets and liabilities of the Business and the Master Lease, upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Defined Terms . As used in this Agreement, the following terms have the following meanings:

“ Acquisition Proposal ” means any proposal for a merger or business combination involving the Business or the Purchased Assets, or any proposal or offer to acquire in any manner, directly or indirectly, a substantial portion of the assets comprising the Business, the Facility, or the Purchased Assets.

“ Affiliate ” means, with respect to a specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, the specified Person. For purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means (a) the possession, directly or indirectly, of the power to vote 25% or more of the securities or other equity interests of a Person having ordinary voting power, (b) the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, by contract or otherwise or (c) being a director, officer, executor, trustee or fiduciary (or their equivalents) of a Person or a Person that controls such Person.

“ Business Confidential Information ” means any information or data concerning the Business, the Purchased Assets, or the Facility which information is not already generally available to the public or later becomes public knowledge other than through Seller or its Affiliates in violation of this Agreement.

“ 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.

“ Business Employees ” means all present or former employees (including any leased or temporary employees) of Seller engaged in whole or in part in the Business or who spend a material portion of their working time at the Facility.

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

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

“ Commercial Software ” means commercially available software programs that are (a) generally available to the public pursuant to non-exclusive, non-negotiated end-user licenses for which the aggregate fees paid are less than $10,000, and (b) in no way a component of or incorporated in any products or services of the Business.

“ Competitive Activity ” means the manufacture, distribution and sales of railcars, railcar parts, and railcar components.

“ Contract ” means (a) any contract, letter contract, agreement, lease, purchase order, sale order, delivery order or instrument of indebtedness, but excluding any contract, letter contract or other agreement that, by its terms, purports to be non-binding or (b) other binding arrangement, understanding, instrument, obligation or commitment of any kind or character.

“ Contractual Obligation ” means, with respect to any Person, any Contract, agreement, deed, mortgage, lease or license, whether written or oral, which pertains to such Person or any material assets of such Person.

“ Covered Employees ” means (a) Business Employees, or (b) beneficiaries of any Business Employees.

“ Data Room ” means the electronic data room containing documents and materials relating to the Business and the Facility, maintained by Navistar and made available to Buyer, as constituted on or prior to 5:00 p.m., Chicago time, two Business Days prior to the date of this Agreement.

“ Debt ” means, with respect to any Person at any date, all indebtedness of such Person and its direct and indirect subsidiaries (whether secured or unsecured), including: (a) all obligations for borrowed money (whether current or non-current, short-term or long-term), including, notes, loans, lines of credit, bonds, debentures, obligations in respect of letters of credit and bankers’ acceptances issued for the account of such Person and its direct and indirect subsidiaries, and all associated Liabilities, (b) the outstanding indebtedness with respect to all equipment lease Contractual Obligations (capitalized or otherwise), (c) the maximum Liability

under any payment obligations (whether or not contingent) with respect to acquisitions of assets or businesses in whatever form (including obligations with respect to non-compete, consulting or other arrangements), (d) all obligations with respect to the factoring and discounting of accounts receivable, (e) all obligations arising from cash/book overdrafts or negative cash balances, (f) all accrued but unpaid franchise, income and excise Tax Liabilities, (g) all Liabilities secured by an Encumbrance (other than Permitted Encumbrances) on any property or asset owned by such Person or its direct and indirect subsidiaries, (h) all guarantees, including, guaranties of payment, collection and performance, (i) all Liabilities for the deferred purchase price of property or services (including liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property), (j) all Liabilities relating to unfunded, vested benefits under any Employee Benefit Plan, (k) all Off-Balance Sheet Financing, and (l) all accrued interest, prepayment premiums and penalties related to any of the foregoing; provided that the amount of any of the foregoing obligations at any date shall be the outstanding balance or accrued value at such date.

“ Disclosure Letter ” means the disclosure letter delivered by Seller to Buyer immediately prior to the execution and delivery of this Agreement.

“ Employee Benefit Plan ” means any plan, program, agreement, policy or arrangement, whether or not reduced to writing, whether qualified or nonqualified, whether funded or unfunded and whether covering a single individual or a group of individuals, that is (a) an employee welfare benefit plan within the meaning of Section 3(1) of ERISA, (b) an employee pension benefit plan within the meaning of Section 3(2) of ERISA, (c) a stock bonus, stock purchase, stock option, restricted stock, stock appreciation right, profit sharing or similar equity-based plan or agreement, or (d) any other deferred-compensation, retirement, employment, severance, retention, change-in-control, leave, vacation, health, life, disability, group insurance, welfare-benefit, bonus, incentive or fringe-benefit plan, program, agreement or arrangement maintained, contributed to or required to be contributed to by Seller or any ERISA Affiliate for the benefit of any current or former officers, directors, employees or consultants of the Business or, in the case of any such plan that (i) is subject to Part 3, Subtitle B of Title I of ERISA or Title IV of ERISA (a “ Defined Benefit Pension Plan ”) or (ii) provides medical or death benefits beyond termination of employment (other than (A) coverage mandated by law, (B) death or retirement benefits under an Employee Benefit Plan qualified under Section 401(a) of the Code or (C) coverage that can be terminated without Seller or any ERISA Affiliate incurring any liability with respect thereto) (a “ Retiree Medical Plan ”) under which Seller or any ERISA Affiliate has any liability (contingent or otherwise) with respect to any current or former officers, directors, employees or consultants of Seller, but excluding any Multiemployer Plan.

“ Employee Records ” means all records related to Transferred Employees including but not limited to the following information: (a) skill and development training, (b) seniority histories, (c) salary and benefit information, (d) Occupational, Safety and Health Administration reports, (e) active medical restriction forms, and (f) fitness for duty.

“ Encumbrance ” means any lien, license to a third party, option, warrant, pledge, security interest, mortgage, claim, title defect, right of way, easement, encroachment, profit, servitude, community property interest, equitable interest, right of first offer or first refusal, buy/sell agreement and/or any other material restriction or covenant with respect to, or material condition governing the use, transfer, receipt of income or exercise of any other material attribute of ownership.

“ Environmental Claim ” means any written notice, violation, demand, allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, proceeding, or claim (whether administrative or judicial in nature) relating to the Purchased Assets arising pursuant to or in connection with any actual or alleged violation of, or liability or obligation pursuant to, any Environmental Law.

“ Environmental Condition ” means any condition at, on, in, under or emanating from the Facility in violation of Environmental Law or giving rise, or which reasonably may be expected to give rise, to any liability or investigatory and/or remedial obligation pursuant to Environmental Law.

“ Environmental Laws ” means all applicable federal, state, and local statutes, regulations, ordinances, and similar provisions 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, Threat of 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, 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., and/or similar Alabama state or local laws.

“ Environmental Liabilities ” means, collectively, Liabilities of the Business of or related to the Facility, whether contractual or legal, fixed or contingent, to the extent 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, disposal, discharge, emission, arrangement for disposal, treatment or storage, or Release or Threat of 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 used or handled in connection with the Business at the Facility; (c) the presence of any Hazardous Substances on, at, under or emanating from the Facility or transported to any other location for disposal, treatment or storage of the same; (d) any legal or contractual obligation in connection with the Facility to investigate, mitigate, remediate, clean up, or take any corrective action with respect to, any Hazardous Substance; or (e) asbestos, asbestos-containing materials, silica or mixed dust (or any combination thereof) used by the Facility or the Business prior to the Closing Date 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.

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

“ ERISA Affiliate ” means any corporation or trade or business (whether or not incorporated) that is treated with Seller as a single employer within the meaning of Section 414 of the Code.

“ Excluded Environmental Liabilities ” means any Environmental Liabilities to the extent arising from any events, circumstances or occurrences prior to the Closing Date (other than with respect to the Subleased Portion while subleased by Buyer).

“ Facility ” means a parcel of land constituting approximately 637 acres, and all improvements situated thereon, with an address at 1200 Haley Drive, Cherokee, Alabama 35616, as more particularly described as the “Leased Premises” under the Master Lease.

“ FCA ” means FreightCar America, Inc., a Delaware corporation.

“ FCA Incentives ” means any Incentives that were specifically allocated to FCA or Buyer under the Incentive Allocation Agreement.

“ 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, except in respect of such deviations form GAAP as are disclosed on Schedule 1.01(a) .

“ Governmental Authority ” means any domestic or foreign federal, state or local government, or political subdivision thereof, or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof), or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

“ Governmental Authorization ” means any approval, consent, ratification, waiver, license, Permit, registration or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any Law, including, any bond, certificate of authority, certificate of need, accreditation, qualification, license, franchise, Permit, order, registration, variance or privilege.

“ Governmental Order ” means any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority.

“ 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, 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 Laws; (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 Facility, 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, 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.

“ Incentives ” mean any incentives granted under the Incentive Agreements, or otherwise granted by a Governmental Authority in connection with the Business or the Facility, including with respect to Tax abatements, Tax credits, Tax reductions, direct payments, reimbursements, governmental assistance, preferential terms, inducements, financial commitments, zoning, utilities and training programs.

“ Incentive Agreements ” mean the (a) the SLDA; (b) Tax Abatement Agreement dated July 18, 2007, by and between the Industrial Development Board of Colbert County and National Alabama Corporation, as corrected pursuant to the Technical Corrections dated July 31, 2007 and September 21, 2007, and as amended on September 29, 2011 and February 19, 2013, and as may be further supplemented or amended; and (c) Tax Abatement Agreement dated September 28, 2011, as amended on September 29, 2011 and February 19, 2013, and as may be further supplemented or amended.

“ Incentive Allocation Agreement ” means the Agreement with Respect to Incentives, dated February 19, 2013, by and between Navistar and FCA.

“ Incentive Clawbacks ” mean the clawback, reduction, or required reimbursement of any Incentives, including as provided under the Incentive Agreements.

“ Intellectual Property ” means all intellectual property rights and assets, and all rights, interests and protections that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to the Laws of any jurisdiction throughout the world, whether registered or unregistered, including any and all of the following: (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, (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), and (i) all rights to any all causes of action, damages and remedies related thereto of any nature available to or being pursued by Seller to the extent related to the foregoing, whether accruing before, on or after the date hereof,

including all rights to and claims for damages, restitution and injunctive relief for infringement, dilution, misappropriation, violation, misuse, breach or default, with the right but no obligation to sue for such legal and equitable relief, and to collect, or otherwise recover, any such damages.

“ Intellectual Property Agreements ” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, permissions and other Contracts (including any right to receive or obligation to pay royalties or any other consideration), whether written or oral, relating to any Intellectual Property that is necessary for the conduct of the Business as currently conducted to which Seller is a party, beneficiary or otherwise bound.

“ Intellectual Property Registrations ” means all Seller Intellectual Property that are subject to any issuance, registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

“ Inventory ” means all inventories of raw materials, supplies, spare parts, work-in-process, finished goods and the like located at the Facility or used or held for use in the Business.

“ Law ” means any foreign, federal, state or local law, statute, ordinance, code or regulation, or any Governmental Order.

“ Liability ” means, with respect to any Person, any liability or obligation of such Person whether known or unknown, whether asserted or unasserted, whether determined, determinable or otherwise, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated and whether due or to become due.

“ Losses ” means losses, damages, Liabilities, deficiencies, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers.

“ Machinery and Equipment Agreement ” means the Machinery and Equipment Agreement dated as of September 29, 2011, by and between the Master Lease Landlord and Navistar.

“ Machinery and Equipment Note ” means the promissory note, dated January 2, 2012, delivered by Navistar in favor of the Master Lease Landlord, for a principal amount of $40,000,000, in connection with the Machinery and Equipment Agreement.

“ Make-Whole Payment ” means a payment equal to $24,130,000.

“ Master Lease ” means the Industrial Facility Lease, dated as of September 29, 2011, by and between the Master Lease Landlord and Navistar and relating to the Facility, as amended pursuant to the Amendment to Industrial Facility Lease and Consent to Sublease, dated February 19, 2013, by and among the Master Lease Landlord, Navistar, and Buyer, and as may be further amended from time to time.

“ Master Lease Landlord ” means, collectively, the Teachers’ Retirement Systems of Alabama, an instrumentality of the State of Alabama, and the Employees’ Retirement System of Alabama, an Instrumentality of the State of Alabama.

“ Master Services Agreement ” means the Master Services Agreement, dated February 19, 2014, by and between Navistar and Buyer.

“ Material Adverse Effect ” means any event, circumstance, change, occurrence or development, that is or would reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Business or the Facility, or (b) the ability of Seller to consummate the transactions contemplated hereby on a timely basis; provided, however, that with respect to clause (a) of this definition, in no event shall any of the following be deemed to constitute a Material Adverse Effect, or shall otherwise be taken into account in determining whether a Material Adverse Effect has occurred or would be reasonably expected to occur: (i) any adoption, implementation, repeal, or modification of any Law, (ii) any change in GAAP or other accounting standards (or interpretation thereof), (iii) any action taken by Seller or its Representatives pursuant to the terms of this Agreement or with the prior written consent of Buyer, (iv) changes caused by acts of terrorism or war (whether or not declared) or any escalation thereof occurring after the date hereof, or weather related event, fire or natural disaster (to the extent that any loss or Liability of Seller arising from any such weather related event, fire or natural disaster is covered by any insurance policy); or (v) any actions or omissions by Buyer or any of its Affiliates; provided, that with respect to clauses (i), (ii), or (iv) hereof, so long as such change or effect does not disproportionally affect the Business or the Facility relative to other participants in the industry and geography in which the Business operates. 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.

“ Multiemployer Plan ” means a plan, program or arrangement described in Section 3(37) of ERISA.

“ Off-Balance Sheet Financing ” means (a) any Liability of Seller under any sale and leaseback transactions which does not create a Liability on the consolidated balance sheet of Seller and (b) any Liability of Seller 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).

“ Organizational Documents ” means, with respect to any Person (other than an individual), the certificate or articles of incorporation or organization, certificate of limited partnership and any joint venture, limited liability company, operating, voting or partnership agreement, by-laws, or similar documents, instruments or agreements relating to the organization or governance of such Person, in each case, as amended or supplemented.

“ Parts and Production Supply Agreement ” means the Parts and Production Services Supply Agreement, dated February 19, 2013, by and between International Truck and Buyer.

“ 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 Authority.

“ Permitted Encumbrance ” means the following encumbrances: (a) Encumbrances for Taxes not yet due and payable; (b) zoning, entitlement and other land use regulations by any Governmental Authority provided that such regulations have not been violated; (c) all defects, exceptions, restrictions, easements, rights of way and encumbrances of record in the real property records as set forth in Section 1.01(b) of the Disclosure Letter; (d) statutory liens of landlords, carriers, warehousemen, mechanics, materialmen and other similar Persons imposed by applicable Law incurred in the Ordinary Course of Business and securing sums not yet delinquent; (e) Encumbrances for the benefit of Buyer pursuant to the Security Agreement; and (f) title of a lessor under a capital or operating lease, provided that any capital leases shall be paid off and all Purchased Assets shall be released therefrom prior to the Closing.

“ 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).

“ Proceeding ” means any litigation, action, suit, mediation, arbitration, assessment, investigation, hearing, or similar proceeding (in each case, whether civil, criminal, administrative, investigative or informal) initiated, commenced, conducted, heard, or pending by or before any Governmental Authority or mediator.

“ Release ” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping into the environment.

“ Representative ” means, with respect to any Person, any and all directors, officers, employees, consultants, advisors, counsel, accountants, representatives and other agents of such Person.

“ Security Agreement ” means the Security Agreement, dated February 20, 2013, by and between International Truck and Buyer.

“ Seller Incentives ” means any Incentives that are specifically allocated to Seller under the Incentive Allocation Agreement.

“ Seller Intellectual Property ” means all Intellectual Property which is owned by Seller and necessary for the conduct of the Business as currently conducted.

“ Seller’s Knowledge ” or “ Knowledge of Seller ” (or similar phrases with respect to Seller) means the actual knowledge as of the date of this Agreement, after reasonable investigation, of Lance Fulks, Brandon Tucker, Tim Powelke and Terry Wicker.

“ SLDA ” means the Site Location and Development Agreement, dated July 18, 2007, by and among National Alabama Corporation and the State of Alabama, Colbert County, the Industrial Development Board of Colbert County, the Shoals Economic Development Authority, Shoals Industrial Development Committee and Certain Agencies of or Within the State of Alabama, as assigned to Navistar pursuant to the Consent to Assignment dated September 28, 2011, and amended and supplemented on February 19, 2013, March 31, 2016, June 25, 2015 and December 16, 2016, and as may be further supplemented or amended.

“ Sublease ” means the Sublease, dated February 19, 2013, by and between Navistar and Buyer and relating to the Master Lease, as amended by the Amendment to Sublease and Grant of Purchase Option to Subtenant, dated as of March 11, 2013, by and among the Master Lease Landlord, Navistar, and Buyer, the Second Amendment to Sublease and Consent to Subleased, dated as of October 27, 2014, the Third Amendment to Sublease and Consent to Sublease, dated as of February 1, 2016, as may be further amended from time to time.

“ Subleased Portion ” means the portion of the Facility subleased to Buyer under the terms of the Sublease.

“ 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 and that is licensed to Seller for use in the conduct of the Business as currently conducted or with respect to the Facility.

“ Threat of Release ” means a substantial likelihood of a Release that requires action to prevent or mitigate damage to the environment that may result from such Release.

“ Transaction Documents ” means this Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the Transition Services Agreement, the Lease Assignment Agreement, the Incentive Assignment, the Termination Agreements, 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 1.02 Glossary . The following Glossary of Defined Terms sets forth the section reference of the definitions of certain other defined terms used in the Agreement:


Acquired Contracts		Section 2.01(e)
Accountant Determined Value		Section 3.04(b)
Aggregate Purchase Price		Section 3.01
Agreement		Preamble
Allocation Schedule		Section 3.05
Assignment and Assumption Agreement		Section 7.01(g)(iii)
Assumed Liabilities		Section 2.03
Base Price		Section 3.01
Basket		Section 9.04(a)
Beneficial Rights		Section 2.05
Bill of Sale		Section 7.01(g)(ii)
Business		Recitals
Buyer		Preamble
Buyer Fundamental Representations		Section 9.01
Buyer Indemnitees		Section 9.02(a)
Cap		Section 9.04(a)
CERCLA		Section 1.01
Charges		Section 3.08
Closing		Section 3.06
Closing Date Deadline		Section 8.01(e)
Closing Date Inventory		Section 3.04(a)
Closing Inventory Value		Section 3.04(a)
Closing Payment		Section 3.02
Closing Statement		Section 3.03
Contract Consents		Section 5.11(c)
Customer List		Section 5.21
Direct Claim		Section 9.06
Effective Time		Section 3.06
Estimated Inventory Value		Section 3.03
Estimated Value		Section 3.04(b)
Excluded Assets		Section 2.02
Excluded Contracts		Section 2.02(k)
Excluded IP Assets		Section 2.02(f)
Excluded Liabilities		Section 2.04
Excluded Personal Property		Section 2.02(b)
Financial Statements		Section 5.05
Fundamental Representations		Section 9.01
Good Faith Meeting		Section 10.08
Improvements		Section 5.09(e)
Incentive Assignment		Section 6.07(c)
Indemnified Party		Section 9.05(a)
Indemnifying Party		Section 9.05(a)


Indemnity Notice		Section 9.06
Independent Accountant		Section 3.04(b)
Insurance Policies		Section 5.19
International Truck		Preamble
Inventory Adjustment		Section 3.04(a)
Inventory Summary		Section 5.16
Inventory Valuation Principles		Section 3.03
IT Systems		Section 5.10(h)
Lease Assignment Agreement		Section 7.01(f)
Material Customers		Section 5.21
Material Consents		Section 6.02
Material Suppliers		Section 5.21
Navistar		Preamble
Party or Parties		Preamble
Permit Consents		Section 5.07(d)
Purchased Assets		Section 2.01
Purchased IP Assets		Section 2.01(g)
Purchase Price		Section 3.01
Real Property Transfer Expenses		Section 3.07
Scheduled Permits		Section 5.07(d)
Seller		Preamble
Seller Fundamental Representations		Section 9.01
Seller Indemnitees		Section 9.03(a)
Standard Warranties		Section 5.20
Termination Agreement		Section 7.01(g)(vi)
Territory		Section 6.11(a)(i)
Third Party Claim		Section 9.05(a)
Transfer Taxes		Section 3.07
Transferred Employees		Section 6.12(a)
Transition Services Agreements		Section 7.01(g)(iv)

ARTICLE II

PURCHASE AND SALE OF ASSETS

Section 2.01 Assets to be Transferred . Subject to the terms and conditions of this Agreement and for the consideration herein stated, on the Closing Date, Seller shall sell, transfer, convey, assign, and deliver to Buyer, and Buyer shall purchase and accept, the following properties, assets, rights, and entitlements, free and clear of all Encumbrances (other than Permitted Encumbrances), all of the assets and properties of Seller related to the Business, other than the Excluded Assets (collectively referred to herein as the “ Purchased Assets ”), including, all right, title and interest of Seller in, to and under:

(a) All rights and interest of Seller in the Facility (together with any options to purchase the underlying property and Improvements thereon, and in each case all other rights, subleases, licenses, permits, deposits and profits appurtenant to or related to the Master Lease and any other Contract in connection therewith);

(b) All tangible personal property, including machinery, equipment (including equipment set forth on Section 2.01(b) of the Disclosure Letter), furniture, office equipment, communications equipment, vehicles, storage tanks, spare and replacement parts, fuel, supplies, and other tangible property, whether or not affixed to real estate, in each case (i) located at the Facility, other than the Subleased Portion, or (ii) used, or held for use in, the conduct of the Business, other than the Excluded Personal Property;

(c) All decommissioned or obsolete tangible personal property formerly used in the conduct of the Business that is located at the Facility, other than tangible personal property that is on loan that is no longer used in the conduct of the Business;

(d) All right, title and interest in and to any Inventory that has not been sold or otherwise disposed of by Seller in the Ordinary Course of Business prior to the Closing, and all rights to receive refunds, rebates or credits in connection with the purchase thereof;

(e) All rights and interests of Seller in or under the Contracts listed on Section 2.01(e) of the Disclosure Letter (the “ Acquired Contracts ”);

(f) All Permits and Governmental Authorizations necessary for or incident to the operation of the Business or the Facility (other than the Subleased Portion), and all rights under, interests in and deposits under the foregoing, and pending applications for any thereof, to the extent such Permits and Governmental Authorizations are assignable;

(g) All (i) computer equipment, systems, and software located at the Facility (other than the Subleased Portion); (ii) software, telephone and facsimile numbers and internet domain name registrations used in the Business (other than those which (A) include “Navistar” or any derivation thereof or (B) contain a symbol or logo associated with Seller or an Affiliate thereof and listed on Section 2.01(g) of the Disclosure Letter); (iii) Seller Intellectual Property other than as listed on Section 2.01(g) of the Disclosure Letter; (iv) Seller’s rights to use any Third Party IP other than Seller’s rights pursuant to Intellectual Property Agreements that are Excluded Contracts; and (v) any other trade secrets and know-how of Seller used exclusively in connection with the Business (collectively, “ Purchased IP Assets ”);

(h) With respect to the Business and to the extent in Seller’s possession, any and all past and pending documents of sales and service information, customer lists (including the Customer List), payor and supplier lists, customer orders, Inventory cost records, machinery and equipment records, mailing lists, sales and purchasing materials, quality control records and procedures, standard operating procedures, books of account, customer records and records quotations, purchase orders, correspondence, sales, brochures, advertising materials, samples and display materials, and all rights under sales Contracts and customer orders;

(i) All claims, warranties (express and implied), choses in action, causes of action, rights of recovery and rights of set-off of any kind against third parties relating to the Business, the Facility (other than the Subleased Portion), or the Purchased Assets (including any warranties from contractors, subcontractors, vendors or suppliers regarding their performance, quality of workmanship or quality of materials supplied in connection with construction, manufacturing, development, installation, repair or maintenance at the Facility) or the Assumed

Liabilities, and the right to receive and retain mail and other communications relating to the Business, the Facility, the Purchased Assets or the Assumed Liabilities to the extent such warranties are able to be assigned to Buyer;

(j) All rights to receive any insurance proceeds relating to the Business or the Purchased Assets, to the extent such insurance proceeds do not relate to any Excluded Liability; provided, that such proceeds shall be reduced to the extent Seller actually provides indemnification for a matter pursuant to Section 9.02 ;

(k) All rights of Seller in any Incentives granted, issued or delivered on or after the Closing Date, if any;

(l) To the extent in Seller’s possession, all records, documents and books relating to the Purchased Assets and Business, including maintenance files, excluding (i) all records and returns relating to Taxes, assessments and similar governmental levies concerning Seller (other than personal property Taxes, assessments and levies imposed on the Purchased Assets); (ii) all corporate records of Seller, 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;

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

(n) All goodwill and going concern rights associated with the Business or the Purchased Assets.

Section 2.02 Excluded Assets . The provisions of Section 2.01 notwithstanding, it is expressly understood and agreed that the Purchased Assets shall not include the following (collectively, the “ Excluded Assets ”):

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

(b) The tangible personal property set forth in Section 2.02(b) of the Disclosure Letter (the “ Excluded Personal Property ”);

(d) Corporate records included in the definition of Purchased Assets that Seller wishes to maintain, provided copies of such records are made available to Buyer in the Data Room and further provided that such records will be included in Business Confidential Information as referenced in Section 6.10 ;

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

(f) All right, title and interest in and to the name or mark “Navistar”, as well as any other Seller Intellectual Property that is not considered a Purchased IP Asset and is listed on Section 2.01(g) of the Disclosure Letter (the “ Excluded IP Assets ”);

(g) Any capital stock or equity interests, including any capital stock or equity interests of Seller or its Affiliates;

(h) All cash and cash equivalents, bank accounts, intercompany accounts, securities and investments of Seller or its Affiliates;

(i) All rights and interests related to the Employee Benefit Plans;

(j) All Seller Incentives actually delivered prior to the Closing Date;

(k) Contracts that are not Acquired Contracts (the “ Excluded Contracts ”);

(l) All prepaid expenses, advance payments, deposits, surety accounts and other similar deposits, including deposits with suppliers and utilities;

(m) All insurance proceeds that relate to any Excluded Liability; and

(n) All accounts receivable in connection with the Business as of the Closing Date.

Section 2.03 Assumed Liabilities . At the Closing, Buyer shall assume and pay, perform and discharge the Liabilities under any Contract included in the Acquired Contracts when assigned, to the extent that such obligations are related to and are required to be performed during the periods after Closing, including all Incentive Clawbacks arising out of Buyer’s or its Affiliates actions or Buyer’s or its Affiliates failure to act after the Closing Date, but excluding any Liability arising out of or relating to any breach, violation, default or failure to perform by Seller that occurred prior to the Closing Date (collectively, the “ Assumed Liabilities ”).

Section 2.04 Excluded Liabilities . Except as contemplated by Section 2.03 , Buyer shall not assume, nor shall it agree to pay, perform or discharge, any Liability of Seller or any Affiliate of Seller, whether or not arising from or relating to the conduct of the Business or the Facility (other than the Subleased Portion) and whether absolute, contingent, accrued, known or unknown (the “ Excluded Liabilities ”). Without limiting the generality of the prior sentence, Excluded Liabilities shall include:

(a) Liabilities arising directly out of or based primarily on any violation of any Law to which Seller, the Business or the Facility is subject to the extent such Liabilities relate to violations occurring on or prior to the Closing Date;

(b) Liabilities under any Acquired Contracts to the extent arising prior to the Closing Date;

(d) Liabilities under the Excluded Contracts or any other Contracts, including Intellectual Property Agreements, (i) which are not validly and effectively assigned to Buyer pursuant to this Agreement; (ii) which do not conform to the representations and warranties with respect thereto contained in this Agreement; or (iii) to the extent such Liabilities arise out of or relate to a breach by Seller of such Contracts prior to Closing;

(e) Liabilities of Seller or its Affiliates for performance under the Transaction Documents;

(f) Liabilities for Taxes assessed on the Purchased Assets or the income of the Business or Seller as of the Closing Date, and liabilities for Taxes of Seller;

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

(h) 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;

(i) Liabilities related to any Debt on the part of Seller or its Affiliates;

(j) Liabilities arising from warranties made by Seller or its Affiliates prior to Closing;

(k) Liabilities under the Machinery and Equipment Agreement and Machinery and Equipment Note;

(l) Liabilities arising from chargebacks related charges by Seller or its Affiliates prior to Closing;

(m) Liabilities related to the Purchased Assets arising prior to the Closing Date (including Liabilities that are attributable to facts or circumstances occurring or in existence prior to the Closing Date);

(n) Any Liability of Seller with respect to any Proceeding to the extent related to the operation of the Business prior to the Closing Date;

(o) Any Liability arising and accruing before the Closing Date in connection with the employment of any employee or former employee of either Seller or its Affiliates, or in connection with the termination of Business Employees by Seller as contemplated by this Agreement;

(p) Any Incentive Clawbacks with respect to Seller Incentives delivered prior to the Closing Date, except Incentive Clawbacks with respect to Seller Incentives arising out of Buyer’s or its Affiliates actions or Buyer’s or its Affiliates failure to act after the Closing Date, or any other Incentive Clawbacks that are primarily caused by an error, misstatement, or non-compliance with Law by Seller or its Representatives;

(q) Any Excluded Environmental Liabilities; and

(r) Any other Liability of either Seller or its Affiliates that is not an Assumed Liability.

Section 2.05 Nonassignable Contracts and Rights . Notwithstanding anything to the contrary in this Agreement, no Contracts, properties, rights or other assets of Seller that would otherwise constitute Purchased Assets or Assumed Liabilities shall be deemed sold, transferred or assigned to Buyer pursuant to this Agreement if the attempted sale, transfer or assignment thereof to Buyer without the consent or approval of another party or Governmental Authority would be ineffective or would constitute a breach of contract or a violation of Law 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. In such case, to the extent possible, (a) the beneficial interest in or to such Contracts, properties, rights or other assets (collectively, the “ Beneficial Rights ”) shall in any event pass as of the Closing Date to Buyer under this Agreement and (b) pending such consent or approval, Buyer shall assume or discharge the Liabilities of Seller under such Beneficial Rights (to the extent such obligations are Assumed Liabilities) as agent for Seller, and Seller shall act as Buyer’s agent in the receipt of any benefits, rights or interest received from the Beneficial Rights. Buyer and Seller shall use their reasonable best 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 advisable. The Parties shall make or complete such transfers as soon as reasonably possible and cooperate with one another in any other reasonable arrangement designed to provide for Buyer the Beneficial Rights including enforcement at the cost and for the account of Buyer of any and all rights of Seller against the other party thereto arising out of the breach or cancellation thereof by such other party or otherwise, and to provide for the discharge of any liability arising under such Contracts, properties, rights or other assets, to the extent such liability constitutes an Assumed Liability. Notwithstanding anything to the contrary in this Section 2.05 , this Section 2.05 shall not relieve Seller of the obligation to obtain the Material Consents pursuant to Section 6.02 .

ARTICLE III

PURCHASE PRICE

Section 3.01 Aggregate Purchase Price . The aggregate purchase price to be paid by Buyer for the Purchased Assets (the “ Aggregate Purchase Price ”) shall be an amount equal to (a) $17,264,284.00 (the “ Base Price ”) plus the Closing Inventory Value (collectively, the “ Purchase Price ”), plus (b) the assumption of the Assumed Liabilities, minus (c) the Make-Whole Payment.

Section 3.02 Closing Payment . At the Closing, the portion of the Purchase Price payable by Buyer to Seller (the “ Closing Payment ”) shall be an amount equal to (i) the Base Price, plus the Estimated Inventory Value, less (ii) the Make-Whole Payment. To the extent the Closing Payment is a negative number, it shall represent an amount payable by Seller to Buyer.

The Closing Payment and any other amounts set forth in the Closing Statement shall be paid at Closing by wire transfer of immediately available funds to an account designated by Buyer or Seller, as applicable, at least one Business Day prior to the Closing Date.

Section 3.03 Closing Statement . At least one Business Day prior to the Closing Date, Seller shall prepare and deliver to Buyer a written statement setting forth: (a) Seller’s estimate, prepared in good faith and based on the agreed values, accounting policies, principles, practices and methodologies, consistent with past practice of the Business as described on Section 3.03 of the Disclosure Letter (the “ Inventory Valuation Principles ”), of the aggregate full market value of the Inventory as of the Closing, determined in accordance with the Inventory Valuation Principles (the “ Estimated Inventory Value ”); provided that the Parties acknowledge and agree that the Estimated Inventory Value shall be an amount equal to $3,510,000; and (b) the flow of funds contemplated under this Agreement as of the Closing Date, including, the payments contemplated under this Article III and Section 6.15 (the “ Closing Statement ”), the terms of which shall be subject to the reasonable consent and approval of Buyer.

Section 3.04 Inventory Adjustment .

(a) Within 15 days after the Closing Date, or at such other time as agreed between the Parties, Buyer and Seller will jointly conduct a physical count and valuation of the Inventory as of the Closing Date (the “ Closing Date Inventory ”), using the Inventory Valuation Principles. The Purchase Price shall be (i) increased, on a dollar-for dollar basis, in the event and to the extent that the value of the Closing Date Inventory as determined under this Section 3.04(a) (the “ Closing Inventory Value ”) is greater than the Estimated Inventory Value, and (ii) decreased, on a dollar-for-dollar basis, in the event and to the extent that the Closing Inventory Value is less than the Estimated Inventory Value (the “ Inventory Adjustment ”). The Parties agree the Inventory Adjustment shall be paid in cash in the following manner: (i) if the Inventory Adjustment calls for an increase in the Purchase Price, Buyer shall pay Seller the amount of any such increase in the Purchase Price in cash not later than five Business Days following the date on which the Inventory Adjustment is determined, and (ii) if the Inventory Adjustment calls for a decrease in the Purchase Price, Seller shall pay Buyer the amount of any such decrease in the Inventory Adjustment in cash not later than five Business Days following the date on which the Inventory Adjustment is determined; in either case in immediately available funds by wire transfer to an account designated by the receiving Party thereof.

(b) If Seller and Buyer fail to reach an agreement with respect to the Closing Inventory Value, then such amount shall be submitted for resolution to an impartial regionally or nationally recognized firm of independent certified public accountants mutually appointed by Buyer and Seller (the “ Independent Accountant ”) within 15 days after performance of the Closing Date Inventory. Each of Buyer and Seller shall submit to the Independent Accountant their estimation of the Closing Inventory Value (the “ Estimated Value ”). The Independent Accountant, acting as experts and not arbitrators, shall inspect the Inventory and shall make a determination of the Closing Inventory Value (the “ Accountant Determined Value ”), which must be within the range of Estimated Values submitted by each of Buyer and Seller and in accordance with the Inventory Valuation Principles. The Accountant Determined Value shall be final and binding on the Parties, and the Purchase Price shall be adjusted and the applicable Party shall pay the Inventory Adjustment as a result of such Accountant Determined Value within five

Business Days of its determination. The fees and expenses of the Independent Accountant shall be paid by Seller, on the one hand, and by Buyer, on the other hand, in proportion to the difference between the Estimated Value submitted by such Party and the Accountant Determined Value.

Section 3.05 Allocation of Purchase Price . The Parties hereto agree that, for Buyer’s and Seller’s respective federal, state, local and foreign income Tax purposes, the Aggregate Purchase Price shall be allocated among the Purchased Assets as mutually agreed by Buyer and Seller in a manner consistent with Section 1060 of the Code (such allocation as agreed by Buyer and Seller or as finally determined by the Independent Accountant, as the case may be, the “ Allocation Schedule ”). Buyer shall deliver a draft of such schedule to the Seller not later than 60 days following the Closing Date. Seller shall deliver to Buyer within 30 days after receipt of such schedule any objection that Seller may have to such schedule and, in the absence of the delivery of any such objection during such 30 day period, the Allocation Schedule prepared by Buyer shall be final and binding on the Parties. If Seller delivers any such objection to Buyer, Buyer and Seller shall negotiate in good faith and use their reasonable best efforts to resolve any such dispute. If the Parties fail to agree within 30 days following Buyer’s receipt of such objection, then the disputed items shall be submitted jointly by the Parties to the Independent Accountant for resolution, whose determination shall be final and binding on the Parties. The Independent Accountant shall resolve the dispute within 30 days after the item has been referred to it. The costs, fees and expenses of the Independent Accountant shall be borne equally by Seller, on the one hand, and Buyer, on the other hand. Buyer and Seller each agree to file Internal Revenue Service Form 8594, and all federal, state, local and foreign Tax Returns, in accordance with the Allocation Schedule. Buyer and Seller each agree to provide the other promptly with any other information required to complete Form 8594. The Allocation Schedule shall be amended upon notice by Buyer of any required modifications thereto reasonably determined by Buyer after reasonable consultation with Seller to be necessary related to the adjustments contemplated by Section 3.04 .

Section 3.06 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, not later than one Business Day after the date that the conditions set forth in Section 7.01 and Section 7.02 have been satisfied or waived (other than conditions that by their terms are to be satisfied at Closing, but subject to the satisfaction or waiver of such conditions), or on such other date or at such other place or time as is mutually agreed upon by the Parties. Except as otherwise provided in this Agreement, the Closing shall be effective for economic and accounting purposes as of 12:01 a.m. on the Closing Date (the “ Effective Time ”). All actions to be taken and all documents to be executed and delivered in connection with the consummation of the transactions provided for herein shall be reasonably satisfactory in form and substance to the Parties and their respective counsel. All actions to be taken and all documents to be executed and delivered by the Parties at the Closing shall be deemed to have been taken and executed simultaneously, and no action shall be deemed taken nor any document executed and delivered until all have been taken, executed and delivered.

Section 3.07 Transfer Taxes and Related Expenses . All transfer, documentary, sales, use, stamp, registration, value added, gross receipts, privilege and other such Taxes (including any penalties and interest) (“ Transfer Taxes ”), and (b) costs and expenses incurred in connection

with obtaining surveys and title insurance or using notaries to record titles with respect to the Facility (the “ Real Property Transfer Expenses ”), in each case incurred in connection with the transactions contemplated by this Agreement and the other Transaction Documents, shall be borne 50% by Buyer and 50% by Seller. To the extent Buyer or Seller or any of their Affiliates is required by Law to pay any Transfer Taxes or Real Property Transfer Expenses, Seller or Buyer, as applicable, shall reimburse Buyer or Seller, as applicable, for 50% of any portion of such Transfer Taxes so paid. Such reimbursement shall be made within ten days of delivery to Seller or Buyer of evidence of payment of such Transfer Tax to the applicable Governmental Authority. If Buyer or Seller claims an exemption from any Transfer Taxes of the type described in this Section 3.07 that Seller or Buyer is required to collect, then Buyer or Seller, as applicable, will deliver valid exemption certificates to Seller or Buyer, as applicable, at the Closing.

Section 3.08 Prorations . Personal property, real estate, ad valorem, use and intangible Taxes and assessments (other than Transfer Taxes), common area maintenance charges, utility expenses, and annual installments of special assessments payable therewith, utility charges and rental payments with respect to the Purchased Assets and the Facility, including any rental payments under the Master Lease (collectively, “ Charges ”), shall be prorated on a per diem basis and apportioned on a calendar year basis between Seller, on the one hand, and Buyer, on the other hand, as of the Closing Date. Seller shall be liable for that portion of such Charges relating to, or arising in respect of, periods on or prior to the Closing Date, and Buyer shall be liable for that portion of such Charges relating to, or arising in respect of, any period after the Closing Date. Except as expressly set forth in this Agreement, the Closing shall not affect the FCA Incentives or the Seller Incentives, as applicable, and such Incentives shall remain with FCA, Buyer or Seller, as applicable. All amounts to be prorated will, to the extent reasonably feasible, be reflected on the Closing Statement. To the extent the amounts of any such proratable items are not finally known as of the Closing, appropriate settlement will made within 30 days after the amount of any such item is finally known; provided, that such amount may be set off against other amounts due or payable under this Agreement. For the avoidance of doubt, Buyer will be responsible for all Charges under the Sublease until the Closing Date and termination of the Sublease.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller that the statements contained this Article IV are true, correct and complete as of the date hereof (except to the extent expressly made as of an earlier date, in which case of such date) as follows:

Section 4.01 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 as is presently conducted.

Section 4.02 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 a legal, valid and binding Contractual Obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity. Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement and the other Transaction Documents. The execution, delivery and performance of this Agreement have been duly authorized by Buyer.

Section 4.03 Non-contravention . The execution and delivery by Buyer of this Agreement, the performance by Buyer of its obligations hereunder, and the consummation of the transactions contemplated hereby with respect to Buyer, shall not (a) contravene the Organizational Documents of Buyer, (b) require Buyer to make any declaration, filing or registration with, or provide any notice to, any Governmental Authority or obtain any Governmental Authorization, or (c) require any consent, approval or authorization of, declaration, filing or registration with, or notice to, any other Person.

Section 4.04 Brokers ’ Fees . Buyer has no Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Seller could become liable.

Section 4.05 Acknowledgements of Buyer . Buyer has conducted its own independent investigation and has been provided with and has evaluated documents and information as it has deemed necessary to enable it to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement and has relied solely upon its own investigation and the express representations and warranties set forth in this Agreement (including the related portions of the Disclosure Letter). Buyer acknowledges and agrees that, except as expressly set forth in the representations and warranties of Seller set forth in Article V (including the related portions of the Disclosure Letter), Seller makes no other representation or warranty with respect to the Business, the Purchased Assets or the Assumed Liabilities.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

In order to induce Buyer to enter into and perform this Agreement and to consummate the transactions contemplated hereunder, Seller represents and warrants to Buyer that, except as disclosed by Seller in the Disclosure Letter delivered on the date hereof, as follows; provided that any exception set forth in a section or subsection of the Disclosure Letter shall be deemed to be disclosed for purposes of, and shall qualify, the corresponding section or subsection of this Agreement:

Section 5.01 Organization and Good Standing . Each of Navistar and International Truck is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the full corporate right, power and authority to own, lease and operate all of its properties and assets and carry out the Business as it is presently conducted. Each of Navistar and International Truck is qualified to do business as a foreign Person in Alabama. The Data Room contains true and complete copies of the Organizational Documents of each of Navistar and International Truck as currently in effect. No other Affiliate of Seller has an interest in or title to the Business, the Facility or the Purchased Assets.

Section 5.02 Due Authorization; No Conflict .

(a) Seller has the full corporate power and authority to execute and deliver this Agreement and each of the Transaction Documents to which it is a party, and all other agreements, certificates and documents executed or to be executed in connection herewith, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Seller of the Transaction Documents and all other agreements, certificates and documents executed or to be executed in connection herewith have been duly authorized by all necessary corporate action, and no additional authorization on the part of Seller is necessary in connection with the consummation of the transactions contemplated by this Agreement.

(b) This Agreement has been duly executed and delivered by Seller. The Transaction Documents and all other agreements, certificates and documents executed or to be executed by Seller in connection herewith, constitute or, when executed and delivered, shall constitute a legal, valid and binding Contractual Obligation of Seller, enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity.

(c) The execution and delivery by Seller of this Agreement and the other the Transaction Documents to which it is a Party, the performance by Seller of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby, shall not (with or without notice or lapse of time): (i) violate, conflict with, result in a breach of the terms or conditions of, or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights under, (A) any Acquired Contract, (B) any other Contractual Obligation to which the Purchased Assets is subject or by which Seller is bound, or (C) any Law, Governmental Authorization or Governmental Order applicable to Seller, the Purchased Assets, the Facility, the Business or the Assumed Liabilities; (ii) contravene the Organizational Documents of Seller or any of its Affiliates; (iii) require Seller to make any declaration, filing or registration with, or provide any notice to, any Governmental Authority or obtain any Governmental Authorization; (iv) require any consent, approval or authorization of, declaration, filing or registration with, or notice to, any other Person; (v) result in the creation or imposition of any Encumbrance upon any of the Purchased Assets; or (vi) cause Buyer to have Liability for any Tax other than Transfer Taxes.

Section 5.03 Brokers ’ Fees . Neither Seller nor any of its Affiliates has any Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by any of the Transaction Documents.

Section 5.04 Title to and Sufficiency of Assets .

(a) Seller has good and transferable title to all of the Purchased Assets and at Closing the Purchased Assets will be free and clear of all Encumbrances, other than Permitted Encumbrances.

(b) All tangible assets included in the Purchased Assets are located at the Facility. The tangible assets included in the Purchased Assets are in good operating condition and repair and free from material defects, reasonable wear and tear excepted, have been maintained by Seller in accordance with standard industry practice of the Business.

(c) The Purchased Assets are sufficient in all material respects to carry on the operations of the Business as now conducted by Seller. Except for the Purchased Assets and the Business Employees (other than the Excluded Assets), there are no other assets, agreements, rights or licenses of any kind or nature whatsoever material to Seller in the operation of the Business as is presently conducted. None of Seller’s Affiliates conducts or operates any part of the Business or owns or has possession of any assets necessary for conducting or operating the Business as is presently conducted.

Section 5.05 Financial Statements . Attached hereto as Section 5.05 of the Disclosure Letter are true and complete copies of the unaudited consolidated balance sheet and statements of income of the Business as of and for the fiscal years ended October 31, 2015, October 31, 2016, and October 31, 2017 (the “ Financial Statements ”). 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 Facility as of the respective dates thereof and the results of operations for the periods indicated.

Section 5.06 Absence of Certain Changes . Except as expressly contemplated by this Agreement, since October 31, 2017, the Business and the Facility have been conducted in the Ordinary Course of Business, and with respect to the Business, the Facility, and the Purchased Assets, there has not been:

(a) any event, development or circumstance that has had or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect;

(b) any material damage, destruction or other casualty loss (whether or not covered by insurance) affecting the Business, the Facility, or the Purchased Assets;

(c) any amendment or modification of the Organizational Documents of Seller or the Employee Benefit Plans which has any material effect on the Business;

(d) any creation or other incurrence of any Encumbrance upon any Purchased Asset, other than Permitted Encumbrances;

(e) any sale, transfer, lease or other disposition of any asset of Seller, except for Inventory sold in the Ordinary Course of Business;

(f) any capital expenditure, or commitments for capital expenditures, by Seller in an amount in excess of $250,000 in the aggregate;

(g) any cancellation, compromise, waiver, release, settlement or forgiveness of any right or claim (or series of related rights or claims) or any Debt owed to Seller, in any case involving more than $100,000;

(h) any increase in the compensation or other remuneration payable or paid, whether conditionally or otherwise, or in any benefits granted under any Employee Benefit Plan, to any Business Employee or consultant or agent of Seller who is associated with the Business and whose annual base compensation exceeds $50,000 (or would exceed such amount after such increase);

(i) any change in the accounting principles and practices of Seller from those applied in the preparation of the Financial Statements or the Inventory Summary;

(j) any acquisition of any assets (whether through capital spending or otherwise) outside the Ordinary Course of Business;

(k) any material modification or termination of any Acquired Contract or any term thereof or any Permits or other authorization of Seller issued by a Governmental Authority;

(l) adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law; or

(m) any Contractual Obligation to do any of the foregoing, or any action or omission that would result in any of the foregoing.

Section 5.07 Compliance with Laws; Permits .

(a) Seller is not in breach or violation of, or default under any Law applicable to the Business, the Facility, or any Purchased Asset, and has not been in breach or violation of, or default under any such Law.

(b) Solely with respect to the Business or the Facility, Seller has not made, nor has Seller directed any of its directors, officers, employees, or agents (or, to the Knowledge of Seller, any Representatives or other persons acting on the express authority of Seller) to make, directly or indirectly, overtly or covertly, any contribution, gift, bribe, payoff, influence payment, or kickback to any Person (including, in the case of an individual, any family members of such Person and in the case of an entity, any Affiliates of such entity), regardless of form, whether in money, property or services, in violation of any Law.

(c) With respect to the Business, the Facility, and the Purchased Assets, Seller (i) does not have any reporting obligations pursuant to any settlement agreement entered into with any Governmental Authority, (ii) is not and has not been, and has not received written notice that it is or has been, the subject of any inspection, investigation, survey, audit, monitoring or other form of review by any Governmental Authority, professional review organization, accrediting organization or certifying agency, (iii) has not been a defendant in any qui tam or False Claims Act litigation, or (iv) has not been served with or received any written search

warrant, subpoena (other than those related to actions against third parties), civil investigative demand or contact letter from any Governmental Authority. For purposes hereof, a “contact letter” shall mean a letter from a Governmental Authority notifying Seller of a potential violation under a Law which allows Seller an opportunity to respond prior to the Governmental Authority taking further action.

(d) All Permits required for Seller to conduct the Business as currently conducted or for the ownership and use of the Purchased Assets and use of the Facility have been obtained by Seller and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 5.07(d) of the Disclosure Letter lists all current Permits issued to Seller that are necessary for the conduct of the Business as currently conducted or the ownership or use of the Facility and the Purchased Assets (collectively, the “ Scheduled Permits ”), including the names of the Permits, issuer of such Permits, and their respective dates of issuance and expiration, as well as any consents, notices, or approvals required for the Scheduled Permits to be transferred to Buyer in connection with Closing (the “ Permit Consents ”). Seller is not in breach or violation of and there is no pending or, to the Knowledge of Seller, threatened Proceeding with respect to, any of the Scheduled Permits. Seller has not received any written notice of any Proceeding pending or recommended by any Governmental Authority having jurisdiction over the Scheduled Permits to revoke, withdraw or suspend any such Permit. To the Knowledge of Seller, Seller is not under investigation with respect to any violation of, or any obligation to take remedial action under, any applicable Laws or Scheduled Permits. The Data Room contains true and complete copies of all Scheduled Permits. Except as set forth in Section 5.07(d) of the Disclosure Letter, all Scheduled Permits are assignable to Buyer at or prior to Closing.

Section 5.08 Tax Matters . In each case, in connection with, in any material respect, the Business, the Facility, or the Purchased Assets:

(a) Seller has filed all federal, state, county and local Tax Returns which are required to be filed prior to the date of this Agreement and has timely paid all Taxes which have become due and payable (whether or not shown or required to be shown on any Tax Return).

(b) No event has occurred which could impose on Buyer any successor or transferee Liability for any Taxes in respect of Seller.

(c) All Taxes and other monies required to be withheld by Seller (including from employees for income Taxes and social security and other payroll Taxes) have been collected or withheld, and either timely paid to the respective taxing authorities, set aside in accounts for such purpose, or accrued, reserved against and entered upon the books of Seller and Seller has complied with all information reporting (including Internal Revenue Service Forms W-2 and 1099) and backup withholding requirements, including maintenance of required records with respect thereto.

(d) There are no current (and Seller has not received written notice of any proposed) examinations, audits, actions, Proceedings, investigations, disputes, assessments or claims by or of a Governmental Authority with respect to any Taxes or Tax Return.

(e) No examination, audits, actions, Proceedings, investigations, disputes, assessments or claims with respect to any Tax Return is currently in progress and no Governmental Authority is asserting or, to the Knowledge of Seller, threatening to assert or expected to assert against Seller any deficiency, proposed deficiency or claim for additional Taxes or any adjustment thereof with respect to any period for which a Tax Return has been filed, for which Tax Returns have not yet been filed or for which Taxes are not yet due and payable. No claim has ever been made by any Governmental Authority in a jurisdiction where Seller does not file Tax Returns that Seller is or may be subject to taxation by that jurisdiction.

(f) There are no Encumbrances for Taxes (except for Permitted Encumbrances) on any of the Purchased Assets, and no basis exists for the imposition of any such Encumbrance.

(g) Seller is not and has not been a party to any “listed transaction,” as defined in Code § 6707A(c)(2) and Treasury Regulation § 1.6011-4(b)(2).

Section 5.09 Real Property .

(a) There is no real property other than the Facility used by or in connection with the Business. The Facility (other than the Subleased Portion) has been sufficient for the ordinary and customary operation of the Business as currently conducted by Seller.

(b) The Master Lease and the Sublease are the only leases or subleases (oral or written) for such parcels that make up the Facility that are currently in effect. The Data Room contains a true, correct and complete copy of the Master Lease and Sublease, and such Master Lease and Sublease have not been further supplemented or amended. Other than pursuant to the Sublease, Seller has valid and subsisting undivided leasehold interests in the Facility, free and clear of all Encumbrances, other than Permitted Encumbrances. Other than Permitted Encumbrances or pursuant to the Sublease, Seller has not conveyed, assigned or encumbered its interest in the Facility or any portion thereof. The Master Lease is valid, subsisting, effective and enforceable against Seller and each of the other parties thereto, in accordance with its respective terms (except as may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws relating to creditors rights generally and the availability of equitable remedies). Neither Seller nor, to Seller’s Knowledge, the Master Lease Landlord, is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, the Master Lease or Sublease. To Seller’s Knowledge, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under the Master Lease or Sublease or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder.

(c) There is (i) no pending or, to the Knowledge of Seller, proposed public improvement that may involve the creation or imposition of any Encumbrance on any lot, parcel or tract of land constituting the Facility; (ii) no pending or, to the Knowledge of Seller, threatened eminent domain condemnation or federal forfeiture with respect to all or any portion of the Facility; (iii) to Seller’s Knowledge, no contemplated sale of all or any portion of the Facility in lieu of condemnation; and (iv) to Seller’s Knowledge, no other proceeding pending or threatened which relates to the Facility that would reasonably be expected to adversely affect the current use or possession of the Facility.

(d) The Facility has adequate rights of access to dedicated public ways and is supplied with adequate and sufficient water, electricity, and gas, telephone and sewer, sanitary sewer and storm drain facilities, in each case to the extent reasonably necessary for the operation of the Business currently conducted therein.

(e) The buildings, structures, fixtures, rail line improvements, building systems and equipment (including the heating, ventilation, air conditioning, plumbing, electrical, sewer and storm water systems and facilities included therein), and all components thereof (including the roof, foundation and structural elements), included in the Facility (the “ Improvements ”) are in satisfactory operating condition and repair for the operation of the Business as currently conducted (ordinary wear and tear excepted), and are sufficient for the ordinary and customary operation of the Business at the Facility. The Improvements have not suffered any material damage by fire or other casualty loss.

(f) The Facility is not subject to any property or real estate Taxes or assessments, and is not located within, or subject to, a road utility district, municipal utility district, or other similar quasi-governmental district which imposes Taxes or assessments, nor is the Facility a part of any other private association which imposes dues, assessments, or allocates operating or other costs to the Facility. Seller has not received notice of any material non-recurring Taxes or assessments with respect to the Facility, nor to the Knowledge of Seller, that any thereof is under consideration by any Governmental Authority.

(g) Seller is not indebted to any contractor, laborer, mechanic, materialman, architect, engineer or any other Person for work, labor or services performed or rendered, or for materials supplied or furnished, in connection with the Facility for which any such Person could claim a lien or other Encumbrance against the Facility or any other Purchased Assets.

(h) Other than Permitted Encumbrances, no commitments have been made to any Governmental Authority or to any other organization, group or individual that would impose an obligation upon any owner of a lot, parcel or tract of land constituting the Facility to make any contribution or dedication of money or land (including but not limited to any rights of access or reciprocal easement agreements) or to construct, install or maintain any improvements upon or in the vicinity of such lot, parcel or tract of land.

(i) There are no Contracts of sale or outstanding options, rights of first refusal or similar rights granted to any third party by Seller to purchase any lot, parcel or tract included in the Facility, or any portion thereof or any of Seller’s interest therein.

Section 5.10 Intellectual Property and Software .

(a) The Purchased IP Assets together with the Excluded IP Assets comprise all Intellectual Property used by Seller in connection with the conduct of the Business and the Facility, other than Commercial Software.

(b) There are no Intellectual Property Registrations related to Purchased IP Assets.

(c) Seller is the sole and exclusive legal and beneficial owner of all right, title and interest in and to the Purchased IP Assets, and has the valid right to use all other Intellectual Property used in or necessary for the conduct of the Business as currently conducted, in each case, free and clear of Encumbrances other than Permitted Encumbrances.

(d) The consummation of the transactions contemplated hereunder will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, Buyer’s right to own, use or hold for use any Intellectual Property as owned, used or held for use in the conduct of the Business as currently conducted.

(e) The conduct of the Business and the operation of the Facility as currently conducted and operated, and the Seller Intellectual Property and Intellectual Property licensed under the Intellectual Property Agreements as currently owned, licensed or used by Seller, to the Knowledge of Seller, have not infringed, misappropriated, diluted or otherwise violated, and have not, do not and will not infringe, dilute, misappropriate or otherwise violate, the Intellectual Property of any Person. During the past five years, neither Seller nor any of its directors, officers, or agents have received any written charge, complaint, claim, demand, or notice alleging any such infringement, misappropriation, dilution or other violation of Intellectual Property of any Person with respect to the Business, the Purchased Assets, or the Facility. No third party has challenged, or to the Knowledge of Seller, infringed upon, misappropriated or violated any Purchased IP Assets.

(f) No settlements, consents, covenant not to sue or nonassertion assurances or releases have been entered into by Seller or to which Seller is bound that adversely affect Seller’s right to own or use Purchased IP Assets and Seller has not obligated itself to assign, license or otherwise transfer any rights with respect to the Purchased IP Assets to any third party.

(g) Seller has taken all steps reasonable under the circumstances to protect and maintain the Purchased IP Assets, including maintaining and preserving the confidentiality of all trade secrets and other non-public information related to the Business including the Business Confidential Information. Seller has not disclosed any such trade secrets and other non-public information including the Business Confidential Information to any Person other than pursuant to a written, valid and enforceable confidentiality agreement providing for the non-disclosure and non-use of such trade secrets and other non-public information including the Business Confidential Information.

(h) During the three years preceding the date of this Agreement, there has been no material virus, failure, or breakdown of the computer systems, networks, hardware or software included in the Purchased Assets (collectively, the “ IT Systems ”), or any other adverse event affecting the IT Systems that has caused a material disruption, degradation or interruption (A) of the use of the IT Systems, or (B) of or to the conduct of the Business, and there has been no unauthorized intrusion or use or breach of security of the IT Systems.

Section 5.11 Acquired Contracts .

(a) Seller has delivered or made available to Buyer in the Data Room a true and complete copy of each Acquired Contract, and all other Contracts that are material to the Business, the Facility, or the Acquired Assets, together with any amendments thereto.

(b) The Acquired Contracts constitute all Contracts that are necessary to carry on the operations of the Business as now conducted by Seller, and for the continued occupancy and use of Facility (other than the Subleased Portion) and ownership and use of the Acquired Assets after the Closing, in substantially the same manner as conducted prior to the Closing. Subject to the Contract Consents (as defined below), all Acquired Contracts are assignable to Buyer.

(c) Each Acquired Contract is in full force and effect, is in compliance with all applicable Laws and constitutes a valid, legal, binding obligation of Seller and, to the Knowledge of Seller, the other parties thereto, subject to (i) Laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of Laws governing specific performance, injunctive relief and other equitable remedies. None of Seller or, to Seller’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Acquired Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Acquired Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. The Data Room contains complete and correct copies of each Acquired Contract (including all modifications, amendments, exhibits, schedules and supplements thereto and waivers thereunder). There are no material disputes pending or, to the Company’s Knowledge, threatened under any Acquired Contract. Set forth on Section 5.11(c) of the Disclosure Letter are any consents, notices, or approvals required at any time for the Acquired Contracts to be assigned and transferred to Buyer under the terms of this Agreement (the “ Contract Consents ”).

Section 5.12 Litigation . Since October 31, 2015, there has not been any Proceeding pending, or to the Knowledge of Seller threatened against Seller or any of its Affiliates, in connection with or affecting any of the Purchased Assets, the Facility, or the Business. In addition, there is no Proceeding pending against, or to the Knowledge of Seller, threatened against, or affecting any of Seller or its properties or assets challenges or seeks to restrain, enjoin, alter, prevent or materially delay the transactions contemplated hereby or in any of the other Transaction Documents. Since October 31, 2015, neither Seller nor its Affiliates has been subject to any Governmental Order affecting any of the Business, the Facility, the Purchased Assets or the transactions contemplated hereby or in any of the other Transaction Documents.

Section 5.13 Employees and Independent Contractors .

(a) Section 5.13(a ) of the Disclosure Letter: (i) lists all Business Employees and independent contractors currently providing services to the Business; (ii) lists each Business Employee’s or independent contractor’s current rate of compensation (including, for any Business Employee or independent contractor who are leased or on temporary status, the rates

Seller pays for such Business Employees or independent contractors); (iii) lists each Business Employee’s or independent contractor’s date of hire and any prior periods of employment with Seller; (iv) identifies each such Business Employee who works, on average, fewer than 20 hours per week; (v) names any Business Employee who is absent from work due to a work-related injury, is receiving workers’ compensation or is receiving disability compensation; (vi) indicates the Business Employee or independent contractor who are leased or on temporary status, and any Contracts relating to such lease or temporary arrangement; and (vii) sets forth, for Business Employees who have terminated their employment since January 1, 2016, the reasons for their terminations. There are no unpaid wages, bonuses or commissions owed to any Business Employee or independent contractors providing services to the Business. Except as set forth in Section 5.13(a ) of the Disclosure Letter, all Business Employees are terminable at-will, with or without notice or cause, and there are no outstanding agreements or arrangements with respect to severance payments to current or former Business Employees. The Data Room contains true and complete copies of (i) all employment, consulting, sales, commissions, advertising or marketing Contracts with all Business Employees and independent contractors providing services to the Business since January 1, 2016, which provide for annual payments in excess of $50,000, excluding bonuses and commissions, and (ii) any Contracts under which the Company has leased Business Employees since January 1, 2016.

(b) Except as set forth in Section 5.13(b ) of the Disclosure Letter, with respect to the Business or Facility, Seller has not, in the last five years: (i) experienced any organized slowdown, organized work interruption, strike or work stoppage by its employees; (ii) been a party to, or obligated by, any collective bargaining agreement, neutrality or card-check recognition agreement, or other agreement or understanding with a labor union or labor organization; (iii) been obligated under any Contract or otherwise to recognize or bargain with any labor organization or union on behalf of any employees; (iv) become aware that any Business Employee is represented by any union or labor organization for the purposes of collective bargaining; (v) received any request or demand from any union, labor organization or group of employees that such union, labor organization or group be recognized as the collective bargaining representative of any Business Employee; or (vi) received any notice of any claim of unfair labor practices with respect to any Business Employee.

(c) Within the last 12 months, Seller has not incurred any Liability or obligation under the WARN Act in connection with the Facility or the Business that remains unsatisfied, and no terminations prior to the Closing Date shall result in unsatisfied Liability or obligation under the WARN Act. There has not been a “plant closing” or “mass layoff”, as defined by the WARN Act, requiring notice to employees in the event of a closing or layoff, within 90 days prior to the date of this Agreement.

(d) Except as set forth in Section 5.13(d ) of the Disclosure Letter, neither Seller nor any of its managers, officers, directors, or employees, within the last 12 months, has been charged, or threatened with the charge of, any unfair labor practice with respect to the Business. To the Seller’s Knowledge, Seller is in compliance with all applicable Laws concerning the employer-employee relationship and with all agreements relating to the employment of the Business Employees, including applicable wage and hour Laws, workers’ compensation Laws, occupational safety Laws, worker eligibility Laws, anti-discrimination Laws, unemployment Laws and social security Laws.

Section 5.14 Employee Benefits .

(a) Neither the Seller nor any member of the Controlled Group (as defined below) currently has or at any time in the past has had, solely with respect to the Transferred Employees, an obligation to contribute to a “defined benefit plan” as defined in Section 3(35) of ERISA, a pension plan subject to the funding standards of Section 302 of ERISA or Section 412 of the Code, a “multiemployer plan” as defined in Section 3(37) of ERISA or Section 414(f) of the Code or a “multiple employer plan” within the meaning of Section 210(a) of ERISA or Section 413(c) of the Code. For purposes of this Agreement, “Controlled Group” means any trade or business (whether or not incorporated) (x) under common control within the meaning of Section 4001(b)(1) of ERISA with the Seller or (y) which together with the Seller is treated as a single employer under Section 414(t) of the Code. With respect to each group health plan benefiting any current or former employee of the Seller or any member of the Controlled Group that is subject to Section 4980B of the Code, the Seller and the members of the Controlled Group have all complied with the continuation coverage requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA.

(b) The consummation of the transactions contemplated by this Agreement will not give rise to any Liability for any employee benefits or other compensation, including Liability for severance pay, unemployment compensation, termination pay or withdrawal Liability, or accelerate the time of payment or vesting or increase the amount of compensation or benefits due to any Covered Employee.

Section 5.15 Environmental Matters . Except as disclosed on Section 5.15 of the Disclosure Letter:

(a) Seller has not: (i) entered into or been subject to any Governmental Order relating to the Facility or the Business pursuant to Environmental Laws or relating to any Environmental Condition; (ii) received any written request for information, notice, demand letter, administrative inquiry, or formal or informal complaint or claim with respect to any Environmental Condition (including under any citizen suit provision of any Environmental Law) relating to the Facility or the Business; or (iii) been the subject of or, to the Knowledge of Seller, threatened with, any governmental enforcement action or third party claim relating to the Facility or the Business under any Environmental Law, and Seller does not have any reason to believe that any of the foregoing is reasonably likely to be forthcoming.

(b) Seller is in material compliance with all Environmental Laws relating to the operation of the Business at the Facility.

(c) Seller has obtained all Permits required for the operation of the Business at the Facility by any Environmental Law, and is currently in material compliance with all of the terms, conditions and requirements of such Permits, a complete list of which is set forth in Section 5.15(c ) of the Disclosure Letter, and, to the Knowledge of Seller, there are no pending or threatened Proceedings seeking to revoke, cancel or suspend any such Permit.

(d) Seller has not generated, manufactured, refined, transported, treated, stored, handled, disposed, transferred, produced, recycled, or processed any Hazardous Substances at or from the Facility except, in each case, in compliance with all Environmental Laws or in any manner as could result in the imposition of any Environmental Liability, and there has been no Release or Threat of Release of any Hazardous Substances by the Business at or in the vicinity of the Facility (other than the Subleased Portion while subleased by Buyer).

(e) Seller has not received notice of, and Seller has no Knowledge of, any Environmental Claim in connection with the Business, the Facility or any off-site location or locations to which Seller transported or arranged for the transportation, disposal, treatment or storage of Hazardous Substances in the conduct of the Business.

(f) To Seller’s Knowledge, transfer of the lease for the Facility from Seller to Buyer will not trigger any notice obligations pursuant to Environmental Law.

(g) Seller has not used any underground storage tanks requiring a permit under Environmental Law in connection with the Business at the Facility, except the two 10,000 gallon gasoline and diesel tanks that are needed to support Facility operations.

(h) To Seller’s Knowledge, Seller is not currently required or obligated to make any capital or other expenditures in excess of $10,000 for the Business to remain in compliance with any Environmental Law at the Facility.

(i) The Data Room contains true and correct copies of all material reports or tests with respect to compliance of the Facility or the Business with the Environmental Laws or the presence of Hazardous Substances at the Facility that are in the possession, custody or control of Seller or any of its respective Affiliates or Representatives.

(j) Seller has not at any time produced, manufactured, sold or otherwise placed in commerce any product containing asbestos or asbestos-containing material at the Facility or in connection with the Business.

Section 5.16 Inventory . Section 5.16 of the Disclosure Letter contains a true and correct summary of the Inventory as of the close of business on the Business Day immediately preceding the date of this Agreement (the “ Inventory Summary ”), broken down by categories of raw materials, work-in-process and finished goods and providing the reserves relating thereto and the book value of each item. The Inventory are of a quality and quantity useable and saleable in the normal and the Ordinary Course of Business and not obsolete, except as set forth in the Inventory Summary. All work in-process and finished goods in the Inventory have been produced in compliance with Seller’s applicable quality control procedures. No Inventory is held in consignment and Seller is not under any Liability with respect to accepting returns of items of Inventory in the possession of its customers other than in the Ordinary Course of Business. All Inventory was produced or acquired by Seller in bona fide, arms-length transactions entered into in the Ordinary Course of Business.

Section 5.17 Affiliate Transactions . Neither Seller nor its Affiliates is a creditor, debtor, customer, distributor, supplier or vendor of, or service provider to, the Business, or is the counter-party to any Acquired Contract.

Section 5.18 Books and Records . The books and other records of Seller relating to the Business or the Purchased Assets, all of which have been made available to Buyer in the Data Room, have been maintained in accordance with commercially reasonable business practices.

Section 5.19 Insurance . Section 5.19 of the Disclosure Letter sets forth a complete and correct list of all insurance policies of any kind currently in force with respect to the Facility, the Business or the Purchased Assets, other than any insurance policies maintained by Buyer (the “ Insurance Policies ”). Section 5.19 of the Disclosure Letter also sets forth for each Insurance Policy, the type of coverage, the name of the insureds, the insurer, the premium, the expiration date, the period to which it relates, the deductibles and loss retention amounts and the amounts of coverage. The Data Room contains true and complete copies of all of the Insurance Policies. None of the insurers under any of the Insurance Policies has rejected the defense or coverage of any claim relating to the Business, the Facility, or to the Purchased Assets and purported to be covered by such insurer. Seller does not have Liability for any retrospective premium adjustments under any present or past insurance policies. Section 5.19 of the Disclosure Letter also lists all claims for insured losses relating to the Business, the Facility or the Purchased Assets filed by Seller in the preceding three years and all insurance loss runs in respect of the Business, the Facility, and the Purchased Assets for the past three policy years.

Section 5.20 Warranty Claims . As of the date hereof, there are no outstanding claims against Seller by any customer arising out of or in connection with any alleged defect in service, quality, materials, workmanship, fitness, or performance arising out of any products or services provided by Seller in connection with the Business, or any other non-conformity with contractual commitments with customers or express or implied customer warranties in connection with the Business. The Data Room contains true and complete copies of Seller’s standard forms of warranty that it provides to its customers in connection with the Business (other than any implied warranties under applicable Law) (the “ Standard Warranties ”). Seller has not provided warranties to its customers in connection with the Business that differ in any material respects from the Standard Warranties.

Section 5.21 Customer List; Significant Customers and Suppliers . Section 5.21 of the Disclosure Letter (a) sets forth an accurate and complete list of the customers of the Business who have received goods or service provided by Seller during the 2015, 2016 and 2017 calendar years (the “ Customer List ”), and (b) the 10 largest customers and 10 largest suppliers of the Business (measured by value of net sales or purchases, respectively) during each of the 2015, 2016 and 2017 calendar years (the “ Material Customers ” and “ Material Suppliers ”). None of the Material Customers or Material Suppliers has terminated, canceled or made any material modification in, its business relationship with Seller or threatened in writing to take any of the foregoing actions. Seller has not received written notice from any Material Customer or Material Supplier, and Seller has no Knowledge that any Material Customer or Material Supplier has any intent to cease doing business with Buyer, or intent to materially decrease the volume or value of its business with Buyer after, or as a result of, the consummation of the transactions contemplated hereby.

Section 5.22 Governmental Incentives . Section 5.22 of the Disclosure Letter contains a complete description of all Incentives under the Incentive Agreements with respect to the Facility and the Business, and sets forth (including any applicable dollar amounts): (a) all

Incentives under the Incentive Agreements granted to Seller or, to Seller’s Knowledge, any other Person since September 28, 2011 and (b) any Incentive Clawbacks or threats or claims with respect to Incentive Clawbacks during the period beginning on September 28, 2011 and ending on the date of this Agreement, and the reason for such Incentive Clawbacks or threats or claims thereof. There are no Contracts, Governmental Authorizations, or Governmental Orders with respect to Incentives or Incentive Clawbacks other than the Incentive Agreements and the Incentive Allocation Agreement. All information provided by Seller to any Governmental Authority in connection with any Incentives (including in any applications or subsequent reporting) was true and complete in all respects at the time when made to the Governmental Authority, and Seller has complied in all material respects with any reporting obligations in connection with the Incentives. Seller has no Knowledge of any pending or threatened Incentive Clawbacks.

ARTICLE VI

COVENANTS AND AGREEMENTS

Section 6.01 Buyer ’ s Investigation .

(a) Prior to the Closing Date, Buyer shall be entitled, upon reasonable request and at its own expense, through its employees and Representatives, including, its attorneys, to perform a due diligence investigation of the Business, Purchased Assets and the Facility. Without limiting the foregoing, Buyer and its Representatives shall have the right to inspect the machinery and equipment located at the Facility included in the Purchased Assets. Buyer shall be permitted reasonable access to Seller’s premises, the Facility, books and records of Seller, including, the opportunity to observe and verify the Purchased Assets. Any such investigation and review shall be conducted during normal business hours at reasonable times and under reasonable circumstances. Buyer agrees that any such investigation or review shall not unreasonably interfere with the ongoing operations of Seller. Seller shall cooperate with all reasonable requests and shall use reasonable efforts to cause its Representatives to cooperate with such review and investigation.

(b) Prior to the Closing Date, Buyer shall not, without Seller’s prior written consent (which consent will not be unreasonably withheld, conditioned or delayed) meet with customers listed on the Customer List. Seller shall use commercially reasonable efforts to provide Buyer with reasonable access to customers on the Customer List prior to the Closing Date. Prior to the Closing Date, Buyer shall have reasonable access, during mutually agreeable times with Seller, to meet with Business Employees in order to introduce such employees to Buyer, complete paperwork for background checks and provide employee benefits orientation, in a manner to minimize interference with the performance of such Business Employees’ duties to Seller.

Section 6.02 Consents of Third Parties; Governmental Authorizations . Seller and Buyer shall use commercially reasonable efforts to obtain, before the Closing Date: (a) all Contract Consents and (b) all Governmental Authorizations, all other declarations, filings or registrations with, or notices to, any Governmental Authority and all consents, approvals or authorizations of, declarations, filings or registrations with, or notices to, any other Person, all as set forth in Section 6.02 of the Disclosure Letter (collectively (a) and (b) are the “ Material

Consents ”), in either case, in form and substance reasonably satisfactory to Buyer. Permit Consents shall be obtained in accordance with the terms set forth in Section 5.07(d) of the Disclosure Letter. Without limiting the foregoing, Seller shall take any action reasonably requested by Buyer in order to transfer Seller’s Title V air emissions stationary source operating permit (Permit No. 701-0058). Effective as of the Closing Date, Buyer shall be solely responsible for all obligations under such permit as they relate to any pollutant emissions on or after Closing, while Seller shall retain responsibility and liability for all permit obligations as they relate to any such emissions prior to the Closing Date. If a Material Consent is not obtained at or prior to Closing, Seller shall use commercially reasonable efforts to obtain such Material Consent as soon as practicable after Closing; provided, that all Material Consents must be obtained within 30 days after Closing, unless otherwise set forth in this Agreement.

Section 6.03 Operations of the Business Prior to the Closing . During the period prior to the Closing Date, except as contemplated by this Agreement, Seller shall operate and carry on the Business only in the Ordinary Course of Business. Consistent with the foregoing, Seller shall (a) keep and maintain the Facility and the Purchased Assets in good operating condition and repair subject to normal wear and tear; (b) use its commercially reasonable efforts consistent with good business practice to maintain the Business intact and to preserve the goodwill of the suppliers, licensors, employees, customers, distributors and others having business relations with Seller in connection with the Business; (c) maintain (except for expiration due to lapse of time) all Acquired Contracts in effect without change, except those Acquired Contracts which expire or terminate by their terms or as otherwise expressly provided herein; (d) comply in all material respects with the provisions of all Laws applicable to Seller in connection with the Purchased Assets, the Facility, and the conduct of the Business; (e) not cancel, release, waive or compromise any Debt related to the Business that will be assumed at the Closing by Buyer in its favor other than in connection with returns for credit or replacement in the Ordinary Course of Business; (f) not alter the rate or basis of compensation of any of its Business Employees other than in the Ordinary Course of Business; (g) not enter into any new material Contract; (h) not sell, lease or otherwise dispose of any properties or assets associated with the Business, except in the Ordinary Course of Business or Excluded Assets; (i) not enter into any Contractual Obligation with any Affiliate that is related to the Business; and (j) not take or omit to take any action that would cause the representations and warranties in Article V to be untrue at, or as of any time prior to, the Closing Date.

Section 6.04 Notification of Certain Matters . From the date of this Agreement until the Closing Date, Seller shall give Buyer prompt written notice upon becoming aware of any material development affecting the Purchased Assets, the Facility, the Assumed Liabilities, or any event or circumstance that could reasonably be expected to result in a breach of, or inaccuracy in, any representation or warranty contained in Article V ; provided, that if such material development occurs after the date of this Agreement, such disclosure shall be deemed to qualify the applicable representation and warranty of Seller set forth in this Agreement, and shall not be deemed to be a breach of, or inaccuracy in, any of the representations and warranties of Seller set forth in this Agreement. In no event shall Seller be required to indemnify Buyer for a material development that occurs after the date of this Agreement and is disclosed to Buyer pursuant to this Section 6.04 .

Section 6.05 No Solicitation . From the date of this Agreement until the earlier of the Closing Date or the date of the termination of this Agreement pursuant to Article VIII , Seller shall not, nor shall it authorize or permit any officer, director, employee, investment banker, attorney or other adviser or Representative of Seller to: (a) solicit, initiate or encourage the submission of, any Acquisition Proposal, (b) enter into any agreement with respect to any Acquisition Proposal, or (c) participate in any discussions or negotiations regarding, or furnish to any Person any information for the purpose of facilitating the making of, or take any other action to facilitate any inquiries or the making of, any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal. Seller shall promptly advise Buyer of any Acquisition Proposal and any inquiries with respect to any Acquisition Proposal.

Section 6.06 Satisfaction of Closing Conditions . Seller and Buyer shall, and shall cause their respective Representatives to, use commercially reasonable efforts to take all of the actions necessary to consummate the transactions hereunder including delivering all the various certificates, documents and instruments described in Section 7.01 and Section 7.02 hereto, as the case may be.

Section 6.07 Further Assurances; Incentive Assignment .

(a) Seller agrees that, at any time and from time to time on and after the Closing Date, it will, upon the reasonable request of Buyer and without further consideration, take all commercially reasonable steps necessary to place Buyer or its Affiliates (as directed by Buyer) in possession and operating control of the Purchased Assets, and Seller will use its commercially reasonable efforts to 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, and to carry out the other transaction contemplated hereunder. Seller shall not take any action that is designed or intended to have the effect of discouraging any lessor, licensor, supplier, distributor or customer of Seller in connection with the Business from maintaining the same relationship with Buyer after the Closing as it maintained with Seller prior to the Closing.

(b) Buyer agrees that after the Closing Date, it shall provide Seller with reasonable access during normal business hours to (a) the books and records transferred to Buyer hereunder necessary for Seller’s Tax, accounting and other corporate purposes and (b) for a period not to exceed 90 days following the Closing, the Facility in order to permit Seller to remove the Excluded Assets from the Facility; provided, that Seller shall be responsible for any Losses incurred by Buyer, including any damage to the Facility or Buyer’s property, as a result of such removal of the Excluded Assets.

(c) Each Party shall use commercially reasonable efforts to execute, and to cause the other parties thereto to execute, the Third Supplement and Amendment to Consent to Assignment and Amendment in the form of Exhibit A hereto (the “ Incentive Assignment ”) as soon as reasonably practicable after Closing, but in no event more than 30 days after Closing, pursuant to which Seller will assign to Buyer the SLDA. The Parties will cooperate and provide each other with reasonable assistance in fulfilling any requirements of the Public Authorities (as defined in the Incentive Assignment) in connection with the execution of the Incentive Assignment.

Section 6.08 Transition Cooperation . Seller shall refer all customer inquiries relating to the Business to Buyer from and after the Closing, and shall promptly forward or cause to be forwarded to Buyer any mail received by it that relates to the Business, the Facility, the Purchased Assets, or the Assumed Liabilities. Seller agrees to cooperate with Buyer to facilitate the transfer of all utilities servicing the Facility into Buyer’s name, at or as soon as reasonably practicable following the Closing, including the transfer of any telephone numbers, electrical service, water and sewage.

Section 6.09 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, the Purchased Assets, or the Facility, each of the other Parties will assist such defending Party’s counsel in the contest or defense, make reasonably available their personnel, and provide such testimony and access to their books and records as the defending Party may reasonably request 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 IX ); provided that the foregoing shall not apply to actions or claims between the Parties.

Section 6.10 Confidentiality .

(a) Seller will treat and hold as confidential all of the Business Confidential Information, refrain from using any of the Business Confidential Information except as needed for Seller’s internal or government-reporting purposes and destroy all Business Confidential Information retained by it in accordance with its record retention policies. In the event that Seller is requested or required pursuant to a written or oral question or request for information or documents in any Proceeding, interrogatory, subpoena, civil investigation demand, or similar process to disclose any Business Confidential Information, Seller 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 6.10 . If, in the absence of a protective order or the receipt of a waiver hereunder, Seller is, on the advice of counsel, compelled to disclose any Business Confidential Information to any tribunal or else stand liable for contempt, Seller may disclose the Business Confidential Information to the tribunal; provided, however, that Seller shall use its reasonable best efforts to obtain an order or other assurance that confidential treatment will be accorded to such Business Confidential Information required to be disclosed and Seller shall use its reasonable best efforts to disclose only such Business Confidential Information as is necessary to comply with such written or oral question or request for information or documents in any Proceeding, interrogatory, subpoena, civil investigation demand, or similar process.

(b) Buyer will not, and will instruct its Representatives and other Affiliates not to, for a period of five years after the Closing Date, without the prior written consent of Seller, disclose to any third party (other than each other and their respective Representatives) any confidential or proprietary information related to the Seller, its Affiliates, the Excluded Assets or Excluded Liabilities; provided, that, the foregoing restriction will not (i) apply to the Business Confidential Information or any information (A) generally available to, or known by, the public (other than as a result of disclosure in violation of this Section 6.10(b ), or (B) independently developed by Buyer or any of its Representatives (other than by Representatives that were Representatives of Seller prior to the Closing) without reference to or use of the applicable confidential or proprietary information, or (ii) prohibit any disclosure (A) required by Law or by the applicable rules of any exchange on which Buyer lists securities, or (B) made in connection with the enforcement of any right or remedy relating to this Agreement or any of the other Transaction Documents or the transactions contemplated hereby or thereby.

Section 6.11 Covenant Not to Compete .

(a) Seller agrees that it will not, and will not permit any of its subsidiaries to, except on behalf of Buyer, during the period beginning on the date hereof and ending on the fifth anniversary of the Closing Date, directly or indirectly, for any reason, for its own account, or on behalf of, or together with or through, any other Person or entity, whether as principal, agent, shareholder, partner, member or equity owner:

(i) engage in or assist others in engaging in, own, control, manage, or participate in the ownership, control or management of, or have a material financial interest in, any business engaged in, in whole or in part, the Competitive Activity within the United States of America, Canada, and Mexico (collectively, the “ Territory ”);

(ii) solicit, or assist in the solicitation of, any Person having an office or conducting business anywhere within the Territory and to which Seller sold goods or provided services in connection with the Business, in each case during the two-year period ending on the Closing Date, for the purpose of selling goods or providing services related to the Competitive Activity; or

(iii) solicit, or assist in the solicitation of, any Person employed or engaged by Buyer in any capacity (as an employee, independent contractor or otherwise) to terminate such employment or other engagement, whether or not such employment or engagement is pursuant to a contract and whether or not such employment or engagement is at will; provided, however, that the advertisement of job openings and use of employee search firms, newspapers, magazines, the internet and other media not directed at the foregoing shall not constitute a breach of this Section 6.11(a)(iii) . Nothing in this Section 6.11(a)(iii) will prohibit Seller from employing those Business Employees that Buyer does not hire as of the Closing Date, or any Person after such Person’s employment or engagement with Buyer is terminated if Seller did not violate this Section 6.11(a)(iii) during such Person’s employment or engagement with Buyer.

(b) Although the Parties have, in good faith, used their best efforts to make the provisions of Section 6.11(a) reasonable in terms of geographic area, duration and scope of restricted activities in light of the scope and nature of the Business and the direct and indirect consideration to be received by Seller hereunder, and it is not anticipated, nor is it intended, by

any Party that an arbitral panel or court of competent jurisdiction would find it necessary to reform the provisions hereof to make them reasonable in terms of geographic area, duration or otherwise, the Parties understand and agree that if an arbitral panel or court of competent jurisdiction determines it necessary to reform the scope of Section 6.11(a) or any part thereof in order to make it binding and enforceable, such provision shall be considered reformable and divisible in all respects and such lesser or other scope as any such court shall determine to be reasonable shall be effective, binding and enforceable.

(c) The Parties recognize and agree that in the event of a breach or threatened breach by Seller of Section 6.11(a) , money damages would not be an adequate remedy to Buyer for such breach and, even if money damages were adequate, it would be difficult to ascertain or measure with any degree of accuracy the damages sustained by Buyer therefrom. Accordingly, if there should be a breach or threatened breach by Seller of the provisions of Section 6.11(a) , Buyer shall be entitled to seek an injunction restraining Seller from any such breach. Nothing in the preceding sentence shall limit or otherwise affect any remedies that Buyer or its Affiliates may otherwise have under applicable Law.

Section 6.12 Employee Matters .

(a) Effective as of the Closing Date, Buyer shall offer employment to a sufficient number of Business Employees, and on sufficient terms and conditions of employment, such that the transactions contemplated by this Agreement do not result in a “plant closing” or “mass layoff”, as those terms are defined in the WARN Act, or otherwise result in the application of, or liability under, the WARN Act. Except as set forth in this Section 6.12(a) and Section 6.12(b) , Buyer shall not be obligated to hire or retain any Business Employee for any period following the Closing. Prior to the Closing, Buyer shall provide Seller with notice with respect to the Business Employees to whom Buyer intends to offer employment (the Business Employees who accept such employment, the “ Transferred Employees ”). Upon reasonable request by Buyer, Seller shall cooperate with and shall not impair Buyer’s efforts to obtain the employment of such Business Employees.

(b) Buyer, at the time of Closing, will offer employment to all of the Transferred Employees, who will become employees of Buyer. Seller shall pay to all such Transferred Employees as soon as reasonably practicable after the Closing Date, and in accordance with Seller’s standard payroll schedule and procedures, all amounts earned or accrued for wages, commissions, salaries, bonuses, holiday and vacation pay, and past service claims as of the Closing Date. Seller shall make and remit, for all periods through and including the Closing Date, all proper deductions, remittances and contributions for employees’ wages, commissions and salaries required under all Contractual Obligations and Laws (including, for health, hospital and medical insurance, group life insurance, pension plans, workers’ compensation, unemployment insurance, income Tax, FICA Taxes and the like) and, wherever required by such Contractual Obligations and/or Laws, all proper deductions and contributions from its own funds for such purposes, including making all matching contributions to Seller’s 401(k) plan(s) on account of any contributions made by the Transferred Employees prior to Closing and for which matching contributions by Seller have not yet been made, as required by Seller’s 401(k) plan(s), in each case consistent with and at such times consistent with Seller’s standard practices. Seller shall be responsible for all Liabilities arising out of or based upon such

termination of the Transferred Employees, including, any severance pay obligations of Seller or their Affiliates. In addition, Seller shall be responsible for all Liabilities arising out of any COBRA continuation coverage, within the meaning of Code Section 4980(f) for “covered employees,” as defined by Code Section 4980B(7), and employees of Seller other than Transferred Employees that are entitled to elect COBRA continuation coverage as of their applicable termination date.

(c) Seller shall offer a severance payment to all Business Employees receiving short-term disability coverage prior to the Closing Date. In any releases entered into by any Business Employees receiving such severance payments, Seller shall provide that Buyer is a beneficiary and include Buyer as a “released party.”

(d) All terms and conditions of employment for Transferred Employees will be established solely by Buyer.

(e) At the request of Buyer prior to the Closing, Seller shall continue their health care coverage for a period not to exceed the remainder of the calendar month in which the Closing occurs for the Transferred Employees. Buyer shall bear the insurance premiums for such period and Buyer shall indemnify and hold Seller harmless for all other Liabilities, costs and expenses incurred by Seller arising out of or based upon such continued coverage for such employees after the Closing Date.

(f) Seller shall promptly deliver to Buyer after the Closing Date all Employee Records for each Transferred Employee. Buyer shall keep all Employee Records confidential and shall not disclose or release such information, except for any disclosure that may be required in the ordinary course of Buyer’s business or as otherwise required by law.

(g) Seller will be responsible for discharging all obligations in respect of Business Employees under the WARN Act for the notification of any “employment loss” within the meaning of the WARN Act which occurs prior to the Closing. Buyer will be responsible for discharging all obligations in respect of Business Employees and Transferred Employees under the WARN Act and for the notification of any “employment loss” within the meaning of the WARN Act which occurs on or after the Closing. Seller will provide Buyer at Closing a list of Business Employees whose employment has been involuntarily terminated or who have been notified of their termination by Seller (other than as a result of the transactions contemplated by this Agreement) during the 90-day period ending on the Closing Date.

(h) Buyer shall not, on or at any time within 90 days after the Closing Date, effectuate a “plant closing” or “mass layoff,” as those terms are defined in the WARN Act, affecting in whole or in part the Business or the Facility. In addition, Buyer shall provide a full defense to, and indemnify Seller for any claims, suits, charges, complaints, demands, grievances, proceedings, losses, expenses, damages, obligations and liabilities (including costs of collection, attorneys’ fees and other defense costs or disbursements) which Seller may incur in connection with any suit or claim of violation brought against or affecting Seller under the WARN Act for any actions taken by Buyer with regard to the Business or the Facility, including but not limited to liability under the WARN Act that arises in whole or in part as a result of any “employment loss”, as that term is defined in the WARN Act, which was caused by Buyer on or within 90 days after the Closing Date.

(i) Seller shall not, within 90 days prior to the Closing Date, effectuate a “plant closing” or “mass layoff,” as those terms are defined in the WARN Act, affecting in whole or in part the Business or the Facility. In addition, Seller shall provide a full defense to, and indemnify Buyer for any claims, suits, charges, complaints, demands, grievances, proceedings, losses, expenses, damages, obligations and liabilities (including costs of collection, attorneys’ fees and other defense costs or disbursements) which Buyer may incur in connection with any suit or claim of violation brought against or affecting Buyer under the WARN Act for any actions taken by Seller with regard to the Business or the Facility, including but not limited to liability under the WARN Act that arises in whole or in part as a result of any “employment loss”, as that term is defined in the WARN Act, which was caused by Seller in such 90 day period prior to the Closing Date.

Section 6.13 Tax Matters .

(a) Seller shall timely pay any Taxes attributable to the Business or the Purchased Assets and file any Tax Returns attributable to Seller’s income from the Business, the Business or the Purchased Assets for periods ending on or before the Closing Date. Buyer shall timely pay any Taxes attributable to the Business or the Purchased Assets and file any Tax Returns attributable to Buyer’s income from the Business, the Business or the Purchased Assets for periods after the Closing Date.

(b) Each of 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 Proceeding relating to any proposed adjustment that relates to 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 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.

Section 6.14 Transfer of Warranties . As of the Closing Date, to the extent assignable, Seller shall be deemed to have assigned to Buyer all of its right, title and interest in and to warranties (express and implied) that continue in effect with respect to any of the Purchased Assets, and to have nominated Buyer as Seller’s true and lawful attorney to enforce such warranties against such manufacturers, and Seller shall execute and deliver such specific assignments of such warranty rights as Buyer may reasonably request.

Section 6.15 Equipment Repair Credit . Seller shall make a payment to Buyer of $650,000 at Closing in connection with the repair of equipment included in the Purchased Assets.

Section 6.16 Publicity . No Party shall issue any press release or similar public announcement concerning this Agreement or the transactions contemplated hereby, or publicly disclose the terms of this Agreement, without obtaining the prior written approval of the other Party unless, in the sole judgment of Buyer or Seller or their legal counsel, as applicable, disclosure is otherwise required by applicable Law or by the applicable rules of any exchange on which such Party lists securities, and only to the extent that such disclosure is required in the sole judgment of such Party or their legal counsel.

Section 6.17 Use of Name . Buyer agrees that Buyer will have no right, title, interest, license or any other right whatsoever in or to the trade names or marks of Seller, including the name “Navistar” and any service marks, trademarks, trade names, identifying symbols, or logos related thereto or containing or comprising the foregoing. Notwithstanding the foregoing, Buyer shall not be required to make any material modifications to any Inventory, including any finished goods, and shall have the right to freely use or sell the Inventory as it exists on the Closing Date.

Section 6.18 Data Room Record . Not later than three Business Days after the date hereof, Seller shall deliver to Buyer a DVD ROM disc (or similar media) containing a digital copy of all of the materials included in the Data Room.

ARTICLE VII

CONDITIONS TO CLOSING

Section 7.01 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 Seller set forth in Article V (other than the Seller Fundamental Representations) shall be true and correct in all material respects as of the date of this Agreement and the Closing Date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all material respects as of that specified date);

(b) The Seller Fundamental Representations shall be true and correct in all respects as of the date of this Agreement and the Closing Date;

(c) Seller shall have performed in all material respects all of its obligations required to be performed under this Agreement at or prior to Closing;

(d) There shall not have occurred after the date of this Agreement any event, change, effect or development that has had or is reasonably expected to have, individually or in the aggregate, a Material Adverse Effect with respect to the Business, the Facility, or the Purchased Assets;

(e) No Proceeding shall be initiated, pending or threatened, in writing, nor shall there be any formal or informal inquiry by a Governmental Authority, which would reasonably be expected to result in a Governmental Order (nor shall there be any Governmental Order in effect) (i) which would prevent consummation of any of the transactions contemplated

hereunder, (ii) which would result in any of the transactions contemplated hereunder being rescinded following consummation, (iii) which would materially limit or otherwise adversely affect the right of Buyer to operate all or any material portion of the Business, the Purchased Assets, or the Facility, or (iv) would compel Buyer or any of its Affiliates to dispose of all or any material portion of the Facility, the Business, or the Purchased Assets;

(f) Seller shall have assigned the Master Lease to Buyer pursuant to the terms of the Lease Assignment and Assumption Agreement in the form of Exhibit B hereto (the “ Lease Assignment Agreement ”);

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

(i) a certificate of Seller dated the Closing Date stating that the preconditions specified in Section 7.01 (a) , (b ), (c) and (d) have been satisfied;

(ii) the Bill of Sale, in the form of Exhibit C hereto (the “ Bill of Sale ”), executed by Seller;

(iii) the Assignment and Assumption Agreement, in the form of Exhibit D hereto (the “ Assignment and Assumption Agreement ”), executed by Seller;

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

(v) a copy of the Lease Assignment Agreement and an estoppel certificate in connection with the Master Lease, each executed by the Master Lease Landlord;

(vi) terminations of the Parts and Production Services Supply Agreement, the Security Agreement and the Master Services Agreement, each as executed by Seller (the “ Termination Agreements ”);

(vii) the Closing Statement executed by Seller;

(viii) a duly executed consent to assign to Buyer the Power Supply Contract with City of Sheffield, Alabama dated September 10, 2009 (as assigned to Navistar on January 2, 2012);

(ix) the Customer List, updated as of the Closing Date;

(x) evidence that all mortgages, security interests, collateral assignments and other Encumbrances (other than Permitted Encumbrances except for Permitted Encumbrances that must be paid off or released at or prior to Closing) on any of the Purchased Assets have been released, discharged and terminated in full, including payoff letters in connection therewith, and that termination statements with respect to all UCC financing statements relating to such Encumbrances have been filed at the expense of Seller; and

(xi) a certificate of good standing or its equivalent for Seller from the Secretary of State of the state of its incorporation and each other jurisdiction in which Seller is required to be qualified to conduct the Business;

(xii) a certificate of Seller certifying (A) the resolutions duly adopted by Seller authorizing and adopting the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party and the consummation of all transactions contemplated hereby and thereby, (B) the Organizational Documents of Seller, and (C) the names and signatures of the officers of Seller authorized to sign this Agreement and the other Transaction Documents to which it is a party;

(xiii) a non-foreign affidavit 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 Seller is not a “foreign person” as defined in Code § 1445;

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

Section 7.02 Conditions to Seller ’ s Obligations . The obligations of Seller 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 Seller):

(a) The representations and warranties of Buyer set forth in Article IV (other than the Buyer Fundamental Representations) shall be true and correct in all material respects, as of the date of this Agreement and the Closing Date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all material respects as of that specified date);

(b) The Buyer Fundamental Representations shall be true and correct in all respects as of the date of this Agreement and the Closing Date;

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

(d) No Proceeding shall be pending or threatened in writing which may result in a Governmental Order (nor shall there be any Governmental Order in effect) (i) which would prevent consummation of any of the transactions contemplated hereunder, or (ii) which would result in any of the transactions contemplated hereunder being rescinded following consummation;

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

(i) a certificate of Buyer dated the Closing Date stating that the preconditions specified in Section 7.02(a) , (b) and (c) have been satisfied;

(ii) the Assignment and Assumption Agreement executed by Buyer;

(iii) the Transition Services Agreement executed by Buyer;

(iv) the Lease Assignment Agreement executed by Buyer;

(v) each of the Termination Agreements executed by Buyer or FCA, as applicable; and

(vi) the Closing Statement executed by Buyer.

ARTICLE VIII

TERMINATION

Section 8.01 Termination . Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated at any time prior to the Closing:

(a) by the mutual written consent of Buyer and Seller;

(b) by either Buyer or Seller, if (i) any Governmental Authority having competent jurisdiction over any Party shall have issued a final Governmental Order restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such Governmental Order is or shall have become nonappealable, or (ii) a Law has been adopted that makes the transactions contemplated by this Agreement illegal or otherwise prohibited; provided, however, that the Party seeking to terminate this Agreement pursuant to clause (i) above shall not have initiated such Proceeding or taken any action in support of such Proceeding and shall have used its reasonable best efforts to challenge such order or other action;

(c) by Buyer, in the event of the inaccuracy in or breach of any representation or warranty of Seller contained in this Agreement or if Seller breaches or fails to perform any of its respective covenants or agreements contained in this Agreement and such inaccuracy, breach or failure to perform (i) would reasonably be expected to give rise to the failure of a condition set forth in Section 7.01 , (ii) cannot be or has not been cured within 15 Business Days after the receipt of written notice thereof, and (iii) has not been waived by Buyer; provided, that, the right to terminate this Agreement pursuant to this Section 8.01(c) shall not be available if, at the time of such purported termination, Buyer has breached or failed to perform in any material respect any of its representations, warranties, covenants or agreements contained in this Agreement;

(d) by Seller, in the event of the inaccuracy in or breach of any representation or warranty of Buyer contained in this Agreement or if Buyer breaches or fails to perform any of its covenants or agreements contained in this Agreement and such inaccuracy, breach or failure to perform (i) would reasonably be expected to give rise to the failure of a condition set forth in Section 7.02 , (ii) cannot be or has not been cured within 15 Business Days after the receipt of written notice thereof, and (iii) has not been waived by Seller; provided, that, the right to terminate this Agreement pursuant to this Section 8.01(d) shall not be available if, at the time of such purported termination, Seller has breached or failed to perform in any material respect any of its respective representations, warranties, covenants or agreements contained in this Agreement; or

(e) by either Buyer or Seller, if the Closing has not been consummated on or before March 2, 2018 (the “ Closing Date Deadline ”); provided, that no Party may terminate this Agreement pursuant to this Section 8.01(e) if such Party’s breach or failure to perform any of such Party’s representations, warranties, covenants or agreements contained in this Agreement shall have been a principal cause of or resulted in the failure of the Closing to be consummated on or before the Closing Date Deadline.

Section 8.02 Notice of Termination; Effect of Termination .

(a) The Party desiring to terminate this Agreement pursuant to Section 8.01(b) through Section 8.01(e) shall give written notice of such termination to the other Party in accordance with Section 10.07 , specifying the provision or provisions hereof pursuant to which such termination is effected.

(b) In the event of termination of this Agreement pursuant to Section 8.01 , this Agreement shall be of no further force or effect; provided, however, (i) the provisions of Section 6.10 , Article VIII , and Article X shall survive termination and (ii) any termination pursuant to Section 8.01 shall not relieve any Party of any Liability for breach of any representation, warranty, covenant or agreement hereunder occurring prior to such termination. The right of any Party to terminate this Agreement pursuant to Section 8.01 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Party, whether prior to or after the execution of this Agreement.

Section 8.03 Return of Documentation . Following termination of this Agreement, (a) all filings, applications and other submissions made pursuant to this Agreement or prior to the execution of this Agreement in contemplation hereof shall, to the extent practicable, be withdrawn from the Governmental Authority to which made, and (b) Buyer shall return or destroy (and provide proof of such destruction of) all agreements, documents, contracts, instruments, books, records, materials and other information (in any format) regarding Seller provided to Buyer or its Representatives in connection with the transactions contemplated hereunder other than as reasonably necessary to enforce its rights under this Agreement. Notwithstanding the foregoing, Buyer and its legal counsel shall each be permitted to retain electronic copies of all such information and materials that have become embedded in its electronic data systems through programmed backup procedures.

ARTICLE IX

INDEMNIFICATION

Section 9.01 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 Seller (a) contained in Section 5.01 , Section 5.02 , Section 5.03 and Section 5.04(a) (the “ Seller Fundamental Representations ”) shall survive the Closing and continue in full force and effect until the 20 ^th anniversary of the Closing Date, (b) contained in Section 5.15 shall survive the Closing and continue in full force and effect until the fifth anniversary of the Closing Date, (c) contained in Section 5.08 shall survive the Closing and continue in full force and effect until the seventh anniversary of the Closing Date, and (d) all other representations and warranties of Seller under this Agreement

shall survive Closing hereunder and continue in full force and effect for a period of 18 calendar months thereafter. The representations and warranties of Buyer contained in Section 4.01 , Section 4.02 , Section 4.03 and Section 4.04 (the “ Buyer Fundamental Representations ”, and together with the Seller Fundamental Representations, the “ Fundamental Representations ”) shall survive the Closing and continue in full force and effect until the 20 ^th anniversary of the Closing Date, 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 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 9.01 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 9.01 (regardless of when the Losses in respect thereof may actually be incurred).

Section 9.02 Indemnification Provisions for Buyer ’ s Benefit .

(a) Seller agrees to indemnify, defend and hold harmless Buyer and its Affiliates, officers, directors, managers, members, employees, Representatives, and agents (collectively, the “ Buyer Indemnitees ”) from and against any Losses they may incur or suffer resulting from, arising out of, relating to, or caused by:

(i) any inaccuracy in or the breach of any representation or warranty of Seller in this Agreement;

(ii) the nonperformance or breach of any covenant or agreement made by Seller under this Agreement, the other Transaction Documents or any certificate or instrument delivered by or on behalf of Seller pursuant to this Agreement;

(iii) any Excluded Assets or Excluded Liabilities; and

(iv) any matter, item, condition or circumstance listed, contained or otherwise referred to in Section 9.02(a)(iv) of the Disclosure Letter.

(b) To the extent any claim for indemnification arises under Section 9.02(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 Losses.

(c) Payments by Seller pursuant to Section 9.02 (a) in respect of any Losses 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 by the Buyer Indemnitees in respect of any such Loss. Notwithstanding the foregoing, no Buyer Indemnitee shall have any duty or obligation to seek to obtain or continue to pursue any such recoveries under insurance policies or indemnity, contribution, or other agreement with respect to Losses, or to maintain any insurance policy.

(d) Any Liability for indemnification under this Section 9.02 shall be determined without duplication of recovery in the event that a state of facts gives rise to the same Losses 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 9.03 Indemnification Provisions for Seller ’ s Benefit .

(a) Buyer shall be obligated to indemnify, defend and hold harmless Seller and its Affiliates, officers, directors, managers, members, employees, Representatives, and agents (the “ Seller Indemnitees ”) from and against the entirety of any Losses they may suffer resulting from, arising out of, relating to or caused by

(i) the breach of any representation or warranty of Buyer in this Agreement;

(ii) the nonperformance or breach of any covenant or agreement made by Buyer under this Agreement, the other Transaction Documents or any certificate or instrument delivered by or on behalf of Buyer pursuant to this Agreement; and

(iii) the Assumed Liabilities.

(b) To the extent any claim for indemnification arises under Section 9.03(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 Losses.

(c) Payments by Buyer pursuant to Section 9.03 (a) in respect of any Losses 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 by the Seller Indemnitees in respect of any such Loss. Notwithstanding the foregoing, no Seller Indemnitee shall have any duty or obligation to seek to obtain or continue to pursue any such recoveries under insurance policies or indemnity, contribution, or other agreement with respect to Losses, or to maintain any insurance policy.

(d) Any Liability for indemnification under this Section 9.03 shall be determined without duplication of recovery in the event that a state of facts gives rise to the same Losses arising from a breach of more than one representation, warranty, covenant or agreement.

Section 9.04 Certain Limitations . The indemnification provided for in Section 9.02 and Section 9.03 shall be subject to the following limitations:

(a) Seller shall not be liable to the Buyer Indemnitees for indemnification under Section 9.02(a)(i) until the aggregate amount of all Losses in respect of indemnification under exceeds $25,000 (the “ Basket ”), in which event Seller shall only pay or be liable for all such Losses over and above the Basket. The aggregate amount of all Losses for which Seller shall be liable pursuant to Section 9.02(a)(i) shall not exceed $5,040,000 (the “ Cap ”).

(b) Buyer shall not be liable to the Seller Indemnitees for indemnification under Section 9.03(a)(i) until the aggregate amount of all Losses in respect of indemnification under Section 9.03(a)(i) exceeds the Basket, in which event Buyer shall only pay or be liable for all such Losses over and above the Basket. The aggregate amount of all Losses for which Buyer shall be liable pursuant to Section 9.03(a)(i) shall not exceed the Cap.

(c) In no event will any Party be entitled to recover or make a claim for any amounts in respect of, and in no event will “Losses” be deemed to include consequential, exemplary or punitive damages, lost profits or revenues, business interruption, diminution in value and no “multiple of earnings” or “multiple of cash flow” or similar valuation methodology will be used in calculating the amount of any Losses, except if damages are assessed against a Party using such methodology in connection with a Third Party Claim. In the event Buyer proceeds with the Closing despite James R. Meyer or Matthew S. Kohnke obtaining actual knowledge after the date of this Agreement of a circumstance or condition pursuant to Section 6.01(a) of any breach by Seller of any representation, warranty, agreement or covenant contained in this Agreement, and Seller did not have Knowledge of such circumstance or condition prior to the date of this Agreement, then no Buyer Indemnitee will have any claim or recourse against Seller with respect to such breach under this Article IX .

(d) Notwithstanding the foregoing, the limitations set forth in Section 9.04(a) , Section 9.04(b) and Section 9.04(c) shall not apply to Losses based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any Fundamental Representations; provided that each Party’s obligations to indemnify the other under this Agreement shall in no event exceed the Purchase Price (prior to any adjustments set forth in this Agreement), unless the liability results from or arises out of fraud by either Buyer or Seller or their respective Affiliates or Representatives as finally determined by a court of competent jurisdiction, or with respect to any Excluded Liabilities which shall not be subject to any such limitation or reduce the indemnification available for any other Losses under this Agreement.

Section 9.05 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 IX , 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) by such failure to provide timely notice. 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 Loss 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

30 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 9.05 (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 (in the reasonable discretion of the Indemnified Party), the Indemnified Party may retain separate co-counsel, and participate through such counsel in the defense of the Third Party Claim. Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available 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 unreasonably withheld, conditioned, or delayed) 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 Losses with respect to such Third Party Claim.

(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 30 days after receipt of the notice of the Third Party Claim in accordance with Section 9.05 (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 unless such settlement would result in an injunction or other equitable relief with respect to the Indemnifying Party), and the Indemnifying Party will remain responsible for any Losses 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 IX .

Section 9.06 Direct Claims . Any claim by an Indemnified Party on account of Losses 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 Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 30 days after its receipt of the Indemnity Notice to respond in writing to such Direct Claim. During such 30-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 directly related to the Direct Claim) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 30-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.

Section 9.07 Payments . Once a Loss is agreed to by the Indemnifying Party or is payable pursuant to this Article IX , the Indemnifying Party shall satisfy its obligations within 10 Business Days thereof by wire transfer of immediately available funds.

Section 9.08 Buyer Right of Set Off . Buyer has the right, at its sole discretion, to set off any amount to which it may be entitled from Seller under this Article IX against any amount otherwise payable by Buyer to Seller other than accounts receivable payable by Buyer to Seller or its Affiliates in the Ordinary Course of Business. The exercise of such set-off right in good faith shall not constitute a breach or event of default under any contract relating to any amount against which the set-off is applied.

Section 9.09 Exclusive Remedy . From and after the Closing, the Indemnified Parties’ sole and exclusive remedy against any Indemnifying Party, with respect to any and all claims relating to this Agreement, shall be pursuant to the provisions of this Article IX . Notwithstanding the foregoing, this Section 9.09 shall not operate to limit the rights of any party to (a) seek equitable remedies (including specific performance or injunctive relief), (b) any remedies available to it in the event of fraud of another party, (c) any other remedy specifically provided in this Agreement or the other Transaction Documents, or (d) in the event the other Party fails to comply with its obligations under this Article IX .

Section 9.10 Adjustment to Purchase Price . The Parties agree to treat all payments made pursuant to the indemnification provisions set forth in this Article IX , as adjustments to the Purchase Price for Tax purposes.

ARTICLE X

MISCELLANEOUS

Section 10.01 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 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. No provision of this Agreement shall interfere with the right of Buyer or its Affiliates, following any employment of any Transferred Employee, to terminate the employment of any such Transferred Employee at any time, with or without cause, or restrict Buyer or its Affiliates in the exercise of their independent business judgment in modifying any of the terms and conditions of the employment of any such Transferred Employee. No provision of this Agreement shall be deemed to be the adoption of, or an amendment to, any Employee Benefit Plan or any other employee benefit plan, as defined in Section 3(3) of ERISA, or otherwise limit the right of Seller, any ERISA Affiliate or Buyer to amend, modify or terminate any such employee benefit plan.

Section 10.02 Entire Agreement . This Agreement and the other Transaction Documents (including the documents referred to herein and therein) 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 10.03 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 Seller; provided, however, that either Party may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates, (ii) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases Buyer or Seller, as applicable, nonetheless shall remain responsible for the performance of all of its obligations hereunder), or with respect to Buyer (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 or Seller 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 10.04 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. Seller agrees to pay and discharge, promptly and diligently, when due, or to contest or litigate all claims of creditors which could be asserted against Buyer or the Purchased Assets by reason of such noncompliance, to indemnify, defend at their own expense and hold Buyer harmless from and against any and all such claims and, upon receipt of written notice from Buyer of the existence thereof, to take promptly all necessary action to remove or cause to be removed any Encumbrance which may be placed on any of the Purchased Assets by a creditor of Seller by reason of such noncompliance.

Section 10.05 Counterparts . This Agreement may be executed in one or more counterparts (including by means of facsimile or other electronic transmission), 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 10.06 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 10.07 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 Business Day after being sent to the recipient by nationally recognized overnight courier service (charges prepaid), (c) upon confirmation of transmission by the recipient (which confirmation may be by email), if sent by email, or (d) four Business Days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, in each case if properly addressed to the intended recipient as set forth below:


If to Buyer:		FreightCar Alabama, LLC c/o FreightCar America, Inc. 2 North Riverside Plaza, Suite 1300 Chicago, Illinois 60606 Attn: General Counsel

Copy to:		Kelley Drye & Warren LLP 333 West Wacker Drive, Suite 2600 Chicago, Illinois 60606 Attn: Andrew Pillsbury Email: APillsbury@KelleyDrye.com

If to Seller:		Navistar, Inc. 2701 Navistar Dr. Lisle, IL 60532 Attn: Lisa P. Conlon and Bob Brandt Email: Lisa.Conlon@Navistar.com and Bob.Brandt@Navistar.com

Copy to:		Jones Day 77 W. Wacker Dr. Suite 3500 Chicago, IL 60601 Attn: Brian L. Sedlak and Timothy P. FitzSimons Email: brianlsedlak@jonesday.com and tfitzsimons@jonesday.com

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 10.08 Dispute Resolution; 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 IX ), either Party may give written notice to the other Party and the executives from each of Buyer and Seller 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 30 days after the Good Faith Meeting, then the Parties agree that the appropriate, exclusive and convenient forum for any disputes or Proceeding between or among any of the Parties hereto arising out of or related to this Agreement or the transactions contemplated hereby is the federal courts of the United States of America or the courts of the State of Illinois, in each case located in the City of Chicago and County of Cook, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such Proceeding. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any Proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any Proceeding brought in any such court has been brought in an inconvenient forum. Nothing in this Section 10.08 will limit the rights of the Parties to obtain execution of a judgment in any other jurisdiction.

(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION AT LAW, IN EQUITY, IN CONTRACT, IN TORT OR OTHERWISE DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (II) IT MAKES SUCH WAIVERS VOLUNTARILY AND (III) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 10.08(b) .

Section 10.09 Governing Law; Jurisdiction .

(a) This Agreement and all Proceedings (whether at law, in equity, in contract, in tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof shall be governed by and construed in accordance with the domestic Laws of the State of Illinois without giving effect to any choice or conflict of Law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Illinois.

(b) Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the state courts of the State of Illinois or, if such court will not have jurisdiction, any federal court of the United States of America sitting in Illinois, and any appellate court from any appeal thereof, in any Proceeding at law, in equity, in contract, in tort or otherwise based upon, arising out of or relating to this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of the Parties hereby irrevocably and unconditionally (i) agrees not to commence any such Proceeding except in such courts, (ii) agrees that any claim in respect of any such Proceeding may be heard and determined in the state courts of the State of Illinois or, to the extent permitted by Law, in such federal court, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the state courts of the State of Illinois or such federal court and (iv) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such Proceeding in the state courts of the State of Illinois or such federal court. Each of the Parties agrees that a final judgment in any such Proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each Party irrevocably consents to service of process in the manner provided for notices in Section 10.07 . Nothing in this Agreement will affect the right of any Party to serve process in any other manner permitted by Law.

Section 10.10 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 Seller. 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 10.11 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 10.12 Expenses . Except as otherwise provided herein, Buyer and Seller 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 10.13 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.

Section 10.14 Interpretation . The use of the masculine, feminine or neuter gender or the singular or plural form of words used herein (including defined terms) shall not limit any provision of this Agreement. The terms “include,” “includes” and “including” are not intended to be limiting and shall be deemed to be followed by the words “without limitation” (whether or not they are in fact followed by such words) or words of like import. The term “or” has the inclusive meaning represented by the phrase “and/or.” Reference to a particular Person includes such Person’s successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement. Reference to a particular agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof. The terms “dollars” and “$” mean United States Dollars. The Exhibits and Disclosure Letter identified in this Agreement are incorporated into this Agreement by reference and made a part hereof. References to Articles, Sections, paragraphs, clauses, Exhibits or Schedules shall refer to those portions of this Agreement. The use of the terms “hereunder,” “hereof,” “hereto” and words of similar import shall refer to this Agreement as a whole and not to any particular Article, Section, paragraph or clause of, or Exhibit or Schedule to, 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.

Section 10.15 Seller . Each representation and warranty regarding Seller shall be deemed a representation and warranty with respect to each of Navistar and International Truck. Each covenant or agreement of Seller hereunder (including any indemnification obligation under Article IX or any other Liability under this Agreement) shall be a joint and several obligation of each of Navistar and International Truck, and with respect to any covenant limiting actions of Seller after the Closing, shall be deemed a covenant by Seller to cause its Affiliates to refrain from such actions as well. All other references to Seller in this Agreement shall be deemed a reference to each Seller.

Section 10.16 Injunctive Relief . The Parties hereby agree that the Business and the Facility 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.

[Signature page to follow]

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


SELLER:

NAVISTAR, INC.



By:		/s/ Scott F. Renier
Name: Scott F. Renier
Title:		Vice President, Business Development and Strategy


INTERNATIONAL TRUCK AND ENGINE INVESTMENTS CORPORATION

By:		/s/ Scott F. Renier
Name: Scott F. Renier
Title: Vice President

[Signature Page to Asset Purchase Agreement]


BUYER:

FREIGHTCAR ALABAMA, LLC

By:		/s/ Matthew S. Kohnke
Name: Matthew S. Kohnke
Title: Chief Financial Officer

[Signature Page to Asset Purchase Agreement]

Exhibit 10.1

ASSIGNMENT AND ASSUMPTION OF LEASE

This Assignment and Assumption of Lease (this “Agreement”) is made as of the 28th day of February, 2018 by and between NAVISTAR, INC. , a Delaware corporation having its principal address at 2701 Navistar Drive, Lisle, Illinois 60532 (“ Assignor ”) and FREIGHTCAR ALABAMA, LLC, a Delaware limited liability company, having its principal office at FreightCar Alabama, LLC, c/o FreightCar America, Inc., 2 North Riverside Plaza, Suite 1300, Chicago, Illinois 60606, Attn: General Counsel (“ Assignee ”).

WITNESSETH:

WHEREAS , Teachers’ Retirement Systems of Alabama and Employees’ Retirement System of Alabama (collectively, “ Landlord ”), and Assignor, as tenant, are parties to that certain Industrial Facility Lease, dated as of September 29, 2011, as amended by an Amendment to Industrial Facility Lease and Consent to Sublease dated as of February 19, 2013 (collectively, the “ Lease ”), pursuant to which Assignor has leased from Landlord certain land and improvements located in the City of Cherokee, County of Colbert and State of Alabama, commonly known as 1200 Haley Drive, Cherokee, Alabama, and more particularly described in the Lease (the “ Premises ”). A memorandum of lease with respect to the Lease was recorded in the land records of Colbert County, Alabama on October 25, 2011 in Book 2011, Page 22555; and

WHEREAS , Assignor desires to assign all its right, title and interest in the Lease to Assignee, and Assignee desires to accept such assignment, all in accordance with this Agreement.

NOW, THEREFORE, in consideration of the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties, Assignor and Assignee agree as follows:

1. Assignor hereby assigns and transfers all its right, title and interest in and to the Lease to Assignee to have and to hold the same from the date hereof (the “ Effective Date ”), for all of the remainder of the term of the Lease and any extensions thereof, subject to all the terms, covenants, conditions and provisions therein contained. Assignor covenants and agrees that Assignor shall pay all rents, additional rent and all other sums due and payable under the Lease through the Effective Date.

2. Assignee hereby accepts the foregoing assignment from Assignor and hereby assumes and agrees to perform, from and after the Effective Date, all of the terms, covenants, conditions and provisions of the Lease. From and after the Effective Date, Assignee shall make all payments of rent, additional rent and all other sums due under the Lease in accordance with the terms of the Lease.

3. Assignor represents and warrants that, as of the date hereof, there are no defaults of Assignor, as tenant under the Lease, or the Landlord under the Lease and that there are no subleases of the Premises, except for the Sublease dated February 19, 2013 as between Assignor and Assignee as amended by the Amendment to Sublease and Grant of Purchase Option to Subtenant dated March 11, 2013 the Second Amendment to Sublease and Consent to Sublease dated effective as of October 1, 2014 and the Third Amendment to Sublease and Consent to Sublease dated effective as of February 1, 2016 (collectively, the “ Sublease ”).

4. Assignor and Assignee hereby agree that the Sublease shall terminate as of the Effective Date pursuant to the terms thereof as if the Sublease reached the Sublease Expiration Date. Assignor hereby represents and warrants that, as of the date hereof, there are no defaults of Assignee, as subtenant, under the Sublease, and Assignee hereby represents and warrants that, as of the date hereof, there are no defaults of Assignor, as sublandlord, under the Sublease. Assignor and Assignee hereby further represent and warrant that, to their knowledge, no circumstance exists which, if left uncured, would result in a default under the Sublease.

5. Assignee hereby releases and discharges Assignor from any and all obligations, claims, demands, causes of action or other liabilities arising from and after the Effective Date out of or in connection with the Lease or the Premises.

6. This Agreement is subject to the terms and provisions of the Lease, all of which are incorporated herein by this reference, except as explicitly set forth to the contrary herein. Landlord agrees that, notwithstanding Section 11.5 of the Lease, Landlord shall release Tenant from liability under the Lease to the extent first incurred or arising after the Effective Date. Landlord represents and warrants that to Landlord’s knowledge, as of the date hereof, there are no defaults of Assignor, as tenant, under the Lease, and, to Landlord’s actual knowledge, no circumstance exists which, if left uncured, would result in a default under the Lease. Landlord may treat Assignee as if Assignee were originally a party to the Lease, including, without limitation, as to all obligations arising prior to the Effective Date or with respect to events occurring or conditions existing prior to such Effective Date and Assignee shall be afforded such defenses as if originally the tenant party to the Lease. Assignor, Assignee and Landlord further agree that Section 11.6 of the Lease, which was added by the Amendment to Industrial Facility Lease and Consent to Sublease dated as of February 19, 2013, is hereby deleted. Landlord hereby joins this Agreement to consent to the aforesaid assignment of the Lease by Assignor to Assignee and also joins to acknowledge and agree to the terms of this Section 6.

7. This Agreement may not be changed, modified, discharged or terminated orally or in any other manner except for an agreement in writing signed by the parties hereto or their respective successors and/or assigns.

8. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their personal representatives, successors and assigns.

9. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall collectively constitute but one and the same instrument.

10. This Agreement shall be governed by the laws of the State of Alabama.

[ Remainder of page intentionally left blank ]

IN WITNESS WHEREOF , Assignor and Assignee have executed this Agreement as of the date first above written.


*ASSIGNOR:*

NAVISTAR, INC., a Delaware corporation

By:	/s/ Scott F. Renier
	Name:	Scott F. Renier


		Title:		Vice President, Business


Development and Strategy


*ASSIGNEE:*

FREIGHTCAR ALABAMA, LLC, a Delaware limited liability company

By:	/s/ Matthew S. Kohnke
	Name:	Matthew S. Kohnke


		Title:		Chief Financial Officer


The aforesaid assignment and assumption by and between Assignor and Assignee is hereby consented to by, and Landlord also joins for purposes of Section 6 above as of the day of , 20 :

TEACHERS’ RETIREMENT SYSTEMS OF ALABAMA

an instrumentality of the State of Alabama



By:		/s/ David G. Bronner
	Name:	David G. Bronner


		Title:		Chief Executive Officer

EMPLOYEES’ RETIREMENT SYSTEM OF ALABAMA,

an instrumentality of the State of Alabama



By:		/s/ David G. Bronner
	Name:	David G. Bronner


		Title:		Chief Executive Officer


State of Illinois	)
	)	ss.:
County of DuPage	)

I, Ruth Ann Garcia, a Notary (name and style of officer) in and for said County in said State, hereby certify that Scott F. Renier whose name as Vice President, Business Development and Strategy of Navistar, Inc., is signed to the foregoing instrument, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he or she, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.

Given under my hand this 28 ^th day of February, 2018.

(seal)

/s/ Ruth Ann Garcia

Notary Public, DuPage County, Illinois

My Commission Expires: 2-7-21


State of Illinois	)
	)	ss.:
County of Cook	)

I, Vicki L. Prot, a Notary (name and style of officer) in and for said County in said State, hereby certify that Matthew S. Kohnke whose name as CFO of FreightCar America, Inc., is signed to the foregoing instrument, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he or she, as such officer and with full authority, executed the same voluntarily for and as the act of said limited liability company.

Given under my hand this 26 ^th day of February, 2018.

(seal)

/s/ Vicki L. Prot

Notary Public, Cook County, Illinois

My Commission Expires: July 3, 2018


State of Alabama	)
	)	ss.:
County of	)

I, Allison M. DeBoard, a Notary (name and style of officer) in and for said County in said State, hereby certify that David G. Bronner whose name as CEO of Employees’ Retirement Systems of Alabama, is signed to the foregoing instrument, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he or she, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.

Given under my hand this 26 ^th day of Feburary, 2018.

(seal)

/s/ Allison M. DeBoard

Notary Public, State at large County, Alabama

My Commission Expires: 12/17/18


State of Alabama	)
	)	ss.:
County of	)

I, Allison M. DeBoard, a Notary (name and style of officer) in and for said County in said State, hereby certify that David G. Bronner whose name as CEO of Teachers’ Retirement Systems of Alabama, is signed to the foregoing instrument, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he or she, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.

Given under my hand this 26 ^th day of Feburary, 2018.

(seal)

/s/ Allison M. DeBoard

Notary Public, State at large County, Alabama

My Commission Expires: 12/17/18

Exhibit 10.2

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE REDACTED PORTIONS OF THIS AGREEMENT, WHICH ARE DENOTED BY ***. A COMPLETE COPY OF THIS AGREEMENT, INCLUDING THE REDACTED PORTIONS, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

INDUSTRIAL FACILITY LEASE

Dated as of September 29, 2011

between

TEACHERS’ RETIREMENT SYSTEMS OF ALABAMA,

an instrumentality of the State of Alabama,

and

EMPLOYEES’ RETIREMENT SYSTEM OF ALABAMA,

an instrumentality of the State of Alabama, as Landlord

and

NAVISTAR, INC.

a Delaware corporation, as Tenant

Leased Premises : 1200 Haley Drive

Cherokee, Alabama 35616

TABLE OF CONTENTS


			Page

ARTICLE I	GRANT, TERM		1
Section 1.1		Grant	1
Section 1.2		Initial Term	1
Section 1.3		Extension Term	1
Section 1.4		Early Commencement	1

ARTICLE II	INSPECTION OF LEASED PREMISES; REPRESENTATIONS		2

Section 2.1		Inspections; Representations	2
Section 2.2		Landlord’s Representations; Assignment of Warranties	2
Section 2.3		Landlord Covenants	3
Section 2.4		Survival	3

ARTICLE III	USE OF LEASED PREMISES		3

Section 3.1		Use	3

ARTICLE IV	RENT		4

Section 4.1		Base Rent	4
Section 4.2		Penalty and Interest on Late Payments	4
Section 4.3		Net Lease	4
Section 4.4		Additional Rent Reduction	5

ARTICLE V	IMPOSITIONS		5

Section 5.1		Payment by Tenant	5
Section 5.2		Alternative Taxes	5
Section 5.3		Evidence of Payment	6
Section 5.4		Right to Contest	6
Section 5.5		Real Property Taxes	6

ARTICLE VI	INSURANCE		6

Section 6.1		[Intentionally deleted.]	6
Section 6.2		Tenant’s Insurance	7
Section 6.3		Increases in Coverage	7
Section 6.4		Insurance Premiums	7
Section 6.5		Waiver of Subrogation	8
Section 6.6		Form of Insurance	8
Section 6.7		Certificate of Insurance	8
Section 6.8		Fire Protection	8
Section 6.9		Self-Insurance	8
Section 6.10		Deductibles	8

ARTICLE VII	DAMAGE OR DESTRUCTION		8

Section 7.1		Tenant’s Obligation to Rebuild	8
Section 7.2		Termination	9

TABLE OF CONTENTS

(continued)


			Page

Section 7.3		Use of Proceeds for Rebuilding	9
Section 7.4		Failure to Rebuild	11

ARTICLE VIII	CONDEMNATION		11

Section 8.1		Taking of Whole	11
Section 8.2		Partial Taking	11
Section 8.3		Temporary Taking	12

ARTICLE IX	MAINTENANCE		12

Section 9.1		Tenant Maintenance and Repairs	12
Section 9.2		[Intentionally deleted.]	13
Section 9.3		Landlord’s Acts	13
Section 9.4		Certain Capital Expenditures	13

ARTICLE X	ALTERATIONS AND IMPROVEMENTS BY TENANT		14

Section 10.1		Conversion	14
Section 10.2		Machinery and Equipment	14
Section 10.3		Supplier Improvements	14
Section 10.4		Alterations and Improvements Generally	15
Section 10.5		Mechanic’s and Materialmen’s Liens	15
Section 10.6		Indemnity	15

ARTICLE XI	ASSIGNMENT AND SUBLETTING		16

Section 11.1		Restrictions on Transfers	16
Section 11.2		Permitted Assignment	16
Section 11.3		Subletting of the Facility	16
Section 11.4		Subletting of the Land	16
Section 11.5		No Release of Tenant	17

ARTICLE XII	LIENS AND ENCUMBRANCES		17

Section 12.1		Encumbering Title	17

ARTICLE XIII	UTILITIES		17

Section 13.1		Utilities	17
Section 13.2		Service Contracts	17
Section 13.3		Interruption of Services	18

ARTICLE XIV	RIGHTS RESERVED TO LANDLORD		18

Section 14.1		Rights Reserved to Landlord	18

ARTICLE XV		QUIET ENJOYMENT	18

Section 15.1		Quiet Enjoyment	18

ARTICLE XVI	SUBORDINATION OR SUPERIORITY		19

Section 16.1		Subordination	19
Section 16.2		Lease May Be Superior	19

TABLE OF CONTENTS

(continued)


			Page

Section 16.3		Attornment	19
Section 16.4		Right to Cure	19

ARTICLE XVII	SURRENDER		19

Section 17.1		Surrender	19
Section 17.2		Removal of Tenant’s Property	20
Section 17.3		Holding Over	20

ARTICLE XVIII	INDEMNITY AND TENANTS ACTS		20

Section 18.1		Indemnity	20
Section 18.2		Tenant Acts	21
Section 18.3		Landlord’s Indemnity	21
Section 18.4		Survival	21

ARTICLE XIX	ENVIRONMENTAL CONDITIONS		21

Section 19.1		Defined Terms	21
Section 19.2		Tenant’s Covenants with Respect to Environmental Matters	22
Section 19.3		Rights of Inspection	23
Section 19.4		Copies of Notices	24
Section 19.5		Tests and Reports	24
Section 19.6		Indemnification	25
Section 19.7		Landlord’s Obligation	26
Section 19.8		Survival	26

ARTICLE XX	FORCE MAJEURE		26

Section 20.1		Force Majeure	26

ARTICLE XXI	PURCHASE OPTION		26

Section 21.1		Term	26
Section 21.2		Purchase Price of the Leased Premises	27
Section 21.3		Exercise of Purchase Option	27
Section 21.4		Closing and Possession	27
Section 21.5		Condition of Title	27
Section 21.6		Assignment of Purchase Option	27
Section 21.7		Further Purchase Option	27
Section 21.8		Memorandum of Purchase Option	27

ARTICLE XXII	DEFAULTS AND REMEDIES		28

Section 22.1		Defaults	28
Section 22.2		Tenant’s Opportunity to Cure	29
Section 22.3		Remedies	29
Section 22.4		Liquidated Damages	30
Section 22.5		Landlord’s Right to Cure	30
Section 22.6		Remedies Cumulative	30
Section 22.7		No Waiver	30

iii

TABLE OF CONTENTS

(continued)


			Page

ARTICLE XXIII	MACHINERY AND EQUIPMENT		31

Section 23.1		Equipment Operation	31

ARTICLE XXIV	WAIVER OF SECURITY INTEREST; RIGHT TO DEAL WITH PROPERTY OF TENANT		31

Section 24.1		Waiver of Security Interest; Tenant’s Personalty	31

ARTICLE XXV	MISCELLANEOUS		32

Section 25.1		Estoppel Certificates	32
Section 25.2		Amendments Must Be in Writing	32
Section 25.3		Notices	32
Section 25.4		Short Form Lease	33
Section 25.5		Time of Essence	33
Section 25.6		Relationship of Parties	33
Section 25.7		Captions	33
Section 25.8		Severability	33
Section 25.9		Applicable Law/Jurisdiction	33
Section 25.10		Covenants Binding on Successors	33
Section 25.11		Brokerage	34
Section 25.12		Intentionally Omitted	34
Section 25.13		Signs	34
Section 25.14		Attorneys’ Fees	34
Section 25.15		Compliance with Law	34
Section 25.16		No Waiver	34
Section 25.17		Entire Agreement; Exhibits	34
Section 25.18		Limited Recourse	35
Section 25.19		Waiver of Implied Warranties	35
Section 25.20		Waiver Of Jury Trial	35
Section 25.21		Landlord Approval	36
Section 25.22		Tenant’s Self-Help Rights	36
Section 25.23		Landlord’s Breach	36
Section 25.24		Landlord’s Payment or Tenant’s Offset Right	36

EXHIBITS:

Exhibit A — Legal Description of the Land

Exhibit B — Exceptions to Title

INDUSTRIAL FACILITY LEASE (this “ Lease ”), dated as of September 29, 2011, by and between Teachers’ Retirement Systems of Alabama , an instrumentality of the State of Alabama, and Employees’ Retirement System of Alabama , an instrumentality of the State of Alabama (collectively, “ Landlord ”) and Navistar , Inc ., a Delaware corporation (“ Tenan t”).

WHEREAS , Landlord is the owner of that certain parcel of land constituting approximately seven hundred (700) acres in Cherokee, Alabama, as more specifically identified in Exhibit “A” hereto (the “ Land ”) and all of the improvements situated on the Land, including that certain building consisting of approximately 2,150,000 square feet (the “ Facility ”, and collectively with the other improvements upon the Land, the “ Improvements ”);

WHEREAS , Landlord desires to lease the Land and all of the Improvements (such Land and Improvements, together with all appurtenances belonging to or in any way pertaining to the Land and the Improvements, hereinafter jointly or severally, as the context requires, the “ Leased Premises ”) to Tenant and Tenant desires to lease the Leased Premises from Landlord;

NOW , THEREFORE , upon the mutual promises and considerations set forth herein, the sufficiency of which is acknowledged by each party, the parties hereto agree as follows:

ARTICLE I

GRANT, TERM

Section 1.1 Grant . Landlord, for and in consideration of the rents herein reserved and of the covenants and agreements herein contained on the part of Tenant to be performed, shall lease to Tenant, and Tenant shall lease from Landlord, the Leased Premises.

Section 1.2 Initial Term . The term of this Lease shall commence on January 1, 2012 (hereinafter referred to as the “ Commencement Date ”), and shall terminate December 31, 2021, unless sooner terminated or extended as herein set forth (the “ Initial Term ”). On the Commencement Date, Landlord shall deliver the Leased Premises to Tenant in broom clean condition and free of all occupants.

Section 1.3 Extension Term . Tenant shall have the right, upon written notice to Landlord given no later than June 30, 2020 and provided no Event of Default shall have occurred and be continuing as of the date of such written notice, to elect to extend the term of this Lease for one (1) additional term of one hundred twenty (120) months (the “ Extension Term ”) upon all of the terms, covenants and conditions contained in this Lease. Any and all references contained herein to the “ Term ” shall be deemed to include the Initial Term, as extended by the Extension Term, if applicable.

Section 1.4 Early Commencement . Notwithstanding anything to the contrary in this Article 1 or elsewhere in this Lease, Tenant shall have the right, in its sole discretion, to elect to commence the Lease prior to January 1, 2012 upon written notice to Landlord designating such early commencement, which date shall only be permitted on the first date of a month (the “ Early Commencement Date ”). If Tenant elects an Early Commencement Date, then (i) the Initial Term shall be for a period of one hundred twenty (120) months from such Early Commencement

Date and the expiration date set forth in Section 1.2 shall be adjusted accordingly and (ii) any and all dates herein shall be adjusted accordingly to reflect the number of months prior to January 1, 2012 that the Early Commencement Date occurred. For the avoidance of doubt and by way of example only, if the Early Commencement Date occurs on December 1, 2011, then all dates herein shall adjusted to be one month earlier then stated, including, without limitation, the notice date for exercise of the Extension Term (which, in the foregoing example, would be May 31, 2020).

ARTICLE II

INSPECTION OF LEASED PREMISES; REPRESENTATIONS

Section 2.1 Inspections ; Representations . Tenant acknowledges that (i) the Leased Premises is of its selection, (ii) it has inspected and, subject to the terms and conditions of this Lease, accepts the Leased Premises and (iii) except as may be provided in Sections 2.2, 9.3, 18.3 and Article XIX, no representations as to the repair of the Leased Premises, nor promises to alter, remodel or improve the Leased Premises, have been made to Tenant by Landlord. Tenant acknowledges that, except as may be set forth in Sections 2.2, 9.3, 18.3 and Article XIX, Landlord (whether acting as landlord hereunder or in any other capacity) has not made and will not make, nor shall Landlord be deemed to have made, any warranty or representation, express or implied, with respect to the Leased Premises, including any warranty or representation as to (a) its fitness, design or condition for any particular use or purpose, (b) the quality of the material or workmanship therein, (c) the existence of any defect, latent or patent, (d) compliance with any specifications, (e) use, (f) condition, (g) merchantability, (h) quality, (i) durability, (j) operation, (k) the existence of any Hazardous Materials, Environmental Condition or Environmental Claims, or (1) compliance of the Leased Premises with any law or legal requirement. Subject to Sections 2.2, 9.3, 18.3 and Article XIX, Tenant accepts the Leased Premises and any rights it receives hereunder in or to the use of the Facility and all other Improvements as of the Commencement Date “AS-IS,” “WHERE IS,” “WITH ALL FAULTS” in their present condition. Neither the amount of acreage constituting the Land nor the square foot area of the Facility is guaranteed or warranted by Landlord.

Section 2.2 Landlord ’ s Representations ; Assignment of Warranties . Landlord hereby represents and warrants to Tenant, as of the date hereof, as follows:

(a) Landlord has good and marketable fee title to the Leased Premises free and clear of all liens and encumbrances except those set forth in Exhibit “B” , and in addition has the full right, power and lawful authority to execute, deliver and perform its obligations under this Lease, in the manner and upon the terms contained herein, and to grant the estate herein demised, with no other person needing to join in the execution hereof in order for this Lease to be binding on all parties having an interest in the Leased Premises;

(b) The Leased Premises are not subject to any liens, mortgages or other monetary encumbrances other than those presently held by Landlord or set forth in Exhibit “B” ;

(c) Landlord has received no written notice of and has no knowledge of any action, suit or proceeding affecting the Leased Premises or relating to or arising out of the ownership, management or operation of the Leased Premises in any court, or before any federal, state or municipal department, commission, board, bureau or agency or other governmental instrumentality;

(d) No approval or authorization of any third party is required for Landlord to execute this Lease and to carry out Landlord’s obligations under this Lease;

(e) To the Landlord’s knowledge, the Leased Premises complies with all applicable laws, regulations and ordinances, including, without limitation, the Americans With Disabilities Act of 1990 (as amended), and all applicable building, fire and safety codes; and

(f) To the Landlord’s knowledge, all systems and equipment serving the Leased Premises including heating, ventilation and air conditioning, electrical, sprinkler, plumbing (within the restrooms and otherwise), utility lines and dock equipment are in working order.

Section 2.3 Landlord Covenants . Landlord herby covenants to Tenant as follows:

(a) Upon Tenant’s request, Landlord shall cooperate with Tenant’s application for title insurance for the Leased Premises and shall sign customary title forms and provide information required for Tenant’s purchase of title insurance, such as affidavits of title, certifications of non-foreign status, and corporate, partnership or other entity information of Landlord; and

(b) On or before the Commencement date any lien, mortgage or encumbrance held by Landlord and affecting the Leased Premises shall be terminated and released of record.

(c) Landlord shall assign to Tenant, on the Commencement Date, all warranties in connection with the Leased Premises as received from, and all rights of enforcement of such warranties against, all contractors and subcontractors, manufacturers and suppliers, which warranties by their terms (i) remain in force on the Commencement Date and (ii) are assignable to third parties. Despite any such assignment or in the case of any warranties which are not assignable to third parties, in the event any contractor, subcontractor, manufacturer or supplier fails or refuses to honor any such warranty or fails to recognize Tenant’s rights to enforce any such warranty, Landlord agrees to use commercially reasonable efforts to enforce such warranty and to cooperate with Tenant in connection with such enforcement, at Tenant’s sole cost and expense.

Section 2.4 Survival . The representations, warranties, covenants and agreements of the Parties contained herein shall survive indefinitely, except for those representations and warranties in Section 2.2(e) and (f), which shall only survive for ninety (90) days after the Commencement Date.

ARTICLE III

USE OF LEASED PREMISES

Section 3.1 Use . The Leased Premises shall be used and occupied for any lawful purpose, provided that no such use shall (a) violate any certificate of occupancy or law, ordinance or other governmental regulation in effect from time to time and affecting the Leased

Premises or the use thereof, (b) violate any covenants, conditions or restrictions of record in effect as of the date hereof and affecting the Leased Premises or the use thereof or (c) constitute a public nuisance. For the avoidance of doubt, the Parties agree that Tenant shall not have any obligation to continuously operate any business at the Leased Premises, notwithstanding its obligations pursuant to Section 4.1 hereof.

ARTICLE IV

RENT

Section 4.1 Base Rent . Beginning with the Commencement Date, Tenant shall pay to Landlord, on the first business day of each calendar month, a base rent (“ Base Rent ”) of:

(a) *** per month for each of the first twelve (12) months of the Initial Term;

(b) *** per month for each of the subsequent one hundred eight (108) months of the Initial Term; and

(c) if this Lease is extended in accordance with Section 1.3, *** per month for each of the one hundred twenty (120) months constituting the Extension Term.

Base Rent, and all other amounts and charges payable by Tenant to Landlord pursuant to the terms of this Lease (“ Additional Rent ”, all Base Rent and Additional Rent are deemed to be and are collectively referred to as “ Rent ”) shall be paid by electronic funds transfer to Landlord’s account: ABA XXXXXXXXX, Account number XXXXXXXX at State Street Bank & Trust Co. for the account of RSA Acct # XXXX. Landlord shall have the right to change the account for the payment of Rent by giving not less than thirty (30) days written notice thereof to Tenant.

Section 4.2 Penalty and Interest on Late Payments . Each and every installment of Rent which shall not be paid within five (5) business days after the date the same is due shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate of interest published in The Wall Street Journal from time to time as the “Prime Rate” in effect on the due date of such payment, from the date which is five (5) business days after the date the same is payable under the terms of this Lease until the same shall be paid.

Section 4.3 Net Lease . It is the purpose and intent of Landlord and Tenant that the Base Rent payable under this Article 4 shall be net to Landlord and that, except as may be expressly provided in Sections 7.1, 8.2, 9.4 and 25.24, this Lease shall yield, net to Landlord, the Base Rent specified and provided in this Article 4 , Tenant shall pay all costs, charges and expenses of every kind and nature whatsoever against the Leased Premises, including, without limitation, insurance premiums, taxes, utilities and assessments of every kind and nature, including all assessments, both regular and special, which may be due by virtue of recorded declarations, covenants and restrictions affecting the Leased Premises, that may arise or become due during the term and that, except for the execution and delivery of this Lease, would or could have been payable by Landlord. All Base Rent and Additional Rent payable hereunder shall be paid as “net” rent without deduction or offset except as may be expressly provided in Sections 7.1, 8.2, 9.4 and 25.24.

Section 4.4 Additional Rent Reduction . If (a) on or before December 31, 2015, Tenant has, in accordance with Article V of the SLDA, certified to the State of Alabama a Request for Payment under Section 5.6(e) of the SLDA, but is not eligible or entitled to Request for Payment under Section 5.6(f) of the SLDA and (b) as of December 31, 2019, Tenant has not paid and is not obligated to pay any amount to the State pursuant to Section 5.9(b) of the SLDA, then the Base Rent for the twelve calendar months constituting calendar year 2020 shall be reduced by ***, such that the monthly rent for each of the twelve months of calendar year 2020 shall be ***. For purposes hereof SLDA means that certain Site Location and Development Agreement dated as of July 18, 2007 by and among National Alabama Corporation, the State of Alabama, Colbert County, The Industrial Development Board of Colbert County, The Shoals Economic Development Authority, Shoals Industrial Development Committee and other Agencies of or within the State of Alabama, as amended by the parties thereto pursuant to a Consent to Assignment and Amendment Agreement between such parties and Tenant dated as of September [27], 2011.

ARTICLE V

IMPOSITIONS

Section 5.1 Payment by Tenant . Tenant shall pay as Additional Rent for the Leased Premises, all taxes and assessments, general and special, water rates and all other impositions, ordinary and extraordinary, of every kind and nature whatsoever, which may be levied, assessed, charged or imposed, and whether accrued prior to or during the term of the Lease, upon the Leased Premises, or any part thereof, or upon any Improvements at any time situated thereon ( “ Impositions ” ) ; provided, however, that Impositions levied against the Leased Premises shall be prorated between Landlord and Tenant as of the Commencement Date and as of the expiration of either the Initial Term or the Extension Term for the last year of such term (and Tenant’s share of said final year Impositions shall be paid by Tenant upon such expiration based on Landlord’s reasonable estimate thereof, subject to reproration upon actual receipt of final tax bills, invoices, etc.). Tenant shall be obligated to pay only those installments falling due during the Term of this Lease and shall have the right, in Tenant’s sole discretion, to pay any special assessments in installments over the longest period available.

Section 5.2 Alternative Taxes . If at any time during the term of this Lease the method of taxation prevailing at the commencement of the Term shall be altered so that any new tax, assessment, levy, Imposition or charge, or any part thereof, shall be measured by or be based in whole or in part upon the Lease, or the Leased Premises, or the Base Rent, Additional Rent or other income therefrom and shall be imposed upon the Landlord, then all such taxes, assessments, levies, Impositions, or charges, or the part thereof, to the extent that they are so measured or based, shall be deemed to be included within the term Impositions for the purposes hereof to the extent that such Impositions would be payable if the Leased Premises were the only property of Landlord subject to such Impositions, and Tenant shall pay and discharge the same as herein provided in respect of the payment of Impositions. There shall be excluded from Impositions all transfer taxes, sales taxes, federal income taxes, state and local net income taxes, federal excess profit taxes, franchise and capital stock of Landlord.

Section 5.3 Evidence of Payment . Tenant shall deliver to Landlord duplicate receipts and cancelled checks, or photocopies thereof showing the payments of all Impositions, within ten (10) days after Landlord’s written request therefor.

Section 5.4 Right to Contest . Tenant shall have the right to contest the amount or validity, or to seek a refund, in whole or in part, of any Imposition or charge upon or against all or part of the Leased Premises, or the Improvements at any time situated thereon by appropriate proceedings so long as such proceeding shall have the effect of preventing the collection of the Imposition or charge so contested. In the event Tenant contests any taxes levied against the Leased Premises or Improvements, Tenant, to the extent required by applicable law, shall post adequate security or bond with the applicable governmental authority in an amount to cover any payments contested and withheld by Tenant together with the estimated amount of all interest and penalties in connection therewith and all charges that may or might be assessed against or become a charge on the Leased Premises in the proceedings. Upon the termination of such proceedings, Tenant shall pay the amount of such Imposition or part thereof as finally determined in such proceedings, the payment of which may have been deferred during the prosecution of such proceedings, together with any costs, fees, interest, penalties or other liabilities in connection therewith. Landlord shall not ultimately be subjected to any liability for the payment of any costs or expenses in connection with any such proceeding, and Tenant covenants to indemnify and hold harmless Landlord from any such costs or expenses. Tenant shall be entitled promptly to any refund of any such Imposition and penalties or interest thereon that have been paid by Tenant, or that have been paid by Landlord and for which Landlord has been fully reimbursed.

Section 5.5 Real Property Taxes . Landlord acknowledges that, during such period as title to the Leased Premises is held by Landlord, the Leased Premises are, and will, not be subject to any state or local real property (ad valorem) taxes. Landlord covenants to Tenant that, for such period as this Lease remains in effect, Landlord will not sell, assign or convey the Leased Premises to any third party or otherwise sell, assign or convey the Leased Premises such that the Leased Premises would become subject to any state or local real property (ad valorem taxes). If the Holder of any Mortgage (as such terms are defined in Section 16.1) forecloses or otherwise takes title to the Leased Premises (whether by a deed in lieu or other similar mechanism) and as a result thereof the Leased Premises become subject to any state or local real property (ad valorem) taxes or such taxes become due and payable with respect to the Leased Premises, Landlord shall reimburse Tenant for any such taxes within thirty (30) days after Tenant’s written demand therefor, which demand shall include all reasonable documentation evidencing such amounts owed to Tenant.

ARTICLE VI

INSURANCE

Section 6.1 [Intentionally deleted.]

Section 6.2 Tenant ’ s Insurance . Prior to the Commencement Date, Tenant, at its sole cost and expense, shall procure and Tenant shall maintain throughout the Term, the following policies of insurance:

(a) Property insurance insuring the Facility and the other Improvements at any time situated upon the Leased Premises against loss or damage by fire, lightning, wind storm, hail storm, aircraft, vehicles, smoke, explosion, riot or civil commotion, vandalism and malicious mischief as provided by a standard all-risk policy form. This property insurance shall also include flood, earthquake, debris removal, extra expense, ordinance or law, and other coverages as provided by a standard all-risk policy form. The insurance coverage shall be for not less than 100% of the full replacement cost of such Improvements. Landlord and Landlord’s mortgagee, if any, of which Tenant is given written notice, shall be named as loss payee on such policy.

Property insurance covering all contents including equipment and Tenant’s trade fixtures, machinery, equipment, furniture and furnishings in the Leased Premises to the extent of at least one hundred percent (100%) of their full replacement cost under a all-risk policy form and all other risks of direct physical loss customarily covered by such insurance. The policy shall include business interruption coverage for a period of not less than 24 months to include loss of rents coverage;

(b) Commercial general liability insurance covering all bodily injury to or personal injury to or death of any person, or more than one (1) person, and property damage arising from its use, management, or operation of the Leased Premises, containing limits of not less than $2,000,000.00 combined single limits for bodily injury (including death) and property damage per occurrence, plus a policy of commercial auto liability insurance (owned and non-owned/hired) with the same limits of coverage, together with umbrella coverage sufficient to bring Tenant’s coverage for commercial general liability and auto liability to not less than $10,000,000.00 per occurrence. The limits required in no way suggest the amounts are adequate and shall not limit or restrict any liabilities assumed by this agreement. Landlord, and any of its members, partners, officers, directors and employees (the “ Landlord Protected Parties ”), and Landlord’s mortgagee, if any, of which Tenant is given written notice, shall be named as additional insureds on such liability policy(ies) of Tenant on a primary and non-contributory basis.; and

(c) Worker’s compensation insurance complying with requirements of applicable law, in statutory amounts, and a policy of employer’s liability coverage in the amount of at least $1,000,000 bodily injury by accident for each person, $1,000,000 bodily injury by disease for each person and $1,000,000 bodily injury by disease-policy limit.

Section 6.3 Increases in Coverage . Landlord shall have the right from time to time during the term of the Lease, exercisable by giving written notice thereof to Tenant, to require Tenant to increase such limit if, in Landlord’s reasonable judgment, the amount thereof is insufficient to protect the Landlord Protected Parties and Tenant from judgments which might result from such claims, demands or actions.

Section 6.4 Insurance Premiums . Tenant shall pay all insurance premiums for the insurance policies and coverages required pursuant to this Article VI (the “ Insurance Premiums ”). If Tenant should fail to obtain or maintain such coverages at any time during the Term of this Lease, Landlord may, but shall not be obligated to, obtain such insurance policies and coverages at Tenant’s expense, but providing coverage for Landlord only, and charge the cost thereof to Tenant as Additional Rent under this Lease, due from Tenant to Landlord on demand.

Section 6.5 Waiver of Subrogation . All insurance maintained by Tenant pursuant to this Agreement shall contain an endorsement waiving the insurer’s right of subrogation against any Landlord Protected Party or otherwise waive such rights, provided that such waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage.

Section 6.6 Form of Insurance . All insurance required under this Lease shall be issued by responsible companies which are duly licensed to do business in the State of Alabama and which have an A.M. Best rating of at. least A-7. In the event any of the insurance policies required to be carried by Tenant under this Lease shall be cancelled prior to the expiration date of such policy, or if Tenant receives notice of any cancellation of such insurance policies from the insurer prior to the expiration date of such policy, Tenant shall: (a) immediately deliver notice to Landlord that such insurance has been, or is to be, cancelled, (b) shall promptly replace such insurance policy in order to assure no lapse of coverage shall occur, and (c) shall deliver to Landlord a certificate of insurance for such policy.

Section 6.7 Certificate of Insurance . Certificates evidencing the insurance required to be carried hereunder, together with satisfactory evidence of payment of the premiums thereon, shall be deposited with Landlord at the Commencement Date and renewals thereof within ten (10) days of the end of the term of such coverage. Tenant shall furnish and maintain with Landlord at all times during the Term of this Lease a certificate of insurance in favor of Landlord as certificate holder.

Section 6.8 Fire Protection . Tenant shall conform with all applicable fire codes of any governmental authority.

Section 6.9 Self-Insurance . Notwithstanding anything in this Lease to the contrary, so long as Tenant is the original named Tenant hereunder (or an affiliate or subsidiary thereof), at any time that Tenant has, according to their most recently published audited financial statements, an aggregate of not less than $250,000,000 of cash and marketable securities, Tenant shall be entitled to maintain, with respect to the liability insurance coverage required pursuant to this Lease, a deductible and/or self-insured retention limit in the aggregate amount not to exceed the first $2,000,000 of risk per occurrence.

Section 6.10 Deductibles . Any deductibles and self-insured retentions (SIR) shall be the responsibility of Tenant.

ARTICLE VII

DAMAGE OR DESTRUCTION

Section 7.1 Tenant ’ s Obligation to Rebuild . Provided that this Lease is not terminated pursuant Section 7.2 below, and subject to the terms and conditions of Section 7.3 below, in the event of damage to, or destruction of, any Improvements on the Leased Premises, or of the fixtures and equipment therein, by fire or other casualty, Tenant shall promptly, at its sole cost and expense, repair, restore or rebuild the same to the condition existing as of the

Commencement Date. Tenant hereby agrees that Tenant will not be relieved of its obligation to pay Base Rent and Additional Rent during the period of Tenant’s restoration and rebuilding. To the extent that the insurance provided to Landlord by Tenant includes a payment for loss of rental income as a result of fire or other casualty, Tenant shall receive credit against Rent for any such payment made by the insurance company when such claim is paid by the insurance company. Landlord agrees to diligently pursue and use commercially reasonable efforts to obtain payment of a claim for loss of rental income.

Section 7.2 Termination . If a Substantial Casualty (as defined below) occurs during the last two (2) years of the Initial Term or the Extension Term, as applicable, then either party shall have the right to terminate this Lease upon written notice to the other party delivered no later than the earlier of (i) ninety (90) days after the date of such casualty and (ii) the date Tenant commences to restore the Leased Premises (provided that Tenant shall not commence such restoration until it has given Landlord fifteen (15) days prior written notice); provided, however, that such termination by Landlord shall be null and void if within thirty (30) days after Tenant receives Landlord notice of such termination Tenant gives written notice to Landlord of its election to exercise the Extension Option or Purchase Option, as applicable. In the event Landlord or Tenant so terminates this Lease as provided in the previous sentence, Tenant shall irrevocably assign all of its rights and interests in any net proceeds of insurance received by Tenant for the insurance carried pursuant to Section 6.2(a) on occasion of such casualty or partial or total destruction of the Leased Premises, excluding any such proceeds related to Tenant’s persona) property, Trade Fixtures, Machinery and Equipment. For purposes of this Section 7.2, “ Substantial Casualty ” shall mean (i) a casualty which requires repair or restoration in excess of Twenty Five Million Dollars ($25,000,000) or (ii) a casualty that materially impairs Tenant’ operation at the Leased Premises.

Section 7.3 Use of Proceeds for Rebuilding . Unless this Lease is terminated pursuant to Section 7.2 above, to the extent any net proceeds of insurance paid on occasion of any casualty or any partial or total destruction of the Improvements (the “ Proceeds ”) exceed Twenty Five Million Dollars ($25,000,000), Tenant agrees that all such Proceeds shall be paid to Landlord to be held in trust and released to Tenant in accordance with this Section 7.3. In the event that a casualty or any partial or total destruction shall occur at such time as Tenant shall not have maintained property or casualty insurance to the extent required by this Lease, Tenant shall, within thirty (30) days of the casualty or partial or total destruction, and to the extent such proceeds would have exceeded Twenty Five Million Dollars ($25,000,000), pay to Landlord the amount of the proceeds that would have been payable had such insurance been in effect and such amount shall constitute a part of the Proceeds for all purposes hereof. In connection with the restoration of the Improvements following a casualty or partial or total destruction thereof, the Proceeds shall be disbursed by Landlord upon written demand by Tenant and the satisfaction of the following conditions:

(1) at the time of any disbursement, no Event of Default by Tenant shall exist and no materialmen’s or mechanic’s liens shall have been filed and remain undischarged, unbonded or not insured over;

(2) disbursements of portions of the Proceeds (subject to the holdback described in subparagraph (4) below) shall be made from time to time in an amount not exceeding the hard and soft costs of the work and costs incurred since the last disbursement upon receipt of: (A) evidence satisfactory to Landlord (including, without I imitation, architect’s certificates) of the progress of completion of the work to date, the estimated cost of completion and the satisfactory completion of the work to date in accordance with this Lease, the construction contracts then in effect and the plans and specifications for such work; (B) conditional releases of liens from all contractors being paid by such disbursement and unconditional releases of liens from all contractors paid by the prior disbursement; and (C) such other reasonable evidence as may be required by Landlord to verify that the amount of Proceeds disbursed from time to time are represented by work that has been completed and materials that have been delivered to the site free and clear of mechanic’s and materialmen’s liens;

(3) each request for a disbursement hereunder shall be accompanied by a certificate of Tenant describing the work, materials or other costs or expenses for which payment is requested, stating the costs incurred in connection therewith and providing copies of the invoices therefor, and stating that Tenant has not previously received payment for such work or expense, and an architect’s certificate which states that the work for which payment is being made has been completed and complies with laws, rules and regulations applicable to the Leased Premises, and the certificate to be delivered by Tenant upon completion of all work shall, in addition, include an architect’s certificate which states that the work has been substantially completed and complies with laws, rules and regulations applicable to the Leased Premises;

(4) Landlord may retain ten percent (10%) of the amounts otherwise disbursable hereunder until the restoration and rebuilding or demolition, as applicable, is complete and a final certificate of occupancy or certificate of completion (as applicable) shall have been issued and presented to Landlord (in which event all Proceeds previously held-back and all remaining undisbursed Proceeds plus funds contributed by Tenant shall be disbursed to Tenant upon receipt of a Tenant’s and architect’s certificates (as described in subparagraph (3) above) with respect thereto); and

(5) at all times the undisbursed balance of the Proceeds held by Landlord plus any funds contributed thereto by Tenant shall be not less than the cost of completing the necessary restoration, rebuilding or demolition (as applicable) in accordance with the provisions of this Lease, free and clear of all liens. If the estimated cost of the completion of the necessary restoration, rebuilding or demolition work, as reasonably determined by Landlord, exceeds the amount of the Proceeds held by Landlord plus any funds contributed thereto by Tenant, the amount of such excess shall be paid by Tenant to the Landlord to be added to the Proceeds prior to any further disbursement hereunder.

Any Proceeds or other funds contributed thereto by Tenant which remain undisbursed in accordance with the provisions hereof upon: (A) the expiration of the Term, or (B) the failure of Tenant to comply with the provisions hereof with regard to the disbursement of Proceeds, shall forever become the sole property of Landlord to be disbursed or retained by Landlord as Landlord deems appropriate. Any Proceeds exceeding the cost of such restoration or rebuilding shall be disbursed to Tenant with the final payment of the retained amount pursuant to subsection (4) above.

Section 7.4 Failure to Rebuild . If the Lease is not terminated pursuant to Section 7.2 above and if Tenant shall not commence the repair or rebuilding of the Improvements within a period of ninety (90) days after damage or destruction by fire or otherwise (as the same may be extended by times necessary to adjust the insurance claims or obtain required permits or licenses (for which timely applications have been filed) or by any Force Majeure Event (as hereinafter defined)), and prosecute the same thereafter with such dispatch as may be necessary to complete the same within a reasonable period after said damage or destruction occurs, not to exceed three hundred sixty-five (365) days after the date of commencement of such repair or rebuilding (as the same may be extended by any Force Majeure Event or as reasonably necessary for Tenant to complete such work, provided that Tenant shall diligently pursue completion of the restoration work), then Tenant shall be deemed in default under this Lease, and in addition to all of its other remedies under Article 22.3 , Landlord shall be paid and retain the amount held by the Landlord, which it can use, at its sole discretion.

ARTICLE VIII

CONDEMNATION

Section 8.1 Taking of Whole . If the whole or substantially the whole of the Leased Premises shall be taken in condemnation proceedings or by any right of eminent domain, this Lease shall terminate on the date of delivery of possession to the condemning authority. If a material portion of the Leased Premises shall be so taken such that as a result thereof the balance cannot be used for the same purpose and with substantially the same utility to Tenant as immediately prior to such taking, either Landlord or Tenant shall have the right to elect to terminate this Lease, which election shall be made by giving written notice thereof within thirty (30) days after delivery of possession to the condemning authority. Any award, compensation or damages (hereinafter sometimes called the “ Award ”) shall be paid to and be the sole property of Landlord, and Tenant hereby assigns to Landlord all of Tenant’s right, title and interest in and to any and all of the Award, except as provided in the following sentence. Tenant shall be entitled to any Award for undepreciated value of any improvements or alterations installed by or on behalf of Tenant loss of or damage to Tenant’s Trade Fixtures, the Machinery and Equipment or removable personal property and to any Award for relocation costs.

Section 8.2 Partial Taking . (a) If only a part of the Leased Premises shall be so taken or condemned, and the Lease is not terminated pursuant to Section 8.1 hereof, Tenant, at its sole cost and expense, shall repair and restore the Leased Premises and all Improvements thereon, and Landlord shall make the Award available to Tenant for restoration in accordance with the disbursement conditions of Section 7.3 , provided, however, that Tenant shall have no obligation to repair or restore the Leased Premises or any Improvements located thereon if Landlord or its lender fails to make any Award available for restoration of the Leased Premises (and in such event the Lease shall terminate). If the Leased Premises is rendered untenantable in whole or in part, an equitable abatement in Rent shall be allowed from the date of the taking or condemnation. If the Lease is not terminated as provided in the first sentence of this Section 8.2 , Tenant shall promptly and diligently proceed to make a complete architectural unit of the remainder of the Improvements, complying with the disbursement conditions set forth in Section 7.3 . For such purpose, to the extent the amount of the Award relating to the Improvements is less than Twenty Five Million Dollars ($25,000,000), Landlord shall immediately pay the full amount of the Award to Tenant for such restoration. To the extent the amount of the Award exceeds the cost of such restoration, Tenant shall return such excess to Landlord upon full completion of the restoration work.

(b) In the event of a partial taking, this Lease shall terminate as to the portion of the Leased Premises so taken and the Base Rent payable for the balance of the term of this Lease shall be equitably reduced by a sum equivalent to the portion of the Facility taken, such reduction to be effective as of the date of Landlord’s receipt of such Award. Until the amount of the reduction of the Base Rent shall have been determined, Tenant shall continue to pay to Landlord the Base Rent provided for in Section 4.1.

Section 8.3 Temporary Taking . If, at any time during the Term, the whole or any part of the Leased Premises or of the Improvements shall be taken in condemnation proceedings or by any right of eminent domain for temporary use or occupancy (a “ Temporary Taking ”) the foregoing provisions of this Article shall not apply and Tenant shall continue to pay, in the manner at the times specified in this Lease, the full amounts of the Base Rent and all Additional Rent and other charges payable by Tenant under this Lease, and Tenant shall perform and observe all of the other terms, covenants, conditions and obligations of this Lease upon the part of Tenant to be performed and observed with respect to that portion of the Leased Premises not subject to the Temporary Taking, as though such taking had not occurred. In the event of any such Temporary Taking, Tenant shall be entitled to receive the entire amount of the Award made for such taking, whether paid by way of damages, rent or otherwise unless such period of temporary use or occupancy shall extend beyond the termination of this Lease, in which case the Award shall be apportioned between Landlord and Tenant as of the date of termination of this Lease. Tenant covenants that, upon the expiration of any such period of temporary use or occupancy during the Lease term, Tenant will, at its sole cost and expense, restore the Improvements, as nearly as may be reasonably possible, to the condition in which the same was immediately prior to such taking, wear and tear during such temporary use or occupancy excepted. To the extent that Landlord receives any portion of the Award as compensation for the cost of restoration or repair of the Improvements, Landlord shall, upon receipt thereof, promptly pay such sum to Tenant. Any portion of the Award received by Tenant as compensation for the cost of restoration of the Improvements shall, if such period of temporary use or occupancy shall extend beyond the term of this Lease, be paid to Landlord on the date of termination of this Lease.

ARTICLE IX

MAINTENANCE

Section 9.1 Tenant Maintenance and Repairs . Subject to Section 2.2, 9.3, 18.3 and Article XIX, Tenant shall, at its sole cost and expense, at all times during the Term of this Lease, keep, maintain and repair the entire exterior and interior of the Leased Premises, specifically including, without limitation, the heating, ventilating and air conditioning equipment, walls (both interior and exterior), floors, the driveways, parking area and the roof, in the same condition and repair as existing on the Commencement Date, normal wear and tear excepted. As used herein, each and every obligation of Tenant to keep, maintain and repair shall include, without limitation, all ordinary and extraordinary, structural and nonstructural, repairs, replacements and Alterations. Tenant shall further keep and maintain the Improvements at any time situated upon the Leased Premises, safe, secure, clean and sanitary (including without limitation, snow and ice

clearance, landscaping, and necessary interior and exterior painting), and in full compliance with all health, safety and police regulations in force. Without limiting the foregoing, Tenant shall maintain and repair, and keep the same repair and operating condition as existing on the Commencement Date, normal wear and tear excepted, the entire Leased Premises, including, without limitation, plate glass (and related framing, glazing and sealants), entrances, plumbing, closets, pipes, fixtures, electrical and lighting equipment (including replacement of bulbs and ballasts), all private utility lines and facilities (including underground facilities such as lift stations, etc.), fire sprinkler systems, and air conditioning or other equipment. Tenant shall take good care of the Leased Premises and its fixtures and suffer no waste other than reasonable (non-negligent) wear and tear. Tenant shall be responsible for keeping the roof, gutters and downspouts open and free of all debris and other obstructions.

Section 9.2 [Intentionally deleted.]

Section 9.3 Landlord ’ s Acts . Landlord shall (i) repair, at its sole cost and expense, any damage caused to the Leased Premises by Landlord, its agents, invitees, contractors or employees and (ii) make such repairs or replacements as necessary to correct any latent defects existing on the Commencement Date. If Landlord shall fail to repair such damage or make such repairs or replacements as on a timely basis, Tenant shall have the right to make such repair and offset the cost thereof again Base Rent or Additional Rent next due and payable.

Section 9.4 Certain Capital Expenditures . Notwithstanding anything to the contrary in this Lease, if a capital expenditure, repair or replacement (as that terms are defined under generally accepted accounting principles) (a “ Capital Expenditure ”) is required in connection with Tenant’s obligations set forth in Section 9.1 above, and the useful life of such improvement extends beyond the scheduled expiration of the Term, then Tenant shall provide notice to Landlord of such requirement and the costs thereof shall be allocated as follows: Tenant shall pay for the entire cost of such improvement and Landlord shall reimburse Tenant within thirty (30) days from the receipt of an invoice for a portion of the cost of the improvement which is based upon the amount of the useful life of the improvement which extends beyond the Term, or at Tenant’s option, Tenant may elect to have such amount owed by Landlord set off against Base Rent and Additional owed by Tenant hereunder. In the event the cost of such Capital Expenditure requiring a contributory payment by Landlord hereunder shall exceed Two Million Dollar ($2,000,000), Landlord shall have the right to approve such Capital Expenditure, which approval shall not be unreasonably withheld. If Landlord shall not approve such Capital Expenditure, the parties shall reasonably cooperate to address such repair or replacement in a manner reasonably acceptable to both parties. As an example only, if the cost of the improvement is $100,000, the useful life of the improvement is 10 years, and there are 3 years remaining in the Term, the Landlord shall reimburse (or give Tenant a credit against Base Rent and Additional Rent, as applicable) Tenant in the amount of $70,000. To the extent the Tenant extends the Term pursuant Section 1.3 or elects to purchase the Leased Premises pursuant to Article XXI, Tenant shall pay to Landlord, on or before the commencement of the Extension Term or upon the Closing (as defined in Section 21.4), as applicable, any amounts paid by Landlord hereunder that relate to the useful life of the improvement that is for any portion of the Extension Term or, in the case of the Tenant’s election to purchase the Leased Premises, the full amount of paid by Landlord with respect thereto.

ARTICLE X

ALTERATIONS AND IMPROVEMENTS BY TENANT

Section 10.1 Conversion . Tenant shall be permitted to make all alterations, additions, build outs and improvements (hereinafter “ Alterations ”) on the Leased Premises, and on and to the Improvements, parking areas, sidewalks, and equipment thereon, as Tenant deems reasonably required to convert the Facility to suit its business purposes, and as may otherwise be required to suit Tenant’s intended use of the Leased Premises (“ Tenant Conversion Alterations ”).

Section 10.2 Machinery and Equipment . Landlord and Tenant acknowledge that the Facility was designed and constructed as a manufacturing and assembly facility and contains certain machinery, equipment, jigs, tools, furniture and fixtures (the “ Machinery and Equipment ”), as further described in that certain Machinery and Equipment Agreement between Landlord and Tenant dated as of the same date hereof (the “ M&E Agreement ”), and pursuant to which Tenant is acquiring the Machinery and Equipment from Landlord. Landlord acknowledges and agrees that Tenant shall be permitted to remove from the Facility any and all of the Machinery and Equipment, provided that Tenant shall restore the affected area to good condition and repair and shall repair any damage to the Facility caused by such removal, including, repairing any holes in the floor, roof or walls of the Facility and any connection with the utilities and systems of the Facility.

Section 10.3 Supplier Improvements

(a) Approval of Plans. In connection with any Supplier Land Sublease entered into in accordance with the provisions of Section 11.4 , Tenant and/or the Supplier shall have the right, at their sole cost and expense, to cause the construction of improvements including, but not limited to, manufacturing facilities and related facilities as well as utility connections and landscaping (collectively, the “ Supplier Improvements ”)

(b) Construction of Supplier Improvements. Tenant shall perform or shall be responsible for causing all Supplier Improvements to be effected in compliance with applicable laws rules and regulations. Tenant agrees that Supplier Improvement work performed pursuant to this Lease shall be performed in a good and workmanlike manner and in accordance with all governmental laws, rules, regulations and code requirements applicable thereto. Ali contracts for Supplier Improvements shall provide that: (A) the contractor acknowledges that any mechanics’ liens shall be enforceable solely against the subleasehold estate of the Supplier and not the fee estate of Landlord; and (B) at Landlord’s option, Tenant or the Supplier, as applicable, may assign such contracts to Landlord. To the extent Landlord requires, Tenant shall, and shall cause any Supplier to, assign any or all such contracts to Landlord, such assignment to be effective upon an Event of Default, and pursuant under documents reasonably satisfactory to Landlord.

(c) Ownership of Supplier Improvements . During the Term, all Supplier Improvements shall be solely the property of Tenant or Supplier, as applicable. Upon expiration or earlier termination of the Term, the Improvements, excluding Tenant’s Equipment, shall be the property of Landlord. Tenant and Supplier shall execute and deliver to Landlord any deed, bill of sale or other document or instrument that Landlord may require to effectuate of evidence such transfer.

Section 10.4 Alterations and Improvements Generally

(a) All Alterations performed by Tenant shall be constructed at Tenant’s sole cost and expense, including the costs of any building permits and other regulatory approvals.

(b) All Alteration made, or caused to be made, by Tenant to the Leased Premises shall be made in a good and workmanlike manner, shall be performed only with proper permits, and otherwise shall be in compliance with all applicable laws, ordinances, regulations and deed restrictions. company showing liability, auto, worker’s compensation/employer’s liability and property coverage in an amount, type and manner satisfactory to Landlord and protecting Landlord (as an additional insured) from liability for injury to any person and damage to any property, on or off the Leased Premises, in connection with the making of such Alterations. Tenant’s obligation to rectify any poor construction or non-compliance with legal requirements relating to its improvements, alterations, additions and repairs shall survive expiration or termination of this Lease for any reason. Upon Landlord’s request, from time to time, Tenant shall provide Landlord with such documents as Landlord may require (including, without limitation, sworn contractors’ statements and supporting lien waivers) evidencing payment in full for any alterations, and “as built” working drawings.

(c) All Alterations installed at the expense or direction of Tenant, except Trade Fixtures (as hereinafter defined) shall become the property of Landlord and shall remain upon and be surrendered with the Leased Premises as part thereof on the termination of this Lease.

Section 10.5 Mechanic ’ s and Materialmen ’ s Liens . The Leased Premises shall not be subject to any mechanics’, laborers’ or materialmen’s liens for on account of labor or material furnished to Tenant or any Supplier or at the direction or sufferance of Tenant or any Supplier , without the approval of Landlord, whether or not such work is permitted by this Lease. Tenant shall discharge or bond over any lien filed against the Leased Premises or any other property owned by Landlord or any part thereof for work done or materials furnished by or on behalf of Tenant with respect to the Leased Premises within thirty (30) days after Tenant receives notice that such lien is filed. If Tenant fails to keep this covenant, in addition to any other remedies available to Landlord under this Lease or otherwise, Landlord may at its option discharge such lien, in which event Tenant agrees to pay Landlord as Additional Rent, a sum equal to the amount of the lien thus discharged plus Landlord’s reasonable attorneys’ fees and expenses.

Section 10.6 Indemnity . Except to the extent caused by the negligence or willful misconduct of Landlord, Tenant will protect, indemnify and save harmless the Landlord Group (as defined in Section 19.1(f) from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) imposed upon or incurred by or asserted against Landlord by or in connection with the Alterations, the construction or implementation thereof or the performance of any labor or services or the furnishing of any materials or other property in respect of any alterations or any part thereof by Tenant or anyone claiming by, through or under Tenant, or their respective employees, agents or contractors. In case any action, suit or proceeding is brought against Landlord by reason of any occurrence described in this Section 10.7, Tenant will, at Tenant’s expense, by counsel approved by Landlord, resist and defend such action, suit or

proceeding, or cause the same to be resisted and defended. The obligations of Tenant under this Section 10.7 shall survive the expiration or earlier termination of this Lease. At the request of Landlord, Tenant shall furnish and deposit bond or other security with the title company of Landlord’s choosing to insure over any lien related to the liabilities referenced in this Section 10.7 .

ARTICLE XI

ASSIGNMENT AND SUBLETTING

Section 11.1 Restrictions on Transfers . Except as set forth in this Article XI below, Tenant shall not, without Landlord’s prior written consent, assign, convey or transfer this Lease or any interest herein, and shall not sublet all or any portion of the Leased Premises without Landlord’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed; provided however that such consent will not be unreasonably withheld if the credit of the proposed assignee is reasonably acceptable to Landlord.

Section 11.2 Permitted Assignment . Notwithstanding anything in this Article XI to the contrary, an assignment or subletting of all or a portion of the Leased Premises (a “ Permitted Transfer ”) to (a) an entity that controls, is controlled by or is under common control with Tenant, (b) a purchaser of all or substantially all of the assets of Tenant in one transaction, or (c) the surviving entity in the event of any merger or consolidation of Tenant, shall not be subject to Landlord’s consent.

Section 11.3 Subletting of the Facility . Tenant shall have the right, without the consent of Landlord, to sublet space within the Facility to entities that are supplying parts or other goods and/or services to Tenant in connection with Tenant’s operations at the Leased Premise ( “ Suppliers ” ) , provided that: each sublease entered into as permitted hereunder shall provide that (i) the term of any such sublease (including any options to extend the same as therein provided) shall not have a term extending beyond the then remaining Term of this Lease minus one day, (ii) such sublease is expressly subject and subordinate to this Lease and any mortgage encumbering the Leased Premises, (iii) the sublease shall not be assigned, encumbered or otherwise transferred or the subleased premises further sublet by the subtenant in whole or in part, or any part thereof suffered or permitted by the subtenant to be used or occupied by others, without the prior written consent of Landlord in each instance, and (iv) if Tenant so elects, upon any termination of this Lease, the subtenant shall be obligated, at Landlord’s written election, to attorn to and recognize Landlord as the landlord under such sublease, whereupon such sublease shall continue as a direct lease between the subtenant and Landlord (an “ Acceptable Sublease ” ) . Tenant shall furnish an executed copy of each sublease to Landlord within thirty (30) days after the execution of such sublease.

Section 11.4 Subletting of the Land . Tenant shall have the right to sublet un improved portions of the Land upon which no Improvements have been constructed (any such sublease, a “ Supplier Land Sublease ” ) , to Suppliers for the purpose of constructing building and other improvements on the portion of the Leased Premises to be subleased, provided that the conditions set forth in Section 11.3 shall have been satisfied and Tenant shall have provided to Landlord a survey showing the portion of the Land to be subleased. Tenant shall furnish an executed copy of each sublease to Landlord within thirty (30) days after the execution of such sublease. Any building or other Improvements constructed on the Land pursuant to any such sublease shall be the property of Landlord.

Section 11.5 No Release of Tenant . No sublease or assignment entered into by Tenant in accordance with this Article XI shall release Tenant from its primary liability for the performance of its duties and obligations hereunder, and Tenant shall continue to be obligated for all obligations of “Tenant” in this Lease, which obligations shall continue in full effect as obligations of a principal and not of a guarantor or surety, as though no sublease or assignment (or service, data or collocation agreement) had been made.

ARTICLE XII

LIENS AND ENCUMBRANCES

Section 12.1 Encumbering Title . Tenant shall not do any act which shall in any way encumber the title of Landlord in and to the Leased Premises, nor shall the interest or estate of Landlord in the Leased Premises in any way be subject to any claim by way of lien or encumbrance, whether by operation of law or virtue of any express or implied contract by Tenant. Any claim to, or lien upon, the Leased Premises arising from any act or omission of Tenant shall accrue only against the leasehold estate of Tenant and shall be subject and subordinate to the paramount title and rights of Landlord in and to the Leased Premises. Notwithstanding the foregoing, Landlord shall reasonably cooperate with Tenant in obtaining any reasonable easements or other grants for utilities and other services necessary or desirable in connection with Tenant’s operations at the Leased Premises.

ARTICLE XIII

UTILITIES

Section 13.1 Utilities . Tenant shall contract directly with the providers of all utilities and services furnished to the Leased Premises, including, without limitation, electricity, fuel, power, gas, oil, HVAC, water, sanitary sewer services, telephone, telecommunications, internet connectivity, garbage collection and waste removal, janitorial and cleaning services, burglar protection or security services, extermination and pest control and all other utilities used in or on the Property during the Term, and shall pay, at its sole cost and expense, all charges for any and all such utilities, and such obligation on the part of Tenant shall survive the expiration or earlier termination of this Lease until all such outstanding balances have been paid. All such costs and expenses set forth in this Section 13.1 shall be paid by Tenant to the person or entity to whom such payments are due as and when the same shall become due and payable, prior to any interest, penalty or other premium becoming due and payable. Tenant’s obligations under this Section 13.1 shall survive the expiration or earlier termination of this Lease.

Section 13.2 Service Contracts. Tenant shall have the right, in its sole discretion, to enter into service contracts concerning the maintenance of the Leased Premises provided that the term of any such contract shall not extend (including any options granted under such service contract) beyond the Initial Term or, if applicable, the Extension Term (unless such agreement is terminable by Tenant without cause).

Section 13.3 Interruption of Services . Tenant acknowledges that Landlord is not providing any utilities or other services to Tenant and agrees that Landlord shall not be liable to Tenant for any interruption or failure of any utilities or services to the Leased Premises, or any portion thereof, nor shall such constitute a constructive eviction or give rise to a right of rent offset or abatement or termination right or effect the obligations of Tenant under this Lease in any other way whatsoever

ARTICLE XIV

RIGHTS RESERVED TO LANDLORD

Section 14.1 Rights Reserved to Landlord . Landlord reserves the following rights to be exercised at Landlord’s election:

(a) Upon forty-eight (48) hours’ prior notice to Tenant (except in the event of emergency), to inspect the Leased Premises, subject to Tenant’s right to have a representative accompany Landlord during any such inspection; and

(b) Upon forty-eight (48) hours’ prior notice to Tenant to show the Leased Premises to prospective purchasers, mortgagees, or other persons having a legitimate interest in viewing the same, and, at any time within eighteen (18) months prior to the expiration of the Lease term to persons wishing to rent the Leased Premises, subject to Tenant’s right to have a representative accompany Landlord during any such access and provided Tenant has determined not to extend the Lease in accordance with Section 1.3 hereof or exercise its Purchase Option pursuant to Article XXI hereof;

Landlord may enter upon the Leased Premises for said purposes and may exercise any and all of the foregoing rights hereby reserved; provided that such entry is made during normal business hours unless an emergency exists and that Landlord does not unreasonably interfere with Tenant’s use and enjoyment of the Leased Premises.

ARTICLE XV

QUIET ENJOYMENT

Section 15.1 Quiet Enjoyment . Provided no Event of Default has occurred and is continuing, Tenant shall, subject to the terms and provisions of this Lease, peaceably and quietly hold and enjoy the Leased Premises for the Term hereby demised, only, however, against (i) interference therewith by the affirmative acts of Landlord, its employees or agents, and (ii) interference therewith by any person who may claim superior title to the Leased Premises by, through or under Landlord, but not otherwise. Landlord shall under no circumstances be held responsible for restriction or disruption of access to the Leased Premises from public streets caused by construction work or other actions taken by or on behalf of governmental authorities, and same shall not constitute a constructive eviction of Tenant or give rise to any right or remedy of Tenant against Landlord of any nature or kind.

This covenant of quiet enjoyment is in lieu of any covenant of quiet enjoyment provided or implied by law, and Tenant expressly waives any such other covenant of quiet enjoyment to the extent broader than the covenant contained in this Section. Nothing herein deprives Tenant of its right under law to prevent interference with its operations by third parties not under the control of Landlord, including but such actions are at Tenant’s own cost and expense.

ARTICLE XVI

SUBORDINATION OR SUPERIORITY

Section 16.1 Subordination . Landlord represents that there are no Mortgages (as hereinafter defined) presently encumbering the Leased Premises. This Lease and Tenant’s rights under this Lease are and shall always be subordinate to the operation and effect of any mortgage, or deed of trust now or hereafter placed upon the Facility, the Leased Premises or any part thereof by Landlord, or any renewal, modification, consolidation, replacement, or extension of any such mortgage or deed of trust (a “ Mortgage ”), provided that Landlord shall deliver to Tenant a subordination and non-disturbance agreement using a commercially reasonable form from the holder of such Mortgage (a “ Holder ”) that is reasonably acceptable to Tenant.

Section 16.2 Lease May Be Superior . Notwithstanding Section 16.1 , any Holder of any Mortgage may at any time subordinate its Mortgage to this Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease shall be deemed prior to such Mortgage without regard to their respective dates of execution and delivery and in that event such Holder shall have the same rights with respect to this Lease as though it had been executed prior to the execution and delivery of the Mortgage and had been assigned to such Holder.

Section 16.3 Attornment . If any Mortgage is foreclosed, or Landlord’s interest under this Lease is conveyed or transferred in lieu of foreclosure, then if this Lease is in full force and effect at such time, Tenant shall, at the request of any person which, as a result of any of the foregoing, has succeeded to the interest of Landlord in this Lease (any such person, and his or its successors and assigns, being hereinafter called a “ Successor ”) attorn to and recognize the Successor as Tenant’s Landlord under this Lease and shall promptly execute and deliver any instrument that such Successor may reasonably request to evidence the attornment.

Section 16.4 Right to Cure . Tenant shall, upon written request, give to the Holder of any Mortgage on the Leased Premises copies of all notices by Tenant to Landlord and a reasonable opportunity for such mortgagee to cure any default of Landlord (not to exceed ninety (90) days in any event).

ARTICLE XVII

SURRENDER

Section 17.1 Surrender . Upon the expiration of the Term, or upon termination of the Lease or of Tenant’s right to possession of the Leased Premises, Tenant will at once surrender and deliver up the Leased Premises, together with all Improvements and Alterations thereon, to Landlord, broom swept, in the same condition and repair as existing at the Commencement Date, reasonable wear and tear excepted and except as otherwise provided in Article VII and VIII. Tenant shall deliver to Landlord all keys (electronic or otherwise) to all doors therein. All Alterations made in or upon the Leased Premises (excluding any Trade Fixtures) by Tenant shall become Landlord’s property and shall remain upon the Leased Premises on any such termination without compensation, allowance or credit to Tenant, and Tenant shall have no obligation to remove any such Alterations.

Section 17.2 Removal of Tenant’s Property . Upon the termination of this Lease, Tenant shall remove all of Tenant’s Machinery and Equipment and personal property incident to Tenant’s business ( “ Trade Fixtures ” ) on the Leased Premises, provided, however, that Tenant shall repair any injury or damage to the Leased Premises which may result from such removal, and shall restore the Leased Premises to the same condition as prior to the installation thereof. If Tenant does not remove Tenant’s Trade Fixtures from the Leased Premises prior to the expiration or earlier termination of the Lease Term, Landlord may, at its option, remove the same (and repair any damage occasioned thereby) and dispose thereof or deliver the same to any other place of business of Tenant or warehouse the same, and Tenant shall pay the reasonable out-of-pocket cost of such removal, repair, delivery and warehousing to Landlord on demand, or Landlord may treat such Trade Fixtures and Alterations as having been conveyed to Landlord with this Lease as a Bill of Sale, without further payment or credit by Landlord to Tenant.

Section 17.3 Holding Over . Tenant shall have no right to occupy the Leased Premises or any portion thereof after the expiration of the Lease or after termination of the Lease or of Tenant’s right to possession pursuant to Section 22.3 hereof. In the event Tenant or any party claiming by, through or under Tenant holds over, Tenant shall pay, as liquidated damages, monthly rent at a rate equal to one hundred fifty percent (150%) of the Base Rent payable by Tenant hereunder immediately prior to the expiration or other termination of the Lease or of Tenant’s right to possession.

ARTICLE XVIII

INDEMNITY AND TENANTS ACTS

Section 18.1 Indemnity .

(a) Tenant hereby agrees to indemnify, defend and hold harmless Landlord and the Landlord Group , from and against any and all losses, damages, judgments, liabilities, penalties, fines, debts, actions, suits, proceedings, causes of action, costs, fees and expenses, including, without limitation, costs of court, defense costs and reasonable attorneys’ fees (“ Claims and Losses ”) suffered or incurred by Landlord or any member of the Landlord Group, or asserted or claimed against Landlord or any member of the Landlord Group arising in, upon or connection with the Leased Premises. Notwithstanding the foregoing, however, that it is agreed that this indemnity shall not apply to Claims or Losses arising from the negligence or willful misconduct of Landlord or any member of the Landlord Group. Notwithstanding anything to the contrary or apparent contrary elsewhere herein, Tenant’s indemnity in this Section shall, as to events or occurrences prior to the later of termination of this Lease or Tenant’s vacating of the Leased Premises, survive expiration or termination of this Lease for any reason.

(b) Certain Other Claims and Losses. Tenant hereby further agrees to indemnify, defend and hold harmless the Landlord and the Landlord Group from and against any and all Claims and Losses suffered or incurred by Landlord or any member of the Landlord Group, or asserted or claimed against Landlord or any member of the Landlord Group, to the extent arising in whole or in part from the negligence or willful misconduct, or breach of this Lease, by Tenant, its agents, employees, servants, contractors, suppliers, or sub-occupants (whether or not such occupancy may be in violation of this Lease).

Section 18.2 Tenant Acts . Landlord and its agents shall not be liable to Tenant or to Tenant’s employees, patrons, visitors, invitees, or any other persons for any injury to any such persons or for any damage to personal property caused by any act, omission, or neglect of Tenant or Tenant’s agents or of any other tenant of the Leased Premises (whether in violation of this Lease or otherwise).

Section 18.3 Landlord ’ s Indemnity . Landlord hereby agrees, to the fullest extent permitted by Alabama law, to indemnify, defend and hold harmless the Tenant Group (as defined in Section 19.1), from and against any and all losses, damages, judgments, liabilities, penalties, fines, debts, actions, suits, proceedings, causes of action, costs, fees and expenses, including, without limitation, costs of court, defense costs and reasonable attorneys’ fees (“ Claims and Losses ”) suffered or incurred by Tenant or any member of the Tenant Group, or asserted or claimed against Tenant or any member of the Tenant Group, to the extent arising in whole or in part from the negligence or willful misconduct, or breach of this Lease, by Landlord, its agents, employees, servants, contractors, suppliers, or sub-occupants or any member of the Landlord Group. Notwithstanding the foregoing, however, that it is agreed that this indemnity shall not apply to Claims or Losses arising from the negligence or willful misconduct of Tenant or any member of the Tenant Group. Notwithstanding anything to the contrary or apparent contrary elsewhere herein, the indemnity in this Section shall, as to events or occurrences prior to the later of termination of this Lease or Tenant’s vacating of the Leased Premises, survive expiration or termination of this Lease for any reason.

Section 18.4 Survival . The provisions of Article XVII I shall survive the expiration or earlier termination of this Lease.

ARTICLE XIX

ENVIRONMENTAL CONDITIONS

Section 19.1 Defined Terms .

(a) “ Hazardous Material ” shall include but shall not be limited to any substance, material, or waste that is regulated by any Federal, state, or local governmental authority because of toxic, flammable, explosive, corrosive, reactive, radioactive or other properties that may be hazardous to human health or the environment, including without limitation asbestos and asbestos containing materials, radon, petroleum and petroleum products, urea formaldehyde foam insulation, methane, lead based paint, polychlorinated biphenyl compounds, hydrocarbons or like substances and their additives or constituents, pesticides, agricultural chemicals, and any other special, toxic, or hazardous substances, materials, or wastes of any kind, including without limitation those now or hereafter defined, determined, or identified as “hazardous substances,” “hazardous materials,” “toxic substances,” or “hazardous wastes” in any Environmental Law.

(b) “ Environmental Law ” shall mean any federal, state, or local law, statute, ordinance, code, rule, regulation, policy, common law, license, authorization, decision, order, or injunction applicable to the Leased Premises which pertains to health, safety, any Hazardous Material, or the environment (including, but not limited to, ground, air, water, or noise pollution or contamination, and underground or aboveground tanks) together with all rules, regulations, orders, and decrees now or hereafter promulgated under any of the foregoing, as any of the foregoing now exist or may be changed or amended or come into effect in the future.

(c) “ Environmental Claim ” shall mean and include any demand, notice of violation, inquiry, cause of action, proceeding, or suit for damages (including reasonable attorneys’, consultants’, and experts’ fees, costs or expenses), losses, injuries to person or property, damages to natural resources, fines, penalties, interest, cost recovery, compensation, or contribution resulting from or in any way arising in connection with any Hazardous Material in violation of any Environmental Law.

(d) “ Environmental Condition ” shall mean (i) the presence on the Leased Premises of one or more underground storage tanks or (ii) the existence of any Hazardous Material on the Leased Premises, in violation of or requiring cleanup under any Environmental Law in concentrations or at levels exceeding applicable federal, state, or local standards for soil, groundwater, or waste, either of which subjects a party to liability for any Environmental Claim.

(e) “ Environmental Remediation ” shall mean any investigation, cleanup, removal, containment, remediation, or other action relating to an Environmental Condition (i) required pursuant to any Environmental Law, or (ii) necessary to prevent a party from incurring, or relieve a party from, loss of any kind as a result of an Environmental Claim.

(f) “ Landlord Group ” Landlord and any or all of Landlord’s shareholders, members, partners, officers, directors, agents, employees, representatives, contractors, workmen, mechanics, suppliers, customers, guests, licensees, invitees, assignees and all of their respective successors and assigns or any party claiming by, through or under any of them.

(g) “ Remediating Party ” shall mean the party which has elected (or is deemed to have elected) to perform any Environmental Remediation.

(h) “ Tenant Group ” Tenant and any or all of Tenant’s shareholders, members, partners, officers, directors, agents, employees, representatives, contractors, workmen, mechanics, suppliers, customers, guests, licensees, invitees, subtenants, assignees and all of their respective successors and assigns or any party claiming by, through or under any of them.

Section 19.2 Tenant ’ s Covenants with Respect to Environmental Matters . During the Term, Tenant, at its sole cost and expense, shall:

(a) comply with all Environmental Laws relating to the use and operation of the Leased Premises;

(b) not install or operate any above or below ground tank, sump, pit, pond, lagoon, or other storage or treatment vessel or device to be used in connection with Hazardous Materials on the Leased Premises without prior written notice to Landlord and except as used in the course of Tenant’s business and in compliance with all applicable Environmental Laws, including obtaining such permits as may be required by such Environmental Laws;

(c) not handle, use, generate, treat, dispose of, or permit the use, handling, generation, treatment, storage, or disposal of any Hazardous Material in, on, under, around, or above the Leased Premises at any time during the Term, except as used in the course of Tenant’s business and in compliance with all applicable Environmental Laws, including obtaining such permits as may be required by such Environmental Laws (and notice of Landlord with respect to any permit so applied for);

(d) not use any above ground tank (including barrels and drums), of any size within or without the Leased Premises, except (i) in compliance with all Environmental Laws, and (ii) if, reasonably required by Landlord, secondary containment is provided; and

(e) upon the discovery of an Environmental Condition at, on, under or emanating from the Leased Premises:

1. promptly, but not later than five (5) business days after the discovery of the Environmental Condition, notify Landlord of the Environmental Condition;

2. if the Environmental Condition exists and (i) is not the responsibility of Landlord pursuant to Section 19.7 and (ii) was not existing as of the Commencement Date, Tenant shall promptly perform any required Environmental Remediation with respect to such Environmental Condition pursuant to the terms of this subparagraph (e) and prior to commencement of any Environmental Remediation, submit a proposed scope of work for the Environmental Remediation, together with a timetable and a cost estimate, to Landlord for review and approval, which approval shall not be unreasonably withheld, conditioned or delayed;

3. after obtaining Landlord’s approval diligently perform the approved Environmental Remediation, using an environmental consulting firm reasonably acceptable to Landlord;

4. submit to Landlord in a timely manner for Landlord’s reasonable review and comment the documentation and information required by Sections 19.6 and 19.7 of this Lease relating to each phase of the Environmental Remediation, and pay all reasonable costs of Landlord described in Section 19,7(c) ;

5. comply with applicable release reporting requirements under Environmental Law and provide Landlord with any information reasonably necessary for Landlord to comply with Environmental Law; and

6. to the extent applicable, obtain a so called “no further remediation letter” or other acknowledgment from the federal, state, or local governmental agency with jurisdiction over the Environmental Condition that the Leased Premises have been fully remediated.

Section 19.3 Rights of Inspection . ln addition to Landlord’s other rights of entry, access and inspection contained in this Lease, Landlord and its agents and representatives shall have, upon reasonable prior notice given to Tenant and at reasonable hours (provided Tenant

shall have the right to have a representative present at all times during such entry) , a right of entry and access to the Leased Premises for the purposes of (i) inspecting the documentation relating to Hazardous Materials or environmental matters maintained by Tenant or any occupant of the Leased Premises; (ii) ascertaining the nature of the activities being conducted on the Leased Premises and investigating whether Tenant is in compliance with its obligations under Article XIX of this Lease; (iii) determining the type, kind, and quantity of all products, materials, and substances brought onto the Leased Premises, or made or produced thereon, and (iv) performing such environmental investigations and assessments as Landlord may reasonably desire to perform. The investigation and assessments may also include reasonable subsurface or other invasive investigation of the Leased Premises, including, but not limited to, soil borings and sampling of site soil and ground or surface water for laboratory analysis, as may be reasonably recommended by the Landlord’s consultant as part of its inspection of the Leased Premises or based upon such other reasonable evidence of Environmental Conditions warranting such subsurface or other invasive investigation. Tenant will cooperate with Landlord and Landlord’s consultants and will supply, promptly upon request, any information reasonably requested to facilitate the completion of the environmental assessments and investigations. Landlord and its agents and representatives shall have the right to take samples in quantities sufficient for analysis of all products, materials, and substances present on the Leased Premises and shall also have the right to conduct other tests and studies as may be reasonably determined by Landlord to be appropriate in order to investigate whether Tenant is in compliance with its obligations under Article XIX. Any inspections and tests conducted in furtherance of this Section 19.3 shall (i) be at Landlord’s expense and (ii) use commercially reasonable efforts as to minimize interference with Tenant’s use or occupancy of the Leased Premises. Landlord agrees to promptly repair any material damage to the Leased Premises caused by Landlord’s exercise of its rights in this Section 19.3. ln any case, Landlord shall promptly advise Tenant of the existence of any identified Environmental Conditions and provide such information regarding any Environmental Conditions as to allow Tenant to ensure the health and safety of its employees and others present at the Leased Premises.

Section 19.4 Copies of Notices . During the Term, Landlord and Tenant shall promptly provide each other with copies of all summons, citations, directives, information inquiries or requests, notices of potential responsibility, notices of violation or deficiency, orders or decrees, Environmental Claims, complaints, investigations, judgments, letters, notices of environmental liens or response actions in progress, and other communications, written or oral, actual or threatened, received by such Tenant, Landlord or any occupant of the Leased Premises, from any federal, state, or local agency or authority, or any other entity or individual (including both governmental and non governmental entities and individuals), concerning (a) any actual or alleged release of any Hazardous Material on, to, or from the Leased Premises; (b) any actual or alleged violation of or responsibility under Environmental Laws with respect to the Leased Premises; or (c) any actual or alleged liability under any theory of common law tort or toxic tort, including without limitation, negligence, trespass, nuisance, strict liability, or ultrahazardous activity with respect to the Leased Premises.

Section 19.5 Tests and Reports . Upon written request by Landlord, Tenant shall provide Landlord, at Tenant’s expense, with (i) copies of all environmental reports and tests prepared or obtained by or for Tenant or any occupant of the Leased Premises; (ii) copies of transportation and disposal contracts (and related manifests, schedules, reports, and other

information) entered into or obtained by Tenant with respect to any Hazardous Material at the Leased Premises ; (iii) copies of any permits issued to Tenant under Environmental Laws with respect to the Leased Premises; (iv) prior to filing, copies of any and all reports, notifications, and other filings to be made by Tenant or any occupant of the Leased Premises to any Federal, state, or local environmental authorities or agencies, and after filing, copies of such filings with respect to the Leased Premises; and (v) any other relevant documents and information with respect to environmental matters relating to the Leased Premises. Tenant shall be obligated to provide such documentation only to the extent that the documentation is within Tenant’s possession or control.

Section 19.6 Indemnification . Tenant shall reimburse, defend with counsel reasonably chosen by Landlord, indemnify, and hold Landlord and the Landlord Group free and harmless from and against any and all Environmental Claims, response costs, losses, liabilities, damages, costs, and expenses, including without limitation loss of rental income, loss due to business interruption, and reasonable attorneys’ and consultants’ fees, costs and expenses arising out of or in any way connected with any or all of the following:

(a) any Hazardous Material which is or was actually generated, stored, treated, released, disposed of, or otherwise located on or at the Leased Premises as a result of the act or omission of Tenant or any member of the Tenant Group (regardless of the location at which such Hazardous Material is now or may in the future be located or disposed of), including, but not limited to any and all (i) liabilities under any common law theory of tort, nuisance, strict liability, ultrahazardous activity, negligence, or otherwise based upon, resulting from or in connection with any Hazardous Material; (ii) obligations to take response, cleanup, or corrective action pursuant to any Environmental Laws; and (iii) the costs and expenses of investigation or remediation in connection with the decontamination, removal, transportation, incineration, or disposal of any of the foregoing in accordance with Environmental Law;

(b) any actual or alleged illness, disability, injury, or death of any person, in any manner arising out of or allegedly arising out of exposure to any Hazardous Material or other substances or conditions present at the Leased Premises as a result of the act or omission of Tenant or any member of the Tenant Group (including, but not limited to, ownership, operation, and disposal of any equipment which generates, creates, or uses electromagnetic files, x rays, other forms of radiation and radioactive materials), regardless of when any such illness, disability, injury, or death shall have occurred or been incurred or manifested itself;

(c) any failure by Tenant to comply with any obligation under this Article XIX relating to an Environmental Condition for which Tenant is Remediating Party;

(d) the imposition of any lien for damages caused by, or the recovery of any costs for, the remediation or cleanup of any Hazardous Material as a result of the act or omission of Tenant or any member of the Tenant Group; and

(e) costs of removal of any and all Hazardous Materials from all or any portion of the Leased Premises, which Hazardous Materials came to be present at the Leased Premises, either as a result of the act or omission of Tenant or any member of the Tenant Group, or which otherwise came to be present at the Leased Premises during the term of this Lease (unless a result of any act of Landlord or the Landlord Group during the term of this Lease);

To the extent that any claim, event or circumstances set forth in clauses (a), (b), (d) and (e) above was caused (i) by an act of the Landlord or any member of the Landlord Group or (11) by the presence or existence of Hazardous Materials on the Leased Premises as of the Commencement Date (other than the presence or existence of Hazardous Materials on the Leased Premises which are part of the Machinery and Equipment or building systems and which are, as of the Commencement Date, in compliance with Environmental Law), such clauses (a), (b), (d) and (e) shall not be applicable.

Section 19.7 Landlord ’ s Obligation . In the event of an Environmental Condition resulting from the violation of any Environmental Law with respect to the Leased Premises by Landlord or any member of the Landlord Group, its tenants (other than Tenant), subtenants, concessionaires, licensees, agents, employees or invitees or any other Environmental Condition caused by such parties, Landlord shall, at its sole cost and expense, diligently perform the Environmental Remediation, provided that such Environmental Remediation shall (i) be reasonably approved by Tenant, (ii) conducted in a safe and workman like manner and (iii) be taken as to reasonably minimize interference with Tenant’s use or occupancy of the Leased Premises.

Section 19.8 Survival . The provisions of Article XIX shall survive the expiration or earlier termination of this Lease.

ARTICLE XX

FORCE MAJEURE

Section 20.1 Force Majeure . Neither Landlord nor Tenant shall be deemed in default with respect to any of the terms, covenants and conditions of this Lease on Landlord’s or Tenant’s part to be performed, other than the failure to make any payment of money due hereunder and within the reasonable control of the paying party, if such party’s failure to timely perform same is due in whole or in part to any civil disorder, failure of power, restrictive governmental laws and regulations, riots, acts of terrorism, insurrections, war, shortages, accidents, casualties, acts of God, acts caused directly by the other party hereto or such party’s agents, employees and invitees, or any other cause beyond the reasonable control of Landlord or Tenant, as applicable (each, a “ Force Majeure Event ”).

ARTICLE XXI

PURCHASE OPTION

In consideration of and as an inducement to Tenant to enter into this Lease, Landlord hereby grants to Tenant the option to purchase the Leased Premises (the “ Purchase Option ”) on and subject to the following terms and conditions:

Section 21.1 Term . During the Initial Term and the Extension Term, Tenant shall have the right to exercise the Purchase Option pursuant to the terms and conditions of this Article XXI.

Section 21.2 Purchase Price of the Lease Premises . If the Purchase Option is exercised by Tenant, the full purchase price of the Leased Premises shall be ***, unless Landlord and Tenant agree to a different purchase price. The purchase price shall be paid in one lump sum at the Closing (as hereinafter defined).

Section 21.3 Exercise of Purchase Option . Provided there is not an Event of Default by Tenant at the time of such exercise, Tenant may exercise the Purchase Option by giving Landlord written notice thereof at least eighteen (18) months prior to the expiration of the Initial Term.

Section 21.4 Closing and Possession . The closing of the conveyance of the Leased Premises to Tenant (the “ Closing ”) shall occur at such place as the Parties may mutually determine, on a date designated by Tenant on or prior to the last day of the Initial Term. In the event the Closing occurs other than on the last day of the Initial Term, Landlord shall be entitled to payment at Closing of ***. As of the Closing, this Lease shall terminate and be of no further force and effect.

Section 21.5 Condition of Title . Landlord shall convey title to the Leased Premises by warranty deed, free and clear of all liens, encumbrances, mortgages, easements, conditions, reservations and restrictions except: (a) those easements, conditions, reservations and restrictions existing on the effective date of this Lease and set forth on Exhibit “B” attached hereto; (b) those easements, conditions, reservations and restrictions imposed upon the Leased Premises with Tenant’s consent during the term of this Lease; (c) liens for Impositions not yet due and payable; (d) those exceptions to title which have been agreed to in writing by Tenant and (e) any title exceptions arising by reason of acts of the Tenant, including any subleases entered into by Tenant. Landlord shall furnish Tenant a policy of title insurance written by a title insurer reasonably acceptable to Tenant insuring the title to the Leased Premises, including all easements, free and clear of all defects except those specifically mentioned herein and the cost thereof shall be split evenly between Landlord and Tenant.

Section 21.6 Assignment of Purchase Option . Any assignment of this Lease permitted hereunder or consented to by Landlord shall constitute an assignment of the Purchase Option. Tenant may not retain this Purchase Option in the event it assigns this Lease, but such assignee shall be entitled to exercise the Purchase Option.

Section 21.7 Further Purchase Option . If Tenant shall elect to extend this Lease pursuant to Section 1.3 hereof, Tenant shall have an option to purchase the Leased Premises on the terms and conditions of Sections 21.2, 21.3, 21.4 and 21.5 hereof, provided that all references therein to the “Initial Term” shall be deemed to refer to the “Extension Term.”

Section 21.8 Memorandum of Purchase Option . Upon the request of Tenant, Landlord shall execute and deliver a memorandum of purchase option, in a form reasonably acceptable to Landlord and Tenant, evidencing the Purchase Option. At Tenant’s election and at Tenant’s sole cost and expense, such memorandum shall be recorded in the records of the county in which the Leased Premises are located.

ARTICLE XXII

DEFAULTS AND REMEDIES

Section 22.1 Defaults . Tenant agrees that any one or more of the following events shall be considered events of default (an “ Event of Default ”):

(a) Tenant shall be adjudged an involuntary bankrupt, or a decree or order approving, as properly filed, a petition or answer filed against Tenant asking reorganization of Tenant under the Federal bankruptcy laws as now or hereafter amended, or under the laws of any state, shall be entered, and any such decree or judgment or order shall not have been vacated or set aside within ninety (90) days from the date of the entry or granting thereof; or

(b) Tenant shall file or admit the jurisdiction of the court and the material allegations contained in any petition in bankruptcy or any petition pursuant or purporting to be pursuant to the Federal bankruptcy laws as now or hereafter amended, or Tenant shall institute any proceeding or shall give its consent to the institution of any proceedings for any relief of Tenant under any bankruptcy or insolvency laws or any laws relating to the relief of debtors, readjustment of indebtedness, reorganization, arrangements, composition or extension; or

(c) Tenant shall make any assignment for the benefit of creditors or shall apply for or consent to the appointment of a receiver for Tenant or any of the property of Tenant; or

(d) The Leased Premises are levied upon by any revenue officer or similar officer and such levy is not released within thirty (30) days; or

(e) A decree or order appointing a receiver of the property of Tenant shall be made and such decree or order shall not have been vacated or set aside within ninety (90) days from the date of entry or granting thereof; or

(f) Tenant shall abandon the Leased Premises without complying with its payment of Rent and repair obligations hereunder; or

(g) Tenant shall default in any payment of Rent or in any other payment required to be made by Tenant hereunder or shall fait to maintain any insurance required of Tenant pursuant to Article VI hereunder and any such default shall continue for five (5) business days after notice thereof in writing to Tenant; or

(h) Tenant shall default in any payment required to be made by Tenant pursuant to the Machinery and Equipment Agreement, and any such default shall continue for five (5) business days after notice thereof in writing to Tenant; or

(i) Subject to the terms of Section 22.2 below, Tenant shall default in keeping, observing or performing any of the other material covenants or material agreements herein contained to be kept, observed and performed by Tenant, and such default shall continue for thirty (30) days after notice thereof in writing to Tenant.

Section 22.2 Tenant ’ s Opportunity to Cure . If Tenant defaults under Section 22.1(h) , and such default cannot with due diligence be cured within a period of thirty (30) days, and if notice thereof in writing shall have been given to Tenant, and if Tenant, prior to the expiration of thirty (30) days from and after the giving of such notice, commences to eliminate the cause of such default and proceeds diligently and with reasonable dispatch to take all steps and do all work required to cure such default and does so cure such default, then an Event of Default shall not be deemed to have occurred; provided, however, that Tenant’s right to cure hereunder shall not extend beyond the expiration of the Lease term, and provided further that the curing of any default in such manner shall not be construed to limit or restrict Landlord’s remedies for any other default which becomes an Event of Default.

Section 22.3 Remedies . Upon the occurrence of any one or more Events of Default, Landlord may at its election terminate this Lease or terminate Tenant’s right to possession only, without terminating the Lease. Upon termination of the Lease, or upon any termination of Tenant’s right to possession without termination of the Lease, Tenant shall surrender possession and vacate the Leased Premises immediately, and deliver possession thereof to Landlord, and hereby grants to Landlord the full and free right, without demand or notice of any kind to Tenant (except as hereinabove expressly provided for), to enter into and upon the Leased Premises in such event with process of law and to repossess the Leased Premises as Landlord’s former estate and to expel or remove Tenant and any others who may be occupying or within the Leased Premises without being deemed in any manner guilty of trespass, eviction, or forcible entry or detainer, without incurring any liability for any damage resulting therefrom and without relinquishing Landlord’s rights to Rent or any other right given to Landlord hereunder or by operation of law. Upon termination of the Lease, Landlord shall be entitled to recover as damages all Rent and other sums due and payable by Tenant on the date of termination, plus an amount equal to the value of the Rent and other sums provided herein to be paid by Tenant for the residue of the stated term hereof, less the fair rental value of the Leased Premises for the residue of the stated term (taking into account the time and expenses reasonably necessary to obtain a replacement tenant or tenants, including expenses hereinafter described relating to recovery of the Leased Premises, preparation for reletting and for reletting itself). If Landlord elects to terminate Tenant’s right to possession only without terminating the Lease, Landlord may, at Landlord’s option, enter into the Leased Premises, remove Tenant’s signs and other evidences of tenancy, and take and hold possession thereof as hereinafter provided, without such entry and possession terminating the Lease or releasing Tenant, in whole or in part, from Tenant’s obligations to pay the Rent and other sums provided herein to be paid by Tenant for the full term or from any other of its obligations under this Lease. Landlord may relet all or any part of the Leased Premises for such Rent and upon such terms as shall be satisfactory to Landlord (including the right to relet the Leased Premises as a part of a larger area, and the right to change the character or use made of the Leased Premises). For the purpose of such reletting, Landlord may decorate or make any repairs, changes, alterations or additions in or to the Leased Premises that may be reasonably necessary. If Landlord does not relet the Leased Premises, Tenant shall pay to Landlord on demand damages equal to the amount of the Rent, and other sums provided herein to be paid by Tenant for the remainder of the Lease term. If the Leased Premises are relet and a sufficient sum shall not be realized from such reletting after paying all of the expenses of such decorations, repairs, changes, alterations, additions, the expenses of such reletting and the collection of the Rent accruing therefrom (including, but not by way of limitation, attorneys’ fees and brokers’ commissions), to satisfy the Rent and other sums herein provided to be paid for the

remainder of the Lease term, Tenant shall pay to Landlord on demand any deficiency and Tenant agrees that Landlord may file suit to recover any Rent or other sums falling due under the terms of this Section from time to time. Landlord shall, to the extent required by Alabama law, exercise reasonable efforts to mitigate its costs incurred and damages in connection with any Tenant Event of Default.

Section 22.4 Liquidated Damages . It is stipulated and agreed that in the event of the termination of this Lease pursuant to Section 22.3 hereof, Landlord shall forthwith, at its election, notwithstanding any other provisions of this Lease to the contrary, be entitled to recover from Tenant as and for liquidated damages an amount equal to the difference between the Rent reserved hereunder for the unexpired portion of the Term demised and the fair and reasonable value of the Leased Premises for the same period. In the computation of such damages the difference between any installment of Rent becoming due hereunder after the date of termination and the fair and reasonable rental value of the Leased Premises for the period for which such installment was payable shall be discounted to the date of termination at the rate of four (4%) per annum. If the Leased Premises or any part thereof be re-let by Landlord for the unexpired term of this Lease, or any part thereof, before presentation of proof of such liquidated damages to any court, commission or tribunal, the amount of rent reserved upon such reletting shall be deemed to be the fair and reasonable rental value for the part or the whole of the Leased Premises so re-let during the term of the re-letting.

Section 22.5 Landlord ’ s Right to Cure . Landlord may, but shall not be obligated to, cure any default that Tenant has not cured after the expiration of all applicable notice and cure periods (specifically including, but not by way of limitation, Tenant’s failure to obtain insurance, make repairs, or satisfy lien claims); and whenever Landlord so elects, all reasonable out-of-pocket costs and expenses paid by Landlord in curing such default, including without limitation reasonable attorneys’ fees, shall be so much Additional Rent due on the next rent date after such payment.

Section 22.6 Remedies Cumulative . Except for the liquidated damages in Section 22.4, no remedy herein or otherwise conferred upon or reserved to Landlord shall be considered to exclude or suspend any other remedy but the same shall be cumulative and shall be in addition to every other remedy given hereunder, or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease to Landlord may be exercised from time to time and so often as occasion may arise or as may be deemed expedient

Section 22.7 No Waiver . No delay or omission of Landlord to exercise any right or power arising from any default shall impair any such right or power or be construed to be a waiver of any such default or any acquiescence therein. No waiver of any breach of any of the covenants of this Lease shall be construed, taken or held to be a waiver of any other breach, or as a waiver, acquiescence in or consent to any further or succeeding breach of the same covenant. The acceptance by Landlord of any payment of Rent after the termination by Landlord of this Lease or of Tenant’s right to possession hereunder shall not, in the absence of agreement in writing to the contrary by Landlord, be deemed to restore this Lease or Tenant’s right to possession hereunder, as the case may be, but shall be construed as a payment on account, and not in satisfaction of damages due from Tenant to Landlord.

ARTICLE XXIII

MACHINERY AND EQUIPMENT

Section 23.1 Equipment Operation . Tenant shall be responsible and liable for the safe and proper operation of any and all equipment within or comprising a part of the Leased Premises, and shall be responsible for any training necessary for said safe and proper operation of equipment which shall include, but not be limited to, any conveyance devices such as top running electric cranes, hoists, jib cranes, forklifts, or heaters (if any). Any liabilities resulting from the operation of said equipment shall be the sole responsibility of Tenant, except to the extent that any such liability was caused by the an act or omission to act by Landlord.

ARTICLE XXIV

WAIVER OF SECURITY INTEREST;

RIGHT TO DEAL WITH PROPERTY OF TENANT

Section 24.1 Waiver of Security Interest ; Tenant ’ s Personalty . Landlord expressly waives any statutory landlord lien rights and agrees that this Lease shall not create any contractual lien of Landlord with respect to Tenant’s removable trade fixtures, furnishings or other personal property of Tenant located at the Leased Premises. No exertion of control by Landlord or its agents or contractors over Tenant’s inventory, equipment or other personal property located in the Leased Premises, whether or not owned by Tenant (“ Tenant ’ s Personalty ”), by reason of Landlord’s exercise of its rights to repossess the Leased Premises shall ever be deemed a conversion of Tenant’s Personalty as long as Landlord substantially complies with the requirements of this Section 24.1 . If Landlord repossesses the Leased Premises pursuant to the authority herein granted, with or without terminating the Lease, then, unless Tenant makes arrangements to remove and does move Tenant’s Personalty out of and off of the Leased Premises within thirty (30) days after Landlord’s repossession of the Leased Premises and the giving of written notice of such repossession pursuant to the notice provisions of this Lease, Landlord shall have the right (i) to remove and store, at Tenant’s expense, all of Tenant’s Personalty found at the Leased Premises, including that which is owned by or leased to Tenant (without obligation to investigate third party claims thereon), and (ii) to dispose of such un-reclaimed Tenant Personalty left in the Leased Premises, the same being deemed at Landlord’s election to have been sold to Landlord by this Lease as if it were a bill of sale (Tenant hereby granting, selling and conveying such property to Landlord with general warranty of title upon Landlord making an entry in its records of its election under this clause (ii)), without obligation to account to Tenant for any proceeds thereof or the method of sale or other disposal thereof or any obligation to obtain any value therefor. Landlord also shall have the right (but no obligation) to relinquish possession of all or any portion of such Tenant Personalty to any person (“ Claimant ”) who presents to Landlord a copy of any instrument represented by Claimant to have been executed by Tenant (or any predecessor of Tenant) granting Claimant the right under various circumstances to take possession of such Tenant Personalty, without the necessity on the part of Landlord to inquire into the authenticity or legality of said instrument. The rights of Landlord herein stated shall be in addition to any and all other rights that Landlord has or may hereafter have at law or in equity (and not waived pursuant to the first sentence of this Section 24.1); and Tenant stipulates and agrees that the rights herein granted Landlord are commercially reasonable. Tenant further agrees to indemnify, defend and hold harmless Landlord (which obligations of Tenant shall survive termination of this Lease) from and against any and all claims by any third party owner or lienholder on property of Tenant that is disposed of by Landlord pursuant to this Section.

ARTICLE XXV

MISCELLANEOUS

Section 25.1 Estoppel Certificates . Tenant and Landlord shall each at any time and from time to time upon not less than ten (10) business days prior written request from the other party, execute, acknowledge and deliver to the requesting party, in a form reasonably satisfactory to the requesting party, a written statement certifying (if true) that Tenant has accepted the Leased Premises, that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), that, to the party’s knowledge, neither Landlord or Tenant is not in default hereunder, the date to which Rent has been paid in advance, if any, and such other accurate certifications as may reasonably be required by Landlord or Tenant.

Section 25.2 Amendments Must Be in Writing . None of the covenants, terms or conditions of this Lease shall be altered, waived, modified, changed or abandoned except by a written instrument, duly executed and delivered by a duly authorized officer or a duly authorized agent of each of the parties hereto.

Section 25.3 Notices . All notices, demands, requests, consents, approvals and other communications (any of the foregoing, a “ Notice ”) required, permitted, or desired to be given hereunder shall be in writing sent by registered or certified mail, postage prepaid, return receipt requested or delivered by reputable overnight courier addressed to the party to be so notified at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 25.3. Any such Notice shall be deemed to have been received (a) when received or refused if such Notice is mailed by certified or registered United States mail, postage prepaid, return receipt requested, or (b) the next business day if sent by an overnight commercial courier, in each case addressed to the parties with confirmed receipt of delivery; as follows:

With a copy to:

Jones Day

77 West Wacker Drive

Chicago, Illinois 60601

Attention: Brian L. Sedlak, Esq.

Section 25.4 Short Form Lease . This Lease shall not be recorded, but the parties agree, at the request of either of them, to execute a Short Form Lease for recording, containing the names of the parties, the legal description and the term of the Lease.

Section 25.5 Time of Essence . Time is of the essence of this Lease, and all provisions herein relating thereto shall be strictly construed.

Section 25.6 Relationship of Parties . Nothing contained herein shall be deemed or construed by the parties hereto, or by any third party, as creating the relationship of principal and agent or of partnership, or of joint venture, by the parties hereto, it being understood and agreed that no provision contained in this Lease nor any acts of the parties hereto shall be deemed to create any relationship other than the relationship of landlord and tenant.

Section 25.7 Captions . The captions of this Lease are for convenience only and are not to be construed as part of this Lease and shall not be construed as defining or limiting in any way the scope and intent of the provisions hereof.

Section 25.8 Severability . If any term or provision of this Lease shall to any extent be held invalid or unenforceable, the remaining terms and provisions of this Lease shall not be affected thereby, but each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.

Section 25.9 Applicable Law/Jurisdiction . This Lease shall be construed and enforced in accordance with the laws of the State of New York without regard to conflict of law provisions except as to matters relating to the creation of the leasehold estate hereunder and the exercise of rights and remedies with respect thereto, which shall be governed by and construed in accordance with the laws of the state of Alabama. Any legal suit, action or proceeding arising out of or based upon this agreement, the other transaction documents or the transactions contemplated hereby or thereby may be instituted in the Federal Courts of the United States of America or the courts of the State of New York in each case located in the city of New York, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. service of process, summons, notice or other document by mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. the parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

Section 25.10 Covenants Binding on Successors . All of the covenants, agreements, conditions and undertakings contained in this Lease shall extend and inure to and be binding upon the successors and assigns of the respective parties hereto, the same as if they were in every case specifically named, and wherever in this Lease reference is made to either of the parties

hereto, it shall be held to include and apply to, wherever applicable, the successors and assigns of such party. Nothing herein contained shall be construed to grant or confer upon any person or persons, firm, corporation or governmental authority, other than the parties hereto, their successors and assigns, any right, claim or privilege by virtue of any covenant, agreement, condition or undertaking in this Lease contained.

Section 25.11 Brokerage . Tenant and Landlord each represent and warrant to the other party that they have had no dealings with any broker or agent in connection with this Lease. Tenant and Landlord each covenant to pay, hold harmless, indemnify and defend the other party from and against any and all costs, expenses or liability (including, without limitation, reasonable attorney’s incurred by the other party) for any compensation, commissions and charges claimed by any broker or agent with respect to this Lease or the negotiation thereof.

Section 25.12 Intentionally Omitted

Section 25.13 Signs . Tenant shall have the right to place signs for its business on the exterior of the Leased Premises. All Tenant exterior signs must be constructed, installed and kept by Tenant, at Tenant’s sole cost and expense, in compliance with all applicable laws, rules and regulations pertaining thereto, in good condition and repair, and with all required permits and licenses therefore in full effect, and the same shall not be used by any party other than Tenant. Landlord gives no representation, warranty or assurance of any kind to Tenant that such exterior signs will be able to be kept or maintained in such locations under the laws and regulations that exist or come into effect from time to time, and Landlord shall have no liability to Tenant whatsoever should the same be denied by law at any time. Tenant shall be responsible for the maintenance and repair, at Tenant’s sole cost and expense, of any signs erected by Tenant hereunder.

Section 25.14 Attorneys ’ Fees . In the event of any litigation between Landlord and Tenant with respect to this Lease, the non-prevailing party in such litigation shall pay the reasonable attorneys’ fees and court costs and expenses of the prevailing party.

Section 25.15 Compliance with Law . Tenant shall comply with all orders, ordinances, regulations and laws of the municipal corporation and other governmental authorities that are applicable to the Leased Premises and/or Tenant’s use of the Leased Premises, whether requiring alterations or improvements of a capital nature or otherwise.

Section 25.16 No Waiver . Except as otherwise expressly stated to the contrary elsewhere herein, no waiver by Landlord or Tenant of any default or breach of any term, covenant, condition, agreement, provision, or stipulation herein contained shall constitute a waiver of any subsequent default or breach of the same or any other term, covenant, condition, agreement, provision or stipulation hereof.

Section 25.17 Entire Agreement ; Exhibits . This Lease embodies the entire contract between the parties hereto relative to the subject matter hereof, and all prior discussions, negotiations, agreements, representations, assurances and/or proposals, if any, prior to the date hereof are hereby merged out of existence and rendered void and of no force or effect whatsoever. All exhibits referred to in this Lease and attached hereto are incorporated herein for all purposes.

Section 25.18 Limited Recourse . The liability of Landlord to Tenant for any default by Landlord under the terms of this Lease shall be limited to the interest of Landlord in the Leased Premises and the proceeds of any liability insurance policies of Landlord related to such claim(s), and Tenant agrees to look solely to Landlord’s interest in the Leased Premises and such claim-related insurance proceeds, if any, for the recovery of any judgment from Landlord, it being expressly understood and agreed that Landlord shall never be personally liable for any judgment or deficiency, WHETHER OR NOT THE CLAIM IN QUESTION AROSE, IN WHOLE OR IN PART, FROM THE NEGLIGENCE (WHETHER INDEPENDENT, CONCURRENT, JOINT, COMPARATIVE OR OTHERWISE) OF LANDLORD OR ANY PARTY FOR WHOLE ACTIONS LANDLORD IS LEGALLY LIABLE. This clause shall not be deemed to limit or deny any remedies that Tenant may have in the event of a default by Landlord hereunder which do not involve the personal liability of Landlord in damages.

Section 25.19 Waiver of Implied Warranties . TENANT HEREBY AGREES, AS A MATERIAL PART OF THE CONSIDERATION FOR LANDLORD’S ENTERING INTO THIS LEASE, THAT EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2.2, LANDLORD HAS MADE NO WARRANTIES TO TENANT (OR ANY OF TENANT’S EMPLOYEES OR AGENTS) REGARDING THE CONDITION OF THE PREMISES, EITHER EXPRESS OR IMPLIED, AND LANDLORD HEREBY EXPRESSLY DISCLAIMS ANY WARRANTY (INCLUDING ANY IMPLIED WARRANTY) THAT THE PREMISES ARE OR WILL BE SUITABLE FOR TENANT’S INTENDED USE THEREOF. TENANT AGREES THAT TENANT’S OBLIGATION TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, BUT THAT TENANT WILL CONTINUE TO PAY RENT WHEN DUE HEREUNDER, WITHOUT ABATEMENT, SET-OFF OR DEDUCTION, EXCEPT AS OTHERWISE PROVIDED IN SECTION 7.1, 8.2, 9.4, 25.24, NOTWITHSTANDING ANY BREACH OR ALLEGED BREACH BY LANDLORD OF ANY OF ITS EXPRESS OBLIGATIONS UNDERTAKEN IN THIS LEASE.

Section 25.20 Waiver Of Jury Trial . LANDLORD AND TENANT HEREBY IRREVOCABLY WAIVE, TO THE FULL EXTENT PERMITTED BY LAW, ANY RIGHT TO HAVE A JURY IN CONNECTION WITH ANY ACTION, LEGAL PROCEEDING OR HEARING WITH RESPECT TO THIS LEASE, AND SUCH WAIVER SHALL BE EFFECTIVE WITH RESPECT TO BOTH PARTIES AND ANY PARTY THAT MAY CLAIM THROUGH LANDLORD AND TENANT. BOTH LANDLORD AND TENANT HAVE READ THIS PARAGRAPH, HAVE BEEN REPRESENTED BY COMPETENT LEGAL COUNSEL OF THEIR CHOICE, AND THE WAIVERS MADE IN THIS PARAGRAPH HAVE BEEN MA DE KNOWINGLY, INTENTIONALLY AND WILLINGLY AND AS PART OF THE CONSIDERATION FOR THIS LEASE. NEITHER LANDLORD NOR TENANT HAS ANY KNOWLEDGE OF ANY DEFENSE THAT MAY BE MADE AGAINST ENFORCEMENT OF THIS WAIVER AND AGREEMENT

Section 25.21 Landlord Approval . Whenever under this Lease the consent or approval of Landlord is required, Tenant shall be entitled to rely on approval or consent from either of The Teachers’ Retirement Systems of Alabama or The Employees’ Retirement System of Alabama and Tenant shall not be required to obtain the consent or approval of both such parties. For the avoidance of doubt, the approval or consent from one either The Teachers’ Retirement Systems of Alabama or The Employees’ Retirement System of Alabama shall be deemed the consent of Landlord for all purposes hereunder. To the extent any approval or consent of Landlord is required hereunder with respect to any matter and Landlord shall fail to respond to Tenant’s request for such approval or consent within thirty (30) days, Tenant shall send Landlord a second written notice requesting such approval or consent and if Landlord shall fail to respond to such second notice within ten (10) days, Landlord shall be deemed to have approved or consented to such matter.

Section 25.22 Tenant ’ s Self-Help Rights . In the event Landlord fails to comply with any of the terms, conditions or provisions of this Lease, including without limitation Landlord’s obligations pursuant to Section 19.7, and such failure continues for more than thirty (30) days after notice thereof from Tenant (or such shorter period as is reasonable in the case of an emergency or such longer period if Landlord commences to complete such obligation and proceeds diligently and with reasonable dispatch to complete such obligation), Tenant shall have all available rights and remedies provided at law or in equity and, without limiting the foregoing, Tenant may perform the obligation which Landlord has failed to perform and Landlord shall reimburse Tenant for any costs and expenses incurred by Tenant for such performance within thirty (30) days after Tenant’s written demand therefor, which demand shall include reasonable documentation evidencing such amounts owed to Tenant.

Section 25.23 Landlord ’ s Breach . In the event Landlord breaches any of the representations, warranties or covenants hereunder (including any breach of the representations set forth in Sections 2.2(e) or 2.2(f) and such breach results in any costs, losses, damages or liabilities to Tenant (whether arising as a third party cost or otherwise, but excluding consequential damages) then Landlord shall reimburse Tenant for any such costs, losses, damages or liabilities within thirty (30) days after Tenant’s written demand therefor, which demand shall include reasonable documentation evidencing such amounts owed to Tenant.

Section 25.24 Landlord ’ s Payment or Tenant ’ s Offset Right .

(a) If Landlord shall fail to pay any amounts due to Tenant under (i) this Lease, including without limitation pursuant to any indemnification provisions or pursuant to Sections 5.5, 25.22 or 25.23 above, or (ii) the M&E Agreement (including any indemnification thereunder) (either such failure, a “ Claim ” ) , in each case within thirty (30) days of when due, then Tenant shall give Landlord written notice of such Claim and Landlord shall have fifteen (15) days to notify Tenant in writing that it in good faith disputes such Claim and the reasons therefor. If Landlord shall fail to so notify Tenant of its objection to the Claim, Tenant shall have the rights set forth in Section 25.24(b) below. I f Landlord shall so notify Tenant of its objection to such Claim, the parties shall negotiate in good faith in order to seek resolution to such Claim. If the parties are unable to resolve such Claim within thirty (30) days after Landlord’s notice of its objection, either party may request arbitration by giving notice to that effect to the other party, and both parties shall promptly thereafter jointly apply to the American Arbitration Association (or any organization successor thereto) in the City and County of New York for the appointment of a single arbitrator acceptable to both parties. The arbitration shall be conducted in accordance

with the then prevailing rules of the American Arbitration Association (or any organization successor thereto) in the City and County of New York. In rendering such decision and award, the arbitrator shall not add to, subtract from or otherwise modify the provisions of this Agreement or the Lease. The decision of the arbitrator shall be binding upon all parties to the dispute and a judgment therefor may be entered by either party in a court having jurisdiction thereof. All the expenses of the arbitration shall be borne by the parties equally, provided that each party shall bear their own legal costs.

(b) In the event (i) Landlord fails to object to Tenant’s notice of a Claim within the fifteen (15) day period described above or (ii) the arbitrator shall make an award to Tenant based on such Claim, Landlord shall pay any amounts owed to Tenant on such Claim within thirty (30) days after either of the foregoing events, and if Landlord shall fait to make such payment Tenant shall have the right to offset such amount against any amounts due hereunder.

EXECUTED by the parties on the respective dates specified beneath their respective signatures below, to be effective as of the Effective Date.


LANDLORD:

THE TEACHERS’ RETIREMENT SYSTEMS OF ALABAMA ,
an instrumentality of the State of Alabama,



By:	/s/ David G. Bronner
	Name:	David G. Bronner
	Title:	Chief Executive Officer

Execution Date: 9/28/2011



THE EMPLOYEES’ RETIREMENT SYSTEM OF ALABAMA,
an instrumentality of the State of Alabama



By:	/s/ David G. Bronner
	Name:	David G. Bronner
	Title:	Chief Executive Officer

Execution Date: 9/28/2011


TENANT:

NAVISTAR, INC.



By:	/s/ Andrew J. Cederoth
	Name:	Andrew J. Cederoth
	Title:	Executive Vice President
		and Chief Financial Officer

Execution Date: September 29, 2011

EXHIBIT “A”

LEGAL DESCRIPTION OF THE LAND

A parcel of land situated in Sections 2 and 3, Township 4 South, Range 13 West and in Sections 34 and 35, Township 3 South, Range 13 West, Colbert County, Alabama, being more particularly described as follows:

Commence at a rebar in pavement at the Southeast comer of Section 3, Township 4 South, Range 13 West and run North 00°06’00”East along the East line of said section a distance of 1294.94 feet to the Northerly line of a Norfolk-Southern Railroad right of way; thence run North 75°37’54”West along said Northerly right of way a distance of 503.95 feet to the Point of Beginning of the herein described parcel; thence continue along the last described course along said Northerly right of way a distance of 3327.97 feet to a point on the Easterly right of way of Haley Road; thence run North 17°19’54”East along said Easterly right of way a distance of 276.21 feet; thence run North 17°06’10”East along said Easterly right of way a distance of 458.96 feet; thence run North 72°53’50”West along said Easterly right of way a distance of 35.00 feet; thence run North 17°06’10”East along said Easterly right of way a distance of 2000.00 feet; thence run North 27 ^° 01’45”East along said Easterly right of way a distance of 203.04 feet; thence run North 17°06’10”East along said Easterly right of way a distance of 600.00 feet; thence run North 72°53’50”West along said Easterly right of way a distance of 30.00 feet; thence run North 17°06’10”E,ast along said Easterly right of way a distance of 1185.55 feet to the beginning of a curve to the left having a central angle of 14°04’14”, a radius of 1320.48 feet, a chord of 323.46 feet and a chord bearing of North 10°04’04”East; thence run along the arc of said curve a distance of 324.28 feet; thence run tangent to said curve North 03°01’57”East along said Easterly right of way a distance of 2200.92 feet; thence run South 86°46’56” East a distance of 284.37 feet; thence run South 67°29’45”East a distance of 3810.29 feet to the beginning of a curve to the right having a central angle of 68°38’14”, a radius of 460.00 feet a chord of 518.69 feet and a chord bearing of South 33°10’38”East; thence run along the arc of said curve a distance of 551.06 feet; thence run tangent to said curve South 01°08’30”West a distance of 830.04 feet to the beginning of a curve to the right having a central angle of 43°48’02”, a radius of 575.00 feet, a chord of 428.94 feet and a chord bearing of South 23°02’30”West; thence run along the arc of said curve a distance of 439.57 feet; thence run tangent to said curve South 44°56’31”West a distance of 562.16 feet to the beginning of a curve to the left having a central angle of 34°39’08”, a radius of 755.00 feet, a chord of 449.69 feet and a chord bearing of South 27°36’58”West; thence run along the arc of said curve a distance of 456.62 feet; thence run tangent to said curve South 10°17’24”West a distance of 29.22 feet to the North line of Section 2, Township 4 South, Range 13 West; thence run South 88°41’29”East along said North line a distance of 50.95 feet thence run along the arc of a curve to the left having a central angle of 25’41’18”, a radius of 705.00 feet, a chord of 313.44 feet and a chord bearing of South 04°16’58”East a distance of 3 I 6,08 feet; thence run tangent to said curve South 17°07’38”East a distance of 101.99 feet to the beginning of a curve to the right having a central angle of 17°04’09”, a radius of 920.00 feet, a chord of 273.07 feet and a chord bearing of South 08°35’33”East; thence run along the arc of said curve a distance of 274.08 feet; thence run tangent to said curve South 00°03’29”East a distance of 1243.19 feet to the beginning of a curve to the right having a central angle of 90°57’26”, a radius of 335.00 feet, a chord of 477.70 feet and a chord bearing of South 45°25’14”West; thence run along the arc of said curve a distance of

A-1

531.81 feet; thence run tangent Co said curve North 89°06’03”West a distance of 535.38 feet to the beginning of a curve to the left having a central angle of 86°32’47”, a radius of 415.00 feet, a chord of 568.95 feet and a chord bearing of South 47°37’34” West; thence run along the arc of said curve a distance of 626.87 feet; thence run South 89°06’03”East a distance of 8.70 feet; thence run South 00°11’29”East a distance of 702.89 feet to the beginning of a curve to the right having a central angle of 55°12’35”, a radius of 345.00 feet, a chord of 319.73 feet and a chord tearing of South 27°24’49” West; thence run along the arc of said curve a distance of 332.44 feet; thence run tangent to said curve South 55°01’12”West a distance of 233.21 feet to the beginning of a curve to the left having a central angle of 29°45’02”, a radius of 380.00 feet, a chord of 195.10 feet and a chord bearing of South 40°08’41” West; thence run along the arc of said curve a distance of 197.31 feet to the point of beginning, containing 637.74 acres, more or less.

Less and Except 0.92 acres to Colbert County (Fiche 2004-19, Frame 646); also less and except 0.58 acres to Deron Brown (Fiche 9823, Frame 618).

A-2

EXHIBIT “B”

EXCEPTIONS TO TITLE

1.	Matters that would be disclosed on an updated, accurate survey of the Premises.

2.	Real property taxes on the Premises that are a lien but not yet due and payable.

3.	Transmission line easement to Alabama Power Company dated September 30, 1924 and recorded in Deed Book 50, Page 185.

4.	Easement for electric transmission lines conveyed to Alabama Power Company dated October 1, 1924 and recorded in Deed Book 50, Page 190.

5.	Right of way for ingress and egress along the south boundary as reserved in Deed Book 367, Page 793.

6.	Easement for electric power transmission lines conveyed to the United States of America on July 14, 1965 and recorded in Deed Book 285, Page 535.

7.	Railroad Spur Easement and Use Agreement conveyed to SCA Tissue North America, LLC, dated August 5, 2004 and recorded at Microfiche 2004-27, Frame 617.

8.	Easement and right of way for electric power transmission lines in condemnation proceedings styled United States v. C.J. Jackson, John Ella Jackson, his wife and Arwilda Jackson, filed June 28, 1962 and recorded in Deed Book 271, Pages 71-74.

9.	Sheffield Utilities power transmission easement 25 feet in width parallel to and north of the Norfolk Southern Railroad right of way.

10.	Barton Water Board water line easement with the Sheffield power transmission easement referred to in directly proceeding Item 7, as shown on survey by Billy S. Shoemaker, Professional Surveyor, dated May 6, 2007 and revised July 16, 2007.

11.	Right of way and easement 50 feet in width conveyed to North Alabama Gas District, dated September 26, 2007, and recorded at Microfiche Record 2007-33, Frames 597, et. seq.

12.	Right of way for public road dated June 4, 2008 and recorded in OFRD Book 2008, page 10290.

13.	Easement granted to the City of Sheffield from Shoals Economic Development Authority, dated October 27, 2009 and recorded on August 24, 2010 and recorded in Book 2010 at Page 18298-18303.

14.	Easement granted to North Alabama Gas District from National Alabama Corporation, dated November 2, 1010 and recorded on November 2, 2010 and recorded in Book 2010 at Page 24798-24804.

B-1

Exhibit 10.3

EXECUTION VERSION

AMENDMENT TO INDUSTRIAL FACILITY LEASE AND CONSENT TO SUBLEASE

THIS AMENDMENT TO INDUSTRIAL FACILITY LEASE AND CONSENT TO SUBLESE (this “Agreement”) is made and entered into effective as of February 19, 2013, by and among TEACHERS’ RETIREMENT SYSTEMS OF ALABAMA, an instrumentality of the State of Alabama, and EMPLOYEES’ RETIREMENT SYSTEM OF ALABAMA, an instrumentality of the State of Alabama (collectively, the “Landlord”), NAVISTAR, INC., a Delaware corporation (“Tenant”), and FreightCar Alabama, LLC, a Delaware limited liability company (“Subtenant”). Landlord, Tenant, and Subtenant are sometimes referred to herein collectively as the “Parties” and individually as a “Party.”

Recitals

A. Landlord entered into that certain Industrial Facility Lease (the “Lease”), dated as of September 29, 2011, with Tenant, whereby Landlord leased to Tenant the Leased Premises (as defined in the Lease). Capitalized terms used herein, but not defined herein, shall have the meanings ascribed to them in the Lease.

B. A short form or memorandum of the Lease has been recorded in the land records of Colbert County, Alabama on October 25, 2011 in Book 2011, Page 22555.

C. Pursuant to that certain Sublease (the “Sublease”), dated as of February 19, 2013, Tenant has subleased to Subtenant a portion of the Facility referred to as the “Subleased Premises,” and granted to Subtenant the exclusive use of certain areas of the Leased Premises referred to therein as the “Exclusive Use Areas,” all as more particularly described in the Sublease. A true and complete copy of the Sublease has been delivered to Landlord.

Agreement

For and in consideration of the respective covenants and agreements of the Parties herein set forth, and other good and valuable consideration, the receipt and sufficiency of all of which are hereby acknowledged by the Parties, the Parties do hereby agree as follows:

ARTICLE 1

AMENDMENT TO LEASE

Section 1.1 Amendment . Landlord and Tenant hereby agree to amend the Lease by adding the following new Section 11.6 at the end of Article XI of the Lease:

“Section 11.6 Subtenant Protection .

(a) If (i) this Lease is terminated or surrendered as a result of an Event of Default, or if Tenant’s rights of possession under this Lease are terminated as a result of an Event of Default, or (ii) upon a rejection of this Lease following Tenant’s bankruptcy or insolvency, or otherwise, then, upon Subtenant’s written request made within thirty (30) days after Subtenant’s receipt of written notice from Landlord of such termination or rejection, Landlord shall enter into a new

lease (“New Lease”) for the entire Leased Premises, naming Subtenant as the tenant under this Lease, upon all of the terms, covenants, and conditions of this Lease (including options to extend the term of this Lease, if any) except for such provisions that must be modified to reflect such termination or rejection and the passage of time, for what would have been the full remaining term of the Lease, including any renewals or extensions thereof set forth in this Lease, had this Lease not been so terminated. The New Lease shall have the same priority as this Lease. The New Lease shall be entered into at the reasonable cost of Subtenant and shall be effective as of the date of such termination of this Lease. if the Lease is terminated as a result of any casualty or condemnation affecting the Leased Premises, however, Landlord is not obligated to enter into a New Lease with Subtenant.

(b) Upon the assumption and/or assignment of this Lease following Tenant’s bankruptcy or insolvency or otherwise, any person or entity to whom this Lease is assumed and/or assigned, as a condition to such assumption and/or assignment, shall be deemed without further act or deed to have assumed all the Tenant’s obligations under both this Lease and the Sublease on and after the effective date of such assumption and/or assignment. Any person or entity to whom this Lease is assumed and/or assigned shall take such assumption or assignment subject to the rights and remedies of Subtenant under the Sublease, the terms of which Sublease are hereby incorporated by reference herein.

(c) Landlord hereby agrees to give to Subtenant copies of all notices of Tenant’s default(s) under this Lease in the same manner as, and whenever, Landlord shall give any such notice of default to Tenant, and no such notice of default shall be deemed given to Tenant unless and until a copy of such notice shall have been so delivered to Subtenant. Landlord shall accept performance by Subtenant of any term, covenant, condition or agreement to be performed by Tenant under this Lease with the same force and effect as though performed by Tenant.

ARTICLE 2

CONSENT TO SUBLEASE

Section 2.1 Consent . Landlord hereby consents to the Sublease and to the sublease of the Subleased Premises by Tenant to Subtenant pursuant to the Sublease, including (without limitation) Section 2.3 (Extension of the Master Lease) and Section 4.4 (Exit Event), which provisions grant Subtenant the right under certain circumstances to sublease the entire Leased premises. Landlord hereby consents to such sublease of the entire Leased Premises by Subtenant in accordance with the terms of the Sublease.

Section 2.2 Non -Disturbance . So long as there is no Sublease Event of Default (as defined in the Sublease), which remains uncured, Landlord covenants and agrees that Subtenant’s possession and use of the Subleased Premises and Exclusive Use Areas and Subtenant’s rights and privileges under the Sublease, including any extensions or renewals thereof which may be effected in accordance with any option or right granted therein, shall not be diminished or interfered with by Landlord, and Subtenant’s occupancy of the Subleased Premises and Exclusive Use Areas shall not be disturbed during the term of the Sublease or any renewal or extension thereof.

ARTICLE 3

GENERAL PROVISIONS

Section 3.1 Notices . Any notice, request, demand, instruction or other document to be given or served hereunder or under any document or instrument executed pursuant hereto shall be in writing and shall be delivered personally, sent by nationally recognized overnight courier service, delivery fee prepaid, or sent by United States registered or certified mail, return receipt requested, postage prepaid, in each case addressed to the parties at their respective addresses set forth below. Any such notice shall be effective (a) upon receipt if delivered personally, (b) on the next business day after confirmed deposit with a nationally recognized overnight courier service, and (b) three (3) business days after deposit in the United States registered or certified mail. A party may change its address for receipt of notices by service of a notice of such change in accordance herewith.


If to Landlord		The Retirement Systems of Alabama 201 South Union Street Montgomery, AL 36130 Attn: Hunter Harrell

with a copy to:		Kelley Drye & Warren LLP 101 Park Avenue New York, NY 10178 Attn: George Marchese

If to Tenant:		Navistar, Inc. 2701 Navistar Drive Lisle, IL 60532 Attention: Scott F. Renier
with a copy to:		Jones Day 77 West Wacker Drive Chicago, IL 60601 Attention: Brian L. Sedlak

If to Subtenant		FreightCar America, Inc. Two North Riverside Plaza Suite 1300 Chicago, IL 60606 Telecopy: 312-928-0890 Attention: Senior Vice President, Operations

with a copy to:		McDermott Will & Emery LLP 227 West Monroe Street Suite 4700 Chicago, IL 60606 Attention: Helen R. Friedli

Section 3.2 No Adverse Amendments to Lease . Landlord and Tenant hereby agree that so long as the Sublease remains in effect and there is no Sublease Event of Default, which remains uncured, (i) without the prior written consent of Subtenant the Lease, including without limitation Section 11.6 thereof, shall not be amended, modified, restated or supplemented in any manner that would have a material adverse effect on the Sublease, the leasehold estate created by the Sublease or Subtenant’s right to use and occupy the Subleased Premises and the Exclusive Use Areas in accordance with the terms of the Sublease, and (ii) any sale, assignment, transfer or other conveyance of an interest in the Lease Premises or the Lease shall be subject to the Sublease and the rights of Subtenant thereunder.

IN WITNESS WHEREOF, this Agreement has been executed by the Parties as of the date first stated above.


Landlord:				Teacher Retirement Systems of Alabama

				By: /s/
				Name:
				Title:

				Employees’ Retirement System of Alabama
				By: /s/
				Name:
				Title:

Tenant:				Navistar, Inc.

				By: /s/Andrew J. Cederoth
				Name: Andrew J. Cederoth
				Title: EVP and CFO

Subtenant:				FreightCar Alabama, LLC

				By: /s/Edward J. Whalen
				Name Edward J. Whalen
				Title: President and Chief Executive Officer

Sworn to and subscribed before me this 14 day of February 2013, at

Montgomery, Alabama

/s/ Allison M. DeBoard

Signature of Notary Public

Name of Notary Public: Allison M. DeBoard

Notary Public, State of Alabama

My commission expires: 1/18/15

Exhibit 10.4


		Activity Number: 1256280

FIFTH AMENDMENT TO LEASE AGREEMENT

THIS FIFTH AMENDMENT TO LEASE AGREEMENT (this “Amendment” ) is made as of the 1st day of March, 2018 by and between NORFOLK SOUTHERN RAILWAY COMPANY , a Virginia corporation (the “Landlord” ) and JOHNSTOWN AMERICA CORP , a Pennsylvania corporation (the “Tenant” ).

W I T N E S S E T H :

WHEREAS, Landlord and Tenant entered into that certain Lease Agreement dated December 20, 2004, (as amended, the “Lease” ), for real property located at Milepost N-256.92 in Roanoke, Roanoke (city), Virginia , having an area of 15.50 acres, more or less (the “Premises” );

WHEREAS, Landlord and Tenant desire to make certain changes to the Lease as hereinafter stated.

NOW THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Lease is hereby amended, and the parties hereto do agree as follows:

1. Modifications and Alterations to the Premises . Landlord and Tenant acknowledge and agree that Landlord has consented to Tenant’s installation of the following improvements to be located upon the Premises:

•

Pedestrian Footbridge Turnstile

•

Guard Booth

•

Related Security Equipment

•

Retaining Wall

•

Asphalt Pavement

•

Spur Gate

* Detailed equipment descriptions, specifications, dimensional aerial maps, and other related correspondence may be referred to in the corresponding Exhibit documents.

2. Notification to Norfolk Southern Division Communications and Signals Representative Required Before Commencement of Work. Prior to commencement of any work to be performed on or about the Premises, Tenant shall notify the appropriate NS Division C&S Supervisor, or designee, for all related notifications pertaining to the relocation, installation, and/or maintenance any communications cables located upon the Premises. Eddie Barnett, NS Supervisor C&S, will serve as the contact representative for all related notifications pertaining to the relocation, installation, and/or maintenance any communications cables located upon the Premises and may be contacted at 540-520-

0331. Tenant is required to contact Mr. Barnett PRIOR to proceeding with any work. Tenant will be responsible for any related expenses necessary to relocate, replace and/or repair the damaged cable(s) as Norfolk Southern’s Communications & Signals Department may deem necessary.

3. NS Designated Employees to Retain Access. Certain employees of Landlord designated by Landlord (the “NS designated employees” ) may retain access to enter East End Shops over the walkway and through the proposed security turnstile and any other secured entrances onto the Premises. Landlord agrees to notify the NS designated employees that the NS designated employees are required to follow all posted rules and warnings and follow any oral instructions or directions at any secured entrance onto the Premises. Except due to the negligence or willful misconduct of Tenant or Tenant Entities (as defined in the Lease), Landlord hereby releases, waives and discharges Tenant from any and all liability, claims, demands, actions and causes of actions whatsoever arising out of or related to any loss, damage, or injury that Landlord may sustain as result of the foregoing access and the security improvements described in this Amendment or hereafter installed.

4. Counterparts. This Amendment may be executed on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

5. Governing Law . This amendment is governed by and shall be construed under the laws of the Commonwealth of Virginia.

6. Effect of Amendment . Except as herein specifically amended, each Lease shall remain in full force and effect.

7. Insurance . Tenant shall procure and maintain, at all times and at its expense, in a form and with an insurance company acceptable to Landlord, Commercial General Liability Insurance for the Premises. Such coverage shall (a) have a single limit of not less than $2,000,000.00 for each occurrence (or such greater amount over time so as to be commercially reasonable) and shall provide for a deductible of not more than $5,000.00, (b) cover Tenant’s contractual liability hereunder, (c) cover Tenant and Landlord for liability arising out of work performed by any third parties for Tenant in or about the Premises, (d) name the Landlord Entities as additional insureds, and (e) be considered primary and noncontributory, regardless of any insurance carried by Landlord. Any property insurance maintained by Tenant on its furniture, fixtures, equipment and personal property shall include a waiver of subrogation in favor of Landlord. Tenant shall deliver certificates of insurance evidencing the insurance required hereinabove to Landlord simultaneously with the execution of this Lease by Tenant, which certificates shall reflect that the policies shall not be canceled without at least thirty (30) days prior notice to Landlord. If Tenant fails to obtain the necessary coverages, Landlord may do so at Tenant’s expense and the same shall constitute additional rental. All insurance certificates should be delivered to Landlord’s Risk Management Department, Three Commercial Place, Norfolk, Virginia 23510, simultaneously with the execution of this Lease by Tenant. The minimum limits of insurance provided for hereunder are not intended to be a limitation on the liability of Tenant hereunder and shall not waive Landlord’s right to seek a full recovery from Tenant.

8. Notice . Any notice given pursuant to the Lease shall be in writing and sent by certified mail, return receipt requested, by hand delivery or by reputable overnight courier to:

(a) Landlord : c/o Director Real Estate, Norfolk Southern Corporation, 1200 Peachtree Street, NE – 12 ^th Floor, Atlanta, Georgia 30309-3579 or at such other address as Landlord may designate in writing to Tenant.

(b) Tenant : Johnstown America Corporation, 830 Campbell Avenue, S.E., Roanoke, Virginia 24013or at such other address as Tenant may designate in writing to Landlord.

Any notice sent in the manner set forth above shall be deemed delivered three (3) days after said notice is deposited in the mail if sent by certified mail (return receipt requested), or upon receipt if sent by hand delivery or reputable overnight courier. Any change of notice address by either party shall be delivered to the other party by the manner of notice required hereby.

9. Ratification; Successors and Assigns . Landlord and Tenant acknowledge and agree that the Lease, as amended by this Amendment, is hereby ratified and confirmed and in full force and effect. This Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment in duplicate, each part being an original, as of the 1st day of March, 2018.


Witness (As To Landlord):		LANDLORD :

/s/ Kontessa M. Lemons	NORFOLK SOUTHERN RAILWAY COMPANY
Signature		a Virginia corporation
Name:Kontessa M. Lemons
		By: /s/ Malcolm G. Roop
		Name: Malcolm G. Roop
Witness (As To Landlord):		Title: Real Estate Manager

/s/ Elvina Huggins		Date of Landlord Signature: March 5, 2018
Signature
Name: Elvina Huggins		[SEAL]


Witness (As To Tenant):		TENANT:

/s/ Matthew S. Goder		JOHNSTOWN AMERICA CORP
Signature		a Pennsylvania corporation
Name: Matthew S. Goder
		By: /s/ Georgia L Vlamis
		Name: Georgia L. Vlamis
Witness: As To Tenant		Title: General Counsel

/s/ Caroline Germeraad		Date of Tenant Signature: February 16, 2018
Signature
Name: Caroline Germeraad		[SEAL]

K L Monday, January 22, 2018\Activity No. 1256280/iManage No. 1592627v1

Form Amendment – Rental, Insurance and Notice (NS) 214854v1

Exhibit 31.1

Certification of Principal Executive Officer

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

I, James R. Meyer, 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.


Date: May 3, 2018	By:	/s/ J AMES R. M EYER
		James R. Meyer
		President and Chief Executive Officer

Exhibit 31.2

Certification of Principal Financial Officer

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

I, Matthew S. Kohnke, 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.


Date: May 3, 2018	By:	/s/ M ATTHEW S. K OHNKE
		Matthew S. Kohnke
		Vice President, Finance, Chief Financial Officer and Treasurer

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 March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, James R. Meyer, President and Chief Executive Officer, and Matthew S. Kohnke, 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: May 3, 2018	By:	/s/ J AMES R. M EYER
		James R. Meyer
		President and Chief Executive Officer (Principal Executive Officer)


Date: May 3, 2018	By:	/s/ M ATTHEW S. K OHNKE
		Matthew S. Kohnke
		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.

If to Landlord:

The Retirement Systems of Alabama

201 South Union Street

Montgomery, Alabama 36130

Attention: Hunter Harrell

With a copy to:

Kelley Drye & Warren LLP

101 Park Avenue

New York, New York 10178

Attention: George Marchese

If to Tenant:

Navistar, Inc.

2701 Navistar Road

Lisle, IL 60532

Attention: General Counsel