10-Q

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 June 30, 2022

 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.)

125 South Wacker Drive, Suite 1500 Chicago, Illinois		60606
(Address of principal executive offices)		(Zip Code)

(800) 458-2235

(Registrant’s telephone number, including area code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	RAIL	The Nasdaq Global Market

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 every Interactive Data File required to be submitted 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 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	

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

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. 

As of July 28, 2022, there were 16,700,850 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 June 30, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021	5
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2022 and 2021	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
4.	Controls and Procedures	31
	PART II – OTHER INFORMATION
1.	Legal Proceedings	32
2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
3.	Defaults Upon Senior Securities	32
4.	Mine Safety Disclosures	32
5.	Other Information	32
6.	Exhibits	32
	Signatures	33

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

FreightCar America, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except for share data)

(Unaudited)


	June 30, 2022			December 31, 2021
Assets
Current assets
Cash, cash equivalents and restricted cash equivalents	$	21,531		$	26,240
Accounts receivable, net of allowance for doubtful accounts of $180 and $323 respectively		23,488			9,571
VAT receivable		13,307			31,136
Inventories, net		75,845			56,012
Related party asset		5,121			8,680
Prepaid expenses		11,188			5,087
Total current assets		150,480			136,726
Property, plant and equipment, net		19,284			18,236
Railcars available for lease, net		19,852			20,160
Right of use asset		16,033			16,669
Other long-term assets		6,705			8,873
Total assets	$	212,354		$	200,664
Liabilities and Stockholders’ Equity
Current liabilities
Accounts and contractual payables	$	46,767		$	41,185
Related party accounts payable		5,454			8,870
Accrued payroll and other employee costs		1,883			2,912
Reserve for workers' compensation		1,271			1,563
Accrued warranty		4,788			2,533
Customer deposits		18,706			3,300
Deferred income state and local incentives, current		—			1,291
Lease liability, current		1,623			1,955
Other current liabilities		5,626			5,711
Total current liabilities		86,118			69,320
Long-term debt, net of current portion		81,960			79,484
Warrant liability		34,498			32,514
Accrued pension costs		—			35
Deferred income state and local incentives, long-term		—			1,216
Lease liability, long-term		15,995			16,617
Other long-term liabilities		3,934			3,134
Total liabilities		222,505			202,320
Stockholders’ deficit
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 June 30, 2022 and December 31, 2021)	-			-
Common stock, $0.01 par value, 50,000,000 shares authorized, 16,700,850 and 15,947,228 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		198			190
Additional paid-in capital		86,380			83,742
Accumulated other comprehensive loss		(5,355	)		(5,522	)
Accumulated deficit		(91,374	)		(80,066	)
Total stockholders' deficit		(10,151	)		(1,656	)
Total liabilities and stockholders’ deficit	$	212,354		$	200,664

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Operations

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

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021

Revenues	$	56,786		$	37,354		$	150,022		$	69,724
Cost of sales		50,197			35,357			133,375			66,411
Gross profit		6,589			1,997			16,647			3,313
Selling, general and administrative expenses		4,053			6,294			14,766			15,445
Restructuring and impairment charges		—			(120	)		—			6,530
Operating income (loss)		2,536			(4,177	)		1,881			(18,662	)
Interest expense		(5,757	)		(3,212	)		(11,462	)		(5,714	)
Gain (loss) on change in fair market value of warrant liability		18,746			3,452			(1,984	)		(18,676	)
Other income		661			230			2,157			345
Income (loss) before income taxes		16,186			(3,707	)		(9,408	)		(42,707	)
Income tax provision		1,647			504			1,900			636
Net income (loss)	$	14,539		$	(4,211	)	$	(11,308	)	$	(43,343	)
Net income (loss) per common share- basic	$	0.58		$	(0.24	)	$	(0.47	)	$	(2.19	)
Net income (loss) per common share - diluted	$	0.58		$	(0.24	)	$	(0.47	)	$	(2.19	)
Weighted average common shares outstanding – basic		24,499,784			20,160,410			23,994,327			20,084,199
Weighted average common shares outstanding – diluted		24,499,784			20,160,410			23,994,327			20,084,199

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2022		2021			2022			2021

Net income (loss)	$	14,539	$	(4,211	)	$	(11,308	)	$	(43,343	)
Other comprehensive income, net of tax:
Pension and postretirement liability adjustments, net of tax		83		156			167			312
Comprehensive income (loss)	$	14,622	$	(4,055	)	$	(11,141	)	$	(43,031	)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Stockholders’ Deficit

(In thousands, except for share data)

(Unaudited)



	FreightCar America Shareholders
																Accumulated
							Additional									Other						Total
	Common Stock						Paid In			Treasury Stock						Comprehensive			Retained			Stockholders'
	Shares			Amount			Capital			Shares			Amount			Loss			Deficit			Deficit
Balance, March 31, 2021		16,033,481		$	161		$	82,519			(446,587	)	$	(1,782	)	$	(11,607	)	$	(77,751	)	$	(8,460	)
Net loss		-			-			-			-			-			-			(4,211	)		(4,211	)
Other comprehensive income		-			-			-			-			-			156			-			156
Restricted stock awards		35,512			-			-			-			-			-			-			-
Employee stock settlement		(260	)		-			-			-			-			-			-			-
Forfeiture of restricted stock awards		(87,991	)		(1	)		-			-			-			-			-			(1	)
Stock-based compensation recognized		-			-			163			-			-			-			-			163
Equity Fees		-			-			-			-			-			-			-			-
Balance, June 30, 2021		15,980,742		$	160		$	82,682			(446,587	)	$	(1,782	)	$	(11,451	)	$	(81,962	)	$	(12,353	)




Balance, March 31, 2022		16,525,266		$	196		$	85,127			-		$	-		$	(5,438	)	$	(105,913	)	$	(26,028	)
Net income		-			-			-			-			-			-			14,539			14,539
Other comprehensive income		-			-			-			-			-			83			-			83
Restricted stock awards		60,543			1			(1	)		-			-			-			-			-
Employee stock settlement		-			-			-			-			-			-			-			-
Forfeiture of restricted stock awards		(70,894	)		(1	)		(6	)		-			-			-			-			(7	)
Stock-based compensation recognized		-			-			262			-			-			-			-			262
Equity fees		185,935			2			998			-			-			-			-			1,000
Balance, June, 30, 2022		16,700,850		$	198		$	86,380			-		$	—		$	(5,355	)	$	(91,374	)	$	(10,151	)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands, except for share data)

(Unaudited)



	FreightCar America Shareholders
																Accumulated						Total
							Additional									Other						Stockholders'
	Common Stock						Paid In			Treasury Stock						Comprehensive			Retained			Equity
	Shares			Amount			Capital			Shares			Amount			Loss			Deficit			(Deficit)
Balance, December 31, 2020		15,861,406		$	159		$	82,064			(327,577	)	$	(1,344	)	$	(11,763	)	$	(38,619	)	$	30,497
Net loss		-			-			-			-			-			-			(43,343	)		(43,343	)
Other comprehensive income		-			-			-			-			-			312			-			312
Restricted stock awards		213,465			2			(2	)		-			-			-			-			-
Employee stock settlement		(1,638	)		-			(5	)		(2,215	)		(7	)		-			-			(12	)
Forfeiture of restricted stock awards		(92,491	)		(1	)		431			(116,795	)		(431	)		-			-			(1	)
Stock-based compensation recognized		-			-			194			-			-			-			-			194
Equity Fees		-			-			-			-			-			-			-			-
Balance, June 30, 2021		15,980,742		$	160		$	82,682			(446,587	)	$	(1,782	)	$	(11,451	)	$	(81,962	)	$	(12,353	)

Balance, December 31, 2021		15,947,228			190			83,742			-			-			(5,522	)		(80,066	)		(1,656	)
Net loss		-			-			-			-			-			-			(11,308	)		(11,308	)
Other comprehensive income		-			-			-			-			-			167			-			167
Restricted stock awards		357,400			4			(4	)		-			-			-			-			-
Employee stock settlement		(3,438	)		-			(13	)		-			-			-			-			(13	)
Forfeiture of restricted stock awards		(71,394	)		(1	)		(6	)		-			-			-			-			(7	)
Stock-based compensation recognized		-			-			666			-			-			-			-			666
Equity Fees		471,054			5			1,995			-			-			-			-			2,000
Balance, June 30, 2022		16,700,850		$	198		$	86,380			-		$	—		$	(5,355	)	$	(91,374	)	$	(10,151	)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

FreightCar America, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities
Net loss	$	(11,308	)	$	(43,343	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Restructuring and impairment charges		—			6,530
Depreciation and amortization		2,060			2,196
Non-cash lease expense on right-of-use assets		636			887
Recognition of deferred income from state and local incentives		(2,507	)		(1,110	)
Loss on change in fair market value for warrant liability		1,984			18,676
Stock-based compensation recognized		1,490			2,961
Non-cash interest expense		7,472			1,981
Other non-cash items, net		—			96
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(13,917	)		916
VAT receivable		16,940			(16,814	)
Inventories		(16,926	)		(6,814	)
Other assets		(7,281	)		(6,263	)
Related party asset, net		143			(2,769	)
Accounts and contractual payables		3,525			10,633
Accrued payroll and employee benefits		(1,028	)		(802	)
Income taxes payable		1,036			(360	)
Accrued warranty		2,255			(2,366	)
Lease liability		(954	)		(1,180	)
Customer deposits		15,406			—
Other liabilities		(1,527	)		(6,749	)
Accrued pension costs and accrued postretirement benefits		105			(415	)
Net cash flows used in operating activities		(2,396	)		(44,109	)
Cash flows from investing activities
Maturity of restricted certificates of deposit		—			182
Purchase of property, plant and equipment		(2,808	)		(1,433	)
Proceeds from sale of property, plant and equipment and railcars available for lease		—			433
Net cash flows used in investing activities		(2,808	)		(818	)
Cash flows from financing activities
Proceeds from issuance of long-term debt		—			16,000
Deferred financing costs		—			(480	)
Borrowings on revolving line of credit		49,282			7,220
Repayments on revolving line of credit		(48,770	)		(11,068	)
Employee stock settlement		(13	)		(7	)
Payment for stock appreciation rights exercised		(4	)		(55	)
Net cash flows provided by financing activities		495			11,610
Net decrease in cash and cash equivalents		(4,709	)		(33,317	)
Cash, cash equivalents and restricted cash equivalents at beginning of period		26,240			54,047
Cash, cash equivalents and restricted cash equivalents at end of period	$	21,531		$	20,730
Supplemental cash flow information
Interest paid	$	3,990		$	2,813
Income tax refunds received, net of payments	$	—		$	5
Non-cash transactions
Change in unpaid construction in process	$	(8	)	$	530
Accrued PIK interest paid through issuance of PIK Note	$	722		$	553
Issuance of warrants	$	8,560		$	—
Issuance of equity fee	$	2,000		$	—

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 and unless otherwise noted)

Note 1 – Description of the Business

FreightCar America, Inc. (“FreightCar” or the "Company") operates primarily in North America through its direct and indirect subsidiaries, 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, and also specializes in the conversion of railcars for re-purposed use. The Company is headquartered in Chicago, Illinois and has facilities in the following locations: Johnstown, Pennsylvania; Shanghai, People’s Republic of China, and Castaños, Coahuila, Mexico (“Castaños”).

On September 10, 2020, the Company announced its plan to permanently close its manufacturing facility in Cherokee, Alabama (the “Shoals Facility”). The closure reduced costs and aligned the Company’s manufacturing capacity with the current railcar market. The Company ceased production at the Shoals Facility in February 2021 (See Note 14–Restructuring and Impairment Charges).

Note 2 – Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of FreightCar America, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The foregoing financial information has been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial reporting. The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. The results of operations for the three and six months ended June 30, 2022 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 2021 year-end balance sheet data was derived from the audited financial statements as of December 31, 2021. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. Certain prior year amounts have been reclassified, where necessary, to conform to the current year presentation. 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, 2021.

Note 3 – Revenue Recognition

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021			2022		2021
Railcar sales	$	52,764	$	34,371		$	142,072	$	63,300
Parts sales		3,193		2,168			6,304		4,534
Revenues from contracts with customers		55,957		36,539			148,376		67,834
Leasing revenues		829		815			1,646		1,890
Total revenues	$	56,786	$	37,354		$	150,022	$	69,724

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 had no contract assets as of each of June 30, 2022 and December 31, 2021. 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 Consolidated Balance Sheet based on the

timing of when the Company expects to recognize the related revenue. Deferred revenue and customer deposits are included in customer deposits, other current liabilities and other long-term liabilities in the Company’s Condensed Consolidated Balance Sheet and were $19,597 and $4,807 as of June 30, 2022 and December 31, 2021, respectively.

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 ASU 2014-09, Revenue from Contracts with Customers. The Company had remaining unsatisfied performance obligations as of June 30, 2022 with expected duration of greater than one year of $40,635.

Note 4 – 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 conversions and 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 internal 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 and restricted cash and restricted 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						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Revenues:
Manufacturing	$	53,606		$	35,158		$	143,731		$	65,177
Corporate and Other		3,180			2,196			6,291			4,547
Consolidated revenues	$	56,786		$	37,354		$	150,022		$	69,724

Operating income (loss):
Manufacturing (1)	$	4,900		$	237		$	13,416		$	(5,781	)
Corporate and Other		(2,364	)		(4,414	)		(11,535	)		(12,881	)
Consolidated operating income (loss)		2,536			(4,177	)		1,881			(18,662	)
Consolidated interest expense		(5,757	)		(3,212	)		(11,462	)		(5,714	)
Gain (loss) on change in fair market value of warrant liability		18,746			3,452			(1,984	)		(18,676	)
Consolidated other income		661			230			2,157			345
Consolidated income (loss) before income taxes	$	16,186		$	(3,707	)	$	(9,408	)	$	(42,707	)

Depreciation and amortization:
Manufacturing	$	869		$	854		$	1,736		$	1,921
Corporate and Other		167			145			324			275
Consolidated depreciation and amortization	$	1,036		$	999		$	2,060		$	2,196

Capital expenditures:
Manufacturing	$	1,482		$	697		$	2,442		$	1,042
Corporate and Other		366			194			366			391
Consolidated capital expenditures	$	1,848		$	891		$	2,808		$	1,433

(1) There were no restructuring and impairment charges for the three and six months ended June 30, 2022 . Results for the three and six months ended June 30, 2021 include restructuring and impairment charges (benefits) of ($120) and $6,530, respectively.


	June 30,		December 31,
	2022		2021
Assets:
Manufacturing	$	179,525	$	154,068
Corporate and Other		32,746		46,417
Total operating assets		212,271		200,485
Consolidated income taxes receivable		83		179
Consolidated assets	$	212,354	$	200,664


Geographic Information
	Revenues								Long Lived Assets(a)
	Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,		December 31,
	2022		2021		2022		2021		2022		2021
United States	$	56,772	$	37,354	$	150,008	$	69,724	$	24,243	$	24,967
Mexico		14		-		14		-		30,926		30,098
Total	$	56,786	$	37,354	$	150,022	$	69,724	$	55,169	$	55,065

(a) Long lived assets include property plant and equipment, net, railcars available for lease, and ROU assets.

Note 5 – 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 June 30, 2022
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant liability	$	-	$	34,498	$	-	$	34,498


Recurring Fair Value Measurements	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant liability	$	-	$	32,514	$	-	$	32,514


Non-recurring Fair Value Measurements	During the Year Ended December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Railcars available for lease, net	$	-	$	-	$	6,638	$	6,638

The fair value of the Company’s warrant liability recorded in the Company’s financial statements, determined using the quoted price of the Company’s common stock, par value $0.01 per share (the "Common Stock") in an active market, exercise price ($0.01/share) and number of shares exercisable at June 30, 2022 and December 31, 2021, is a Level 2 measurement.

Note 6 – Restricted Cash

The Company establishes restricted cash balances when required by customer contracts and to collateralize standby letters of credit. The carrying value of restricted cash approximates fair value.

The Company’s restricted cash balances are as follows:


	June 30,		December 31,
	2022		2021
Restricted cash from customer deposit	$	282	$	282
Restricted cash to collateralize standby letters of credit		103		1,133
Restricted cash equivalents to collateralize standby letters of credit		3,542		3,542
Total restricted cash and restricted cash equivalents	$	3,927	$	4,957

Note 7 – Inventories

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


	June 30,		December 31,
	2022		2021
Raw materials		57,609		34,885
Work in process		13,728		11,306
Finished railcars		-		4,696
Parts inventory		4,508		5,125
Total inventories, net	$	75,845	$	56,012

Inventory on the Company’s Condensed Consolidated Balance Sheets includes reserves of $1,669 and $1,621 relating to excess or slow-moving inventory for parts and work in process at June 30, 2022 and December 31, 2021, respectively.

Note 8 – Debt Financing and Revolving Credit Facilities

Term Loan Credit Agreement

On October 13, 2020, the Company entered into a Credit Agreement (as amended from time to time, the “Term Loan Credit Agreement”) by and among the Company, as guarantor, FreightCar North America, LLC (“Borrower” and together with the Company and certain other subsidiary guarantors, collectively, the “Loan Parties”), CO Finance LVS VI LLC, as lender (the “Lender”), and U.S. Bank National Association, as disbursing agent and collateral agent (“Agent”). Pursuant to the Term Loan Credit Agreement, the Lender committed to the extension of a term loan credit facility in the principal amount of $40,000, consisting of a single term loan to be funded upon the satisfaction of certain conditions precedent set forth in the Term Loan Credit Agreement, including stockholder approval of the issuance of the Common Stock underlying the Warrant (as defined below) (the funding date of such term loan, the “Closing Date”). FreightCar America, Inc. stockholders approved the issuance of the Common Stock underlying the Warrant at a special stockholders’ meeting on November 24, 2020. The $40,000 term loan closed and was funded on November 24, 2020. The Company incurred $2,872 in deferred financing costs related to the Term Loan Credit Agreement. The deferred financing costs are presented as a reduction of the long-term debt balance and amortized to interest expense over the term of the Term Loan Credit Agreement.

The Term Loan Credit Agreement has a term ending five years following the Closing Date. The term loan outstanding under the Term Loan Credit Agreement bears interest, at Borrower’s option and subject to the provisions of the Term Loan Credit Agreement, at Base Rate (as defined in the Term Loan Credit Agreement) or Eurodollar Rate (as defined in the Term Loan Credit Agreement) plus the Applicable Margin (as defined in the Term Loan Credit Agreement) for each such interest rate set forth in the Term Loan Credit Agreement. As of June 30, 2022, the interest rate on the original advance under the Term Loan Credit Agreement was 14.0%.

The Term Loan Credit Agreement has both affirmative and negative covenants, including, without limitation, minimum liquidity, limitations on indebtedness, liens and investments. The Term Loan Credit Agreement also provides for customary events of default. Pursuant to the terms and conditions set forth in the Term Loan Credit Agreement and the related loan documents, each of the Loan Parties granted to Agent a continuing lien upon all of such Loan Parties’ assets to secure the obligations of the Loan Parties under the Term Loan Credit Agreement.

On May 14, 2021, the Loan Parties entered into an Amendment No. 2 to the Term Loan Credit Agreement (the “Second Amendment”) with Lender and the Agent, pursuant to which the principal amount of the term loan credit facility was increased by $16,000 to a total of $56,000, with such additional $16,000 (the “Additional Loan”) to be funded upon the satisfaction of certain conditions precedent set forth in the Second Amendment. The Additional Loan closed and was funded on May 17, 2021. The Company incurred $480 in deferred financing costs related to the Second Amendment which are presented as a reduction of the long-term debt balance and amortized on a straight-line basis to interest expense over the term of the Second Amendment. The Additional Loan bears interest at the same rate as the original term loan.

Pursuant to the Second Amendment, in the event that the Additional Loan was not repaid in full by March 31, 2022, the Company was to issue to the Lender and/or an affiliate of the Lender a warrant (the “March 2022 Warrant”) to purchase a number of shares of Common Stock equal to 5% of the Company’s outstanding Common Stock on a fully-diluted basis at the time the March 2022 Warrant is exercised (after giving effect to such issuance). Because the Company believed that it was probable that the March 2022 Warrant would be issued the Company recorded an additional warrant liability of $7,351 during the third quarter of 2021. The March 2022 Warrant was issued on April 4, 2022 with an exercise price of $0.01 and a term of ten (10) years. As of June 30, 2022 and

December 31, 2021, the March 2022 Warrant was exercisable for an aggregate of 1,439,940 and zero (0) shares of Common Stock, respectively with a per share exercise price of $0.01.

Pursuant to the Second Amendment, the Company was required to, among other things, i) obtain a term sheet for additional financing of no less than $15,000 by July 31, 2021 and ii) file a registration statement on Form S-3 registering Company securities by no later than August 31, 2021. The Company has met each of the aforementioned obligations. The Form S-3 registering Company securities was filed with the Securities and Exchange Commission on August 27, 2021 and became effective on September 9, 2021.

On July 30, 2021, the Loan Parties entered into an Amendment No. 3 to Credit Agreement (the “Third Amendment”) with the Lender and the Agent, pursuant to which, among other things, Lender obtained a standby letter of credit (as may be amended from time to time, the “Third Amendment Letter of Credit”) from Wells Fargo Bank, N.A., in the principal amount of $25,000 for the account of the Company and for the benefit of the Revolving Loan Lender (as defined below).

On December 30, 2021, the Loan Parties entered into an Amendment No. 4 to Credit Agreement (the “Fourth Amendment”) with the Lender and the Agent, pursuant to which the principal amount of the term loan credit facility was increased by $15,000 to a total of $71,000, with such additional $15,000 (the “Delayed Draw Loan”) to be funded, at the Borrower’s option, upon the satisfaction of certain conditions precedent set forth in the Fourth Amendment. The Borrower has the option to draw on the Delayed Draw Loan through January 31, 2023 and may choose not to do so.

The Delayed Draw Loan, if funded, will bear the same interest rate as the original term loan.

Reimbursement Agreement

Pursuant to the Third Amendment, on July 30, 2021, the Company, the Lender, Alter Domus (US) LLC, as calculation agent, and the Agent entered into a reimbursement agreement (the “Reimbursement Agreement”), pursuant to which, among other things, the Company agreed to reimburse the Agent, for the account of the Lender, in the event of any drawings under the Third Amendment Letter of Credit by the Revolving Loan Lender.

In addition, pursuant to the Reimbursement Agreement, the Company shall make certain other payments as set forth below, so long as the Third Amendment Letter of Credit remains outstanding:

Letter of Credit Fee

The Company shall pay to Agent, for the account of Lender, an annual fee of $500, which shall be due and payable quarterly beginning on August 2, 2021, and every three months thereafter.

Equity Fee

Every three months (the “Measurement Period”), commencing on August 6, 2021, the Company shall pay to the Lender (or, so long as Lender is the sole provider of the Third Amendment Letter of Credit, to OC III LVS XII LP, if Lender has timely notified the Company in writing of such designation) a fee (the “Equity Fee”) payable in shares of Common Stock. The Equity Fee shall be calculated by dividing $1,000 by the volume weighted average price of the Common Stock on the Nasdaq Capital Market for the ten (10) trading days ending on the last business day of the applicable Measurement Period. The Company can opt to pay the Equity Fee in cash, in the amount of $1,000, if, and only if, (x) the Company has already issued as Equity Fees a number of shares of Common Stock equal to (I) 5.0% multiplied by (II) the total number of shares of Common Stock outstanding as of July 30, 2021, rounded down to the nearest whole share of Common Stock, and (y) the Company has at least $15,000 of Repayment Liquidity after giving effect to such payment. The term Repayment Liquidity, as defined in the Term Loan Credit Agreement, means (a) all unrestricted and unencumbered cash and cash equivalents of the Loan Parties, plus (b) the undrawn and available portion of the commitments under that certain Amended and Restated Loan and Security Agreement by and among the Revolving Loan Parties and the Revolving Loan Lender (as described below), minus (c) all accounts payable of the Loan Parties that are more than 30 days past due.

The Equity Fee shall no longer be paid once the Company has issued to Lender and/or OC III LVS XII LP Equity Fees in an amount of Common Stock equal to 9.99% multiplied by the total number of shares of Common Stock outstanding as of July 30, 2021, rounded down to the nearest whole share of Common Stock, or 1,547,266 shares of Common Stock (the “Maximum Equity”). Through June 30, 2022, the Company has paid Equity Fees totaling 879,012 shares of Common Stock.

The issuance of each Equity Fee under the Reimbursement Agreement will be made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act for offers and sales of securities that do not involve a “public offering.”

Cash Fee

The Company shall pay to the Agent, for the account of the Lender (or, so long as the Lender is the sole provider of the Third Amendment Letter of Credit, to OC III LVS XII LP, if the Lender has timely notified the Company in writing of such designation) a cash fee (the “Cash Fee”) which shall be due and payable in cash quarterly beginning on the date that the Maximum Equity has been issued and thereafter on the business day immediately succeeding the last business day of the applicable Measurement Period. The Cash Fee shall be equal to $1,000, provided that, in the quarter in which the Maximum Equity is issued, such fee shall be equitably reduced by the value of any Equity Fee issued by the Company that quarter.

Warrant

In connection with the entry into the Term Loan Credit Agreement, the Company issued to an affiliate of the Lender (the “Warrantholder”) a warrant (the “Warrant”), pursuant to that certain warrant acquisition agreement, dated as of October 13, 2020 (the “Warrant Acquisition Agreement”), by and between the Company and the Lender, to purchase a number of shares of Common Stock equal to 23% of the outstanding Common Stock on a fully-diluted basis at the time the Warrant is exercised (after giving effect to such issuance). The Warrant is exercisable for a term of ten years from the date of the issuance of the Warrant. The Warrant was issued on November 24, 2020 after the Company received stockholder approval of the issuance of the Common Stock issuable upon exercise of the Warrant by the Warrantholder. In connection with the issuance of the Warrant, the Company and the Lender entered into a registration rights agreement (the “Registration Rights Agreement”) as of the Closing Date of November 24, 2020. As of June 30, 2022 and December 31, 2021, the Warrant was exercisable for an aggregate of 6,623,724 and 6,098,217 shares, respectively, of Common Stock with a per share exercise price of $0.01. The Company determined that the Warrant should be accounted for as a derivative instrument and classified as a liability on its Consolidated Balance Sheets primarily due to the instrument obligating the Company to settle the Warrant in a variable number of shares of Common Stock. The Warrant was recorded at fair value and is treated as a discount on the term loan. The discount on the associated debt is amortized over the life of the Term Loan Credit Agreement and included in interest expense.

Pursuant to the Fourth Amendment and a warrant acquisition agreement, dated as of December 30, 2021 (the “Warrant Acquisition Agreement”), the Company issued to the Lender a warrant (the “December 2021 Warrant”) to purchase a number of shares of Common Stock equal to 5% of the outstanding Common Stock on a fully-diluted basis at the time the December 2021 Warrant is exercised (after giving effect to such issuance). The December 2021 Warrant has an exercise price of $0.01 and a term of ten years. As of June 30, 2022 and December 31, 2021, the December 2021 Warrant was exercisable for an aggregate of 1,439,940 and 1,325,699 shares of Common Stock, respectively with a per share exercise price of $0.01.

In addition, to the extent the Delayed Draw Loan is funded, the Company has agreed to issue to the Lender a warrant (the “3% Additional Warrant”) to purchase up to a number of shares of Common Stock equal to 3% of the outstanding Common Stock on a fully-diluted basis at the time the 3% Additional Warrant is exercised (after giving effect to such issuance). The 3% Additional Warrant, if issued, will have an exercise price of $0.01 and a term of ten years.

The following schedule shows the change in fair value of the Warrant as of June 30, 2022.


Warrant liability as of December 31, 2021	$	32,514
Change in fair value		1,984
Warrant liability as of June 30, 2022	$	34,498

The change in fair value of the Warrant is reported on a separate line in the consolidated statement of operations. The Term Loan Credit Agreement is presented net of the unamortized discount and unamortized deferred financing costs.

Siena Loan and Security Agreement

On October 8, 2020, the Company entered into a Loan and Security Agreement (the “Siena Loan Agreement”) by and among the Company, as guarantor, and certain of its subsidiaries, as borrowers (together with the Company, the “Revolving Loan Parties”), and Siena Lending Group LLC, as lender (“Revolving Loan Lender”). Pursuant to the Siena Loan Agreement, the Revolving Loan Lender provided an asset backed credit facility, in the maximum aggregate principal amount of up to $20,000, (the "Maximum Revolving Facility Amount") consisting of revolving loans (the "Revolving Loans").

The Siena Loan Agreement provided for a revolving credit facility with maximum availability of $20,000, subject to borrowing base requirements set forth in the Siena Loan Agreement, which generally limited availability under the revolving credit facility to (a) 85% of the value of eligible accounts and (b) up to the lesser of (i) 50% of the lower of cost or market value of eligible inventory and (ii)

85% of the net orderly liquidation value of eligible inventory, and as reduced by reserves established by Revolving Loan Lender from time to time in accordance with the Siena Loan Agreement.

On July 30, 2021, the Revolving Loan Parties and the Revolving Loan Lender entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan and Security Agreement”), which amended and restated the terms and conditions of the Siena Loan Agreement in its entirety.

Pursuant to the Amended and Restated Loan and Security Agreement, the Maximum Revolving Facility Amount was increased to $25,000, provided, however, that the outstanding balance of all Revolving Loans may not exceed the lesser of (A) the Maximum Revolving Facility Amount minus the Availability Block and (B) an amount equal to the issued and undrawn portion of the Third Amendment Letter of Credit (as defined above) minus the Availability Block. The term “Availability Block”, as defined in the Amended and Restated Loan and Security Agreement, means 3.0% of the issued and undrawn amount under the Third Amendment Letter of Credit.

The Amended and Restated Loan and Security Agreement has a term ending on October 8, 2023. Revolving Loans outstanding under the Amended and Restated Loan and Security Agreement bear interest, subject to the provisions of the Amended and Restated Loan and Security Agreement, at an interest rate of 2% per annum in excess of the Base Rate (as defined in the Siena Loan Agreement).

The Amended and Restated Loan and Security Agreement contains affirmative and negative covenants, including, without limitation, limitations on future indebtedness, liens and investments. The Amended and Restated Loan and Security Agreement also provides for customary events of default. Pursuant to the terms and conditions set forth in the Amended and Restated Loan and Security Agreement, each of the Revolving Loan Parties granted the Revolving Loan Lender a continuing lien upon certain assets of the Revolving Loan Parties to secure the obligations of the Revolving Loan Parties under the Amended and Restated Loan and Security Agreement.

On February 23, 2022, the Revolving Loan Parties and the Revolving Loan Lender entered into a First Amendment to Amended and Restated Loan and Security Agreement (the “First Amendment to Amended and Restated Loan and Security Agreement”), pursuant to which, among other things, the Maximum Revolving Facility Amount was increased to $35,000; provided, however, that after giving effect to each Revolving Loan and each letter of credit made available to the Revolving Loan Parties, (A) the outstanding balance of all Revolving Loans and the Letter of Credit Balance (which is defined in the Amended and Restated Loan and Security Agreement as the sum of (a) the aggregate undrawn face amount of all outstanding Letters of Credit and (b) all interest, fees and costs due or, in Lender’s estimation, likely to become due in connection therewith) will not exceed the lesser of (x) the Maximum Revolving Facility Amount and (y) the Borrowing Base (as defined in the First Amendment to Amended and Restated Loan and Security Agreement), and (B) none of the other Loan Limits (as defined in the First Amendment to Amended and Restated Loan and Security Agreement) for Revolving Loans will be exceeded.

Revolving Loans outstanding under the First Amendment to Amended and Restated Loan and Security Agreement bear interest, subject to the provisions of the First Amendment to Amended and Restated Loan and Security Agreement, at a rate of 2% per annum in excess of the Base Rate (as defined in the Amended and Restated Loan and Security Agreement). Notwithstanding the foregoing, Revolving Loans made in respect of Excess Availability (as defined in the First Amendment to Amended and Restated Loan and Security Agreement) arising from clause (b) of the definition of “Borrowing Base” bear interest, subject to the provisions of the First Amendment to Amended and Restated Loan and Security Agreement, at a rate of 1.5% per annum in excess of the Base Rate (as defined in the Amended and Restated Loan and Security Agreement). As of June 30, 2022, the interest rate on outstanding debt under the First Amendment to Amended and Restated Loan and Security Agreement was 6.25%.

As of June 30, 2022, the Company had $25,010 in outstanding debt under the Siena Loan Agreement and remaining borrowing availability of $556. As of December 31, 2021, the Company had $24,026 in outstanding debt under the Siena Loan Agreement and remaining borrowing availability of $122. The Company incurred $1,101 in deferred financing costs related to the Siena Loan Agreement and incurred $1,037 in additional deferred financing costs related to the Amended and Restated Loan and Security Agreement. The deferred financing costs are presented as an asset and amortized to interest expense on a straight-line basis over the term of the Siena Loan Agreement.

M&T Credit Agreement

On April 16, 2019, FreightCar America Leasing 1, LLC, an indirect wholly-owned subsidiary of the Company (“FreightCar Leasing Borrower”), entered into a Credit Agreement (the “M&T Credit Agreement”) with M & T Bank, N.A., as lender (“M&T”). Pursuant to the M&T Credit Agreement, M&T extended a revolving credit facility to FreightCar Leasing Borrower in an aggregate amount of up to $40,000 for the purpose of financing railcars to be leased to third parties.

On April 16, 2019, FreightCar Leasing Borrower also entered into a Security Agreement (the “M&T Security Agreement”) pursuant to which it granted a security interest in all of its assets to M&T to secure its obligations under the M&T Credit Agreement.

On April 16, 2019, FreightCar America Leasing, LLC, a wholly-owned subsidiary of the Company and parent of FreightCar Leasing Borrower (“FreightCar Leasing Guarantor”), entered into (i) a Guaranty Agreement (the “M&T Guaranty Agreement”) pursuant to which FreightCar Leasing Guarantor guarantees the repayment and performance of certain obligations of FreightCar Leasing Borrower and (ii) a Pledge Agreement (the “M&T Pledge Agreement”) pursuant to which FreightCar Leasing Guarantor pledged all of the equity of FreightCar Leasing Borrower held by FreightCar Leasing Guarantor.

The loans under the M&T Credit Agreement are non-recourse to the assets of the Company or its subsidiaries other than the assets of FreightCar Leasing Borrower and FreightCar Leasing Guarantor.

The M&T Credit Agreement had a term that ended on April 16, 2021 (the “Term End”). Loans outstanding thereunder bear interest, accrued daily, at the Adjusted LIBOR Rate (as defined in the M&T Credit Agreement) or the Adjusted Base Rate (as defined in the M&T Credit Agreement). The M&T Credit Agreement has both affirmative and negative covenants, including, without limitation, maintaining an Interest Coverage Ratio (as defined in the M&T Credit Agreement) of not less than 1.25:1.00, measured quarterly, and limitations on indebtedness, loans, liens and investments. The M&T Credit Agreement also provides for customary events of default.

On April 20, 2021, FreightCar Leasing Borrower received a notice from M&T that an Event of Default had occurred due to all amounts outstanding under the M&T Credit Agreement having not be paid by the Term End.

On December 28, 2021 (the “Execution Date”), FreightCar Leasing Borrower, FreightCar Leasing Guarantor (together with FreightCar Leasing Borrower, the “Obligors”), the Company, FreightCar America Railcar Management, LLC, a Delaware limited liability company (“FCA Management”), and M&T, entered into a Forbearance and Settlement Agreement (the “Forbearance Agreement”) with respect to the M&T Credit Agreement and its related Credit Documents (as defined in the M&T Credit Agreement), as well as certain intercompany services agreements related thereto.

Pursuant to the Forbearance Agreement, the Obligors will continue to perform and comply with all of their performance obligations (as opposed to payment obligations) under certain provisions of the M&T Credit Agreement (primarily related to information obligations and the preservation of the collateral pledged by FreightCar Leasing Borrower to M&T pursuant to the M&T Security Agreement (the “Collateral”)) and all the provisions of the M&T Security Agreement. During the period from Execution Date until the termination of the Forbearance Agreement, M&T may not take any action against the Obligors or exercise or enforce any rights or remedies provided for in the Credit Documents or otherwise available to it.

On December 1, 2023, or sooner if requested by the Lender (the “Turnover Date”), FreightCar Leasing Borrower shall execute and deliver to M&T documents required to deliver and assign to M&T all the leased railcars and related leases serving as Collateral for the M&T Credit Agreement.

Upon the Turnover Date and the Obligors’ performance of their respective obligations under the Forbearance Agreement, including the delivery of certain Collateral to M&T upon the Turnover Date, all Obligations (as defined in the M&T Credit Agreement) shall be deemed satisfied in full, M&T shall no longer have any further claims against the Obligors under the Credit Documents and the Credit Documents shall automatically terminate and be of no further force or effect except for the provisions thereof that expressly survive termination.

The Forbearance Agreement contains customary releases at execution for all affiliates of the Company (other than the Obligors) and agreements to deliver final releases with respect to the Obligors upon their performance under the Forbearance Agreement. The Company also agreed to turn over to M&T on the Effective Date certain rents in the amount of $715 that it had previously collected as servicing agent for FreightCar Leasing Borrower, and to continue to provide such services through the Turnover Date without a service fee, and after the Turnover Date through the return of the railcars serving as Collateral, for a service fee.

As of June 30, 2022 and December 31, 2021, FreightCar Leasing Borrower had $7,444 and $7,917, respectively, in outstanding debt under the M&T Credit Agreement, which was collateralized by leased railcars with a carrying value of $6,549 and $6,638, respectively. As of June 30, 2022, the interest rate on outstanding debt under the M&T Credit Agreement was 5.75%.

Long-term debt consists of the following as of June 30, 2022 and December 31, 2021:


	June 30,			December 31,
	2022			2021
M&T Credit Agreement outstanding	$	7,444		$	7,917
Siena Loan Agreement outstanding		25,010			24,026
Term Loan Credit Agreement outstanding		58,000			57,278
Total debt		90,454			89,221
Less Term Loan Credit Agreement discount		(6,170	)		(7,077	)
Less Term Loan Credit Agreement deferred financing costs		(2,324	)		(2,660	)
Total debt, net of discount and deferred financing costs		81,960			79,484
Less amounts due within one year		-			-
Long-term debt, net of current portion	$	81,960		$	79,484

The fair value of long-term debt approximates its carrying value as of June 30, 2022 and December 31, 2021.

Note 9 – Accumulated Other Comprehensive Loss

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


	Pre-Tax		Tax		After-Tax
Three months ended June 30, 2022
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax other income)	$	83	$	-	$	83


	Pre-Tax		Tax		After-Tax
Three months ended June 30, 2021
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax other income)	$	156	$	-	$	156


	Pre-Tax		Tax		After-Tax
Six months ended June 30, 2022
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax other income)	$	167		-	$	167


	Pre-Tax		Tax		After-Tax
Six months ended June 30, 2021
Pension liability activity:
Reclassification adjustment for amortization of net loss (pre-tax other income)	$	312	$	-	$	312

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


	June 30,			December 31,
	2022			2021
Unrecognized pension cost, net of tax of $6,282 and $6,282, respectively	$	(5,355	)	$	(5,522	)

Note 10 – Stock-Based Compensation

Total stock-based compensation was $(2,754) and $300 for the three months ended June 30, 2022 and 2021, respectively, and $1,490 and $2,961 for the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, there was $1,466 of unearned compensation expense related to restricted stock awards, which will be recognized over the remaining weighed average requisite service period of 25 months. As of June 30, 2022, there was $1,401 of unearned compensation related to time-vested stock options, which will be recognized over the remaining requisite service period of 28 months.

2020 and 2021 Grants of Stock Appreciation Rights

During 2020 and 2021, the Company granted 1,139,464 and 1,735,500 cash settled stock appreciation rights, respectively, to certain employees. Each stock appreciation right represents the right to receive a payment measured by the increase in the fair market value of one share of the Company’s stock from the date of grant of the stock appreciation right to the date of exercise of the stock appreciation right. Cash settled stock appreciation rights are classified as liabilities. The 2020 cash settled stock appreciation rights vest ratably over three years and have a contractual life of 10 years. Vesting of the 2021 cash settled stock appreciation rights was contingent upon the achievement of a thirty-day trailing average fair market value of a share of Common Stock of 133.3% ($3.17) or more of the exercise price per share ($2.38). 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. During the first quarter of 2021, the market condition for the 2021 cash settled stock appreciation rights was met. The 2021 cash settled stock appreciation rights vest ratably over three years and have a contractual life of 10 years. The Company measures the fair value of unvested cash settled stock appreciation rights using the Black-Scholes option valuation model and remeasures the fair value of the award each reporting period until the award is vested. Once vested the Company immediately recognizes compensation cost for any changes in fair value of cash settled stock appreciation rights until settlement. Fair value of vested cash settled stock appreciation rights represents the fair market value of one share of the Company’s stock on the measurement date less the exercise price per share. Compensation cost for cash settled stock appreciation rights is trued up each reporting period for changes in fair value pro-rated for the portion of the requisite service period rendered.

The estimated fair value of the cash settled stock appreciation rights as of June 30, 2022 was $3,212. Stock-based compensation for cash settled stock appreciation rights was $(2,951) and $127 for the three months ended June 30, 2022 and 2021, respectively, and $808 and $2,679 for the six months ended June 30, 2022 and 2021, respectively.

The fair value of unvested cash settled stock appreciation rights as of June 30, 2022 was estimated using the Black-Scholes option valuation model with the following assumptions:


				Expected	Risk Free
			Expected	Dividend	Interest	Fair Value
Grant Year	Grant Date	Expected Life	Volatility	Yield	Rate	Per Award

2020	1/24/2020	4.1 years	89.91%	0.00%	2.98%	$	2.85
2020	9/14/2020	4.5 years	86.68%	0.00%	2.99%	$	2.75
2020	11/30/2020	4.7 years	85.24%	0.00%	3.00%	$	2.64
2021	1/5/2021	4.8 years	84.45%	0.00%	3.00%	$	2.69

Note 11 – Employee Benefit Plans

The Company has a qualified, defined benefit pension plan that was established to provide benefits to certain employees. The plan is frozen and participants are no longer accruing benefits. Generally, contributions to the plan 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 plan assets are held by an independent trustee and consist primarily of equity and fixed income securities.

The components of net periodic benefit cost (benefit) for the three and six months ended June 30, 2022 and 2021, are as follows:


	Three Months Ended						Six Months Ended
	June 30,							June 30,
Pension Benefits	2022			2021				2022			2021
Interest cost	$	276		$	236			$	552		$	472
Expected return on plan assets		(617	)		(584	)			(1,234	)		(1,168	)
Amortization of unrecognized net loss		83			156				167			312
	$	(258	)	$	(192	)		$	(515	)	$	(384	)

The Company made no contributions to the Company’s defined benefit pension plan for the three and six months ended June 30, 2022 and 2021. The Company expects to make no contributions to its pension plan in 2022.

The Company also maintains qualified defined contribution plans, which provide benefits to employees based on employee contributions and employee earnings with discretionary contributions allowed.

Note 12 – Contingencies and Legal Settlements

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.

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. The Company has reserved $0.4 million to cover probable and estimable liabilities with respect to these matters (see Note 16–Subsequent Event).

Note 13 – Earnings Per Share

The weighted-average common shares outstanding are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

Weighted average common shares outstanding		15,919,436		14,863,069		15,799,456		14,783,459
Issuance of warrants		8,580,348		5,297,341		8,194,871		5,300,740
Weighted average common shares outstanding - basic		24,499,784		20,160,410		23,994,327		20,084,199
Issuance of contingent warrants		-		-		-		-
Weighted average common shares outstanding - diluted		24,499,784		20,160,410		23,994,327		20,084,199

The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and participating securities. The Company’s participating securities are its grants of restricted stock which contain non-forfeitable rights to dividends. The Company allocates earnings between both classes; however, in periods of undistributed losses, they are only allocated to common shares as the unvested restricted stockholders do not contractually participate in losses of the Company. The Company computes basic earnings per share by dividing net income allocated to common shareholders by the weighted average number of shares outstanding during the period. Warrants issued in connection with the Company's long-term debt were issued at a nominal exercise price and are considered outstanding at the date of issuance. Diluted earnings per share is calculated to give effect to all potentially dilutive common shares that were outstanding during the period. 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 June 30, 2022 and 2021, 1,759,997 and 1,329,429 shares, respectively, were not included in the weighted average common shares outstanding calculation as they were anti-dilutive. For the six months ended June 30, 2022 and 2021, 1,727,421 and 1,531,864 shares, respectively, were not included in the weighted average common shares outstanding calculation as they were anti-dilutive.

Note 14 – Restructuring and Impairment Charges

On September 10, 2020, the Company announced its plan to permanently close its Shoals Facility in light of the ongoing cyclical industry downturn, which had been magnified by the COVID-19 pandemic. On October 8, 2020, the Company reached an agreement with the Shoals Facility owner and landlord, to shorten the Shoals lease term by amending the expiration date to the end of February 2021. In addition, the landlord agreed to waive the base rent payable under the original lease for the months of October 2020 through February 2021. Property, plant and equipment with an estimated fair value of $10,148 was sold or transferred to the Shoals landlord during the six months ended June 30, 2021 as consideration for the landlord’s entry into the lease amendment and the aforementioned rent waiver. Restructuring and impairment charges (benefits) related to the plant closure for the three and six months ended June 30, 2021 were primarily due to relocating some of the facility’s equipment to Castaños.

Restructuring and impairment charges are reported as a separate line item on the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021, and are detailed below:


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2022		2021			2022		2021
Impairment and loss on disposal of machinery and equipment	$	-	$	-		$	-	$	1,591
Employee severance and retention		-		(24	)		-		(5	)
Other charges related to facility closure		-		(96	)		-		4,944
Total restructuring and impairment costs	$	-	$	(120	)	$	-	$	6,530


	Accrued as of December 31, 2021		Cash Charges		Non-cash charges		Cash payments			Accrued as of June 30, 2022

Impairment and loss on disposal of machinery and equipment	$	-								$	-
Employee severance and retention		163				-		(163	)		-
Other charges related to facility closure		-									-
Total restructuring and impairment costs	$	163	$	-	$	-	$	(163	)	$	-


	Accrued as of December 31, 2020		Cash Charges		Non-cash charges			Cash payments			Accrued as of June 30, 2021

Impairment and loss on disposal of machinery and equipment	$	-			$	269					$	-
Employee severance and retention		1,596				(80	)		(1,238	)		278
Other charges related to facility closure		251		6,437		(96	)		(6,688	)		-
Total restructuring and impairment costs	$	1,847	$	6,437	$	93		$	(7,926	)	$	278

Note 15 – Related Parties

The following persons are owners of Fabricaciones y Servicios de México, S.A. de C.V. ("Fasemex"): Jesus Gil, VP Operations and director of the Company; Alejandro Gil and Salvador Gil, siblings of Jesus Gil. Fasemex owns approximately 12.5% of the outstanding shares of Common Stock. Fasemex provides steel fabrication services to the Company. Effective November 2021, the lessors of the Company’s leased facility in Castaños (the "Castaños Facility") are Jesus Gil, Alejandro Gil, and Salvador Gil. Previously, Fasemex was the lessor of the Castaños Facility. The Company paid $4,447 and $16,656 during the three and six months ended June 30, 2022, respectively, and $13,400 and $18,100 during the three and six months ended June 30, 2021, respectively, related to rent payment, security deposit, fabrication services and royalty payments. Distribuciones Industriales JAS S.A. de C.V. (“DI”) is owned by Alejandro Gil and Salvador Gil. The Company paid $563 and $1,072 during the three and six months ended June 30, 2022, respectively, and $500 and $900 during the three and six months ended June 30, 2021, respectively, to DI related to material and safety supplies. Maquinaria y Equipo de Transporte Jova S.A. de C.V ("METJ") is owned by Jorge Gil, another sibling of Jesus Gil. The Company paid $812 and $1,412 during the three and six months ended June 30, 2022, respectively, and $300 and $400 during the three and six months ended June 30, 2021, respectively, to METJ related to trucking services. Related party asset on the condensed consolidated balance sheet of $5,121 as of June 30, 2022 includes prepaid inventory of $575 and other receivables of $4,546 from Fasemex. Related party accounts payable on the condensed consolidated balance sheet of $5,454 as of June 30, 2022 includes $5,008 payable to Fasemex, $202 payable to DI and $244 payable to METJ. Related party asset on the condensed consolidated balance sheet of $8,680 as of December 31, 2021 includes prepaid inventory of $4,134 and other receivables of $4,546 from Fasemex. Related party accounts payable on the condensed consolidated balance sheet of $8,870 as of December 31, 2021 includes $8,291 payable to Fasemex, $291 payable to DI and $288 payable to METJ.

The Warrantholder beneficially owns approximately 38.0% of the outstanding shares of Common Stock (as disclosed by the Warrantholder in its Schedule 13D/A No. 3 filed with the SEC on April 12, 2022). The Company paid $2,084 and $4,120 to the Warrantholder during the three and six months ended June 30, 2022, respectively, for term loan interest, of which $1,726 and $3,398 was paid in cash during the three and six months ended June 30, 2022, respectively, and $358 and $722 was payment in kind during the three and six months ended June 30, 2022, respectively. Additionally, the Company paid $1,000 and $2,000 in equity fees during

the three and six months ended June 30, 2022, respectively, and $125 and $247 in cash fees during the three and six months ended June 30, 2022, respectively, to the Warrantholder related to the standby letter of credit described in Note 8 Debt Financing and Revolving Credit Facilities.

Note 16 – Subsequent Event

The Company has a qualified, defined benefit pension plan (the "Plan") that was established to provide benefits to certain employees. Effective July 19, 2022, the Company entered into a commitment agreement (the "OneAmerica Agreement") with OneAmerica Financial Partners, Inc. ("OneAmerica"). Under the OneAmerica Agreement, the Company will purchase a non-participating group annuity contract (the "Annuity Contract") from OneAmerica and transfer to OneAmerica about 67.7% of its future benefit obligations under the Plan.

Upon payment of the premium to OneAmerica and the closing of the transactions contemplated by the OneAmeria Agreement, the applicable pension benefit obligations will be irrevocably transferred from the Plan to OneAmerica. By transferring the future benefit obligations and annuity administration to OneAmerica, the Company has reduced its gross Plan liabilities by approximately $27.6 million. The purchase of the Annuity Contract will be funded directly by the assets of the Plan.

As a result of the transactions contemplated by the OneAmerica Agreement, the Company expects to recognize a non-cash pre-tax pension settlement charge of $8.1 million in the third quarter of 2022, as a result of the application of pension settlement accounting rules, which require the Company to remeasure the Plan as of July 19, 2022.

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

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,” “likely,” “unlikely,” “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. However, forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These risks and uncertainties relate to, among other things, risks relating to the potential financial and operational impacts of the COVID-19 pandemic, 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, fluctuating costs of raw materials, including steel and aluminum, and delays in the delivery of raw materials, the risk of lack of acceptance of our new railcar offerings by our customers, risks relating to our relationship with our unionized employees and their unions and other competitive factors. The factors listed above are not exhaustive. Other sections of this Quarterly Report on Form 10-Q include additional factors that could materially and adversely affect our business, financial condition and results of operations. New factors emerge from time to time and it is not possible for management to predict the impact of all of these factors on our business, financial condition or results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results. 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.

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 financial institutions, railroads and shippers.

On September 10, 2020, we announced our plan to permanently close the Shoals Facility in light of the cyclical industry downturn, which was magnified by the global pandemic. The closure will reduce costs and align our manufacturing capacity with the current railcar market. We ceased production at the Shoals Facility in February 2021.

Total new orders received for railcars for the six months ended June 30, 2022 were 1,900 units, consisting of 1,602 new railcars and 298 rebuilt railcars, compared to orders for 1,433 units, consisting of 800 new railcars and 633 rebuilt railcars for the six months ended June 30, 2021. Total backlog of unfilled orders was 2,972 units at June 30, 2022, compared to 2,323 railcars as of December 31, 2021. The estimated sales value of the backlog was $320 million and $240 million, respectively, as of June 30, 2022 and December 31, 2021. The increase in the number of orders for new railcars for the six months ended June 30, 2022 compared to the prior year period is a reflection of improvement in the railcar equipment market.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2022 compared to Three Months Ended June 30, 2021

Revenues

Our consolidated revenues for the three months ended June 30, 2022 were $56.8 million compared to $37.4 million for the three months ended June 30, 2021. Manufacturing segment revenues for the three months ended June 30, 2022 were $53.6 million compared to $35.2 million for the corresponding prior year quarter. The $18.4 million increase in Manufacturing segment revenues was largely driven by an increase in the volume of railcar units delivered. Railcar deliveries totaled 468 units for the second quarter of 2022, consisting of 411 new railcars and 57 rebuilt railcars, compared to 313 new railcars delivered in the second quarter of 2021.

Corporate and Other revenues were $3.2 million for the three months ended June 30, 2022 compared to $2.2 million for the three months ended June 30, 2021.

Gross Profit

Our consolidated gross profit was $6.6 million for the three months ended June 30, 2022 compared to $2.0 million for the three months ended June 30, 2021. Manufacturing segment gross profit was $5.5 million for the three months ended June 30, 2022 compared to $1.1 million for the three months ended June 30, 2021. The $4.6 million increase in consolidated gross profit and $4.4 million increase in Manufacturing segment gross profit reflect a favorable volume variance and favorable margins per car.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses for the three months ended June 30, 2022 were $4.1 million compared to $6.3 million for the three months ended June 30, 2021. The $2.2 million decrease was primarily due to decreases in stock-based compensation related fair value adjustments for cash-settled stock appreciation rights awarded to employees in prior periods. Manufacturing segment selling, general and administrative expenses were $0.6 million for the three months ended June 30, 2022, compared to $0.9 million for the three months ended June 30, 2021. Manufacturing segment selling, general and administrative expenses for the three months ended June 30, 2022 were 1.1% of revenue, compared to 2.7% of revenue for the three months ended June 30, 2021. Corporate and Other selling, general and administrative expenses were $3.5 million for the three months ended June 30, 2022 compared to $5.4 million for the three months ended June 30, 2021. Corporate and Other selling, general and administrative expenses for the three months ended June 30, 2022 included decreases in stock-based compensation of $2.7 million.

Restructuring and Impairment Charges

Restructuring and impairment charges were not material for the three months ended June 30, 2022 and 2021.

Operating Income (Loss)

Our consolidated operating income for the three months ended June 30, 2022 was $2.5 million compared to $4.2 million operating loss for the three months ended June 30, 2021. Operating income for the Manufacturing segment was $4.9 million for the three months ended June 30, 2022 compared to operating income of $0.2 million for the three months ended June 30, 2021, reflecting the increase in railcars delivered during the three months ended June 30, 2022 compared to the 2021 period. Corporate and Other operating loss was $2.4 million for the three months ended June 30, 2022 compared to operating loss of $4.4 million for the three months ended June 30, 2021. The decrease in operating loss is primarily a result of the previously described decreases in Corporate and Other stock-based compensation costs.

Income Taxes

Our income tax provision was $1.6 million for the three months ended June 30, 2022 compared to $0.5 million for the three months ended June 30, 2021.

Net Income (Loss)

As a result of the changes and results discussed above, as well as the $18.7 million gain on change in fair market value of warrant liability, net income was $14.5 million for the three months ended June 30, 2022 compared to a $4.2 million net loss for the three months ended June 30, 2021. For the three months ended June 30, 2022, basic and diluted net income per share was $0.58 compared to basic and diluted net loss per share of $0.24 for the three months ended June 30, 2021.

Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021

Revenues

Our consolidated revenues for the six months ended June 30, 2022 were $150.0 million compared to $69.7 million for the six months ended June 30, 2021. Manufacturing segment revenues for the six months ended June 30, 2022 were $143.7 million compared to $65.2 million for the corresponding prior year period. The $78.5 million increase in Manufacturing segment revenues was largely driven by an increase in the volume of railcar units delivered. Railcar deliveries in the six months ended June 30, 2022 totaled 1,251 units, consisting of 848 new railcars and 403 rebuilt railcars, compared to 622 units in the same period of 2021, consisting of 473 new railcars and 149 rebuilt railcars. Corporate and Other revenues were $6.3 million for the six months ended June 30, 2022 compared to $4.5 million for the six months ended June 30, 2021.

Gross Profit

Our consolidated gross profit was $16.6 million for the six months ended June 30, 2022 compared to $3.3 million for the six months ended June 30, 2021. Manufacturing segment gross profit was $14.8 million for the six months ended June 30, 2022 compared to $2.2 million for the six months ended June 30, 2021. The $13.3 million increase in consolidated gross profit and $12.6 million increase in Manufacturing segment gross profit reflect a favorable volume variance and favorable margins per car.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses for the six months ended June 30, 2022 were $14.8 million compared to $15.4 million for the six months ended June 30, 2021. The $0.7 million decrease in consolidated selling, general and administrative expenses for the six months ended June 30, 2022 was primarily due to decreases in stock-based compensation related to fair value adjustments for cash-settled stock appreciation rights awarded to employees in prior periods. Manufacturing segment selling, general and administrative expenses were $1.4 million for the six months ended June 30, 2022, compared to $1.5 million for the six months ended June 30, 2021. Manufacturing segment selling, general and administrative expenses for the six months ended June 30, 2022 were 1.0% of revenue, compared to 2.2% of revenue for the six months ended June 30, 2021. Corporate and Other selling, general and administrative expenses were $13.4 million for the six months ended June 30, 2022 compared to $14.0 million for the six months ended June 30, 2021. The $0.6 million decrease in Corporate and Other selling, general and administrative expenses is primarily a result of decreases in Corporate and Other stock-based compensation costs of $1.5 million.

Restructuring and Impairment Charges

There were no restructuring and impairment charges for the six months ended June 30, 2022. Restructuring and impairment charges of $6.5 million for the six months ended June 30, 2021 primarily represented costs related to relocating some of the Shoals Facility’s equipment to the Castaños Facility.

Operating Income (Loss)

Our consolidated operating income for the six months ended June 30, 2022 was $1.9 million compared to a $18.7 million operating loss for the six months ended June 30, 2021. Operating income for the Manufacturing segment was $13.4 million for the six months ended June 30, 2022 compared to an operating loss of $5.8 million for the six months ended June 30, 2021, reflecting the increase in railcars delivered during the six months ended June 30, 2022 compared to the 2021 period. Manufacturing segment operating loss for the six months ended June 30, 2021 included restructuring and impairment charges of $6.5 million while there were no restructuring and impairment charges for the six months ended June 30, 2022. Corporate and Other operating loss was $11.5 million for the six months ended June 30, 2022 compared to $12.9 million for the six months ended June 30, 2021. The $1.4 million increase in operating loss is primarily a result of the previously described decreases in Corporate and Other stock-based compensation costs.

Income Taxes

Our income tax provision was $1.9 million for the six months ended June 30, 2022 compared to $0.6 million for the six months ended June 30, 2021.

Net Income (Loss)

As a result of the changes and results discussed above, net loss was $11.3 million for the six months ended June 30, 2022 compared to $43.3 million for the six months ended June 30, 2021. For the six months ended June 30, 2022, basic and diluted net loss per share was $0.47 compared to $2.19 for the six months ended June 30, 2021.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are our cash and cash equivalent balances on hand and our credit and debt facilities outlined below.

Term Loan Credit Agreement

Lender committed to the extension of a term loan credit facility in the principal amount of $40.0 million, consisting of a single term loan to be funded upon the satisfaction of certain conditions precedent set forth in the Term Loan Credit Agreement, including stockholder approval of the issuance of the Company's common stock, par value $0.01 per share (the "Common Stock"), underlying the Warrant (as defined below) (the funding date of such term loan, the “Closing Date”). FreightCar America, Inc. stockholders approved the issuance of the Common Stock underlying the Warrant at a special stockholders’ meeting on November 24, 2020. The $40.0 million term loan closed and was funded on November 24, 2020. The Company incurred $2.9 million in deferred financing costs related to the Term Loan Credit Agreement. The deferred financing costs are presented as a reduction of the long-term debt balance and amortized to interest expense over the term of the Term Loan Credit Agreement.

On May 14, 2021, the Loan Parties entered into an Amendment No. 2 to the Term Loan Credit Agreement (the “Second Amendment”) with Lender and the Agent pursuant to which the principal amount of the term loan credit facility was increased by $16.0 million to a total of $56.0 million, with such additional $16.0 million (the “Additional Loan”) to be funded upon the satisfaction of certain conditions precedent set forth in the Second Amendment. The Additional Loan closed and was funded on May 17, 2021. The Company incurred $0.5 million in deferred financing costs related to the Second Amendment which are presented as a reduction of the long-term debt balance and amortized on a straight-line basis to interest expense over the term of the Second Amendment. The Additional Loan bears interest at the same rate as the original term loan.

Pursuant to the Second Amendment, in the event that the Additional Loan was not repaid in full by March 31, 2022, the Company was to issue to the Lender and/or an affiliate of the Lender a warrant (the “March 2022 Warrant”) to purchase a number of shares of Common Stock equal to 5% of the outstanding Common Stock on a fully-diluted basis at the time the March 2022 Warrant is exercised (after giving effect to such issuance). Because the Company believed that it was probable that the Additional Warrant would be issued the Company recorded an additional warrant liability of $7,351 during the third quarter of 2021. The March 2022 Warrant was issued on April 4, 2022 with an exercise price of $0.01 and a term of ten (10) years. As of June 30, 2022 and December 31, 2021, the March 2022 Warrant was exercisable for an aggregate of 1,439,940 and zero (0) shares of Common Stock, respectively with a per share exercise price of $0.01.

Pursuant to the Second Amendment, the Company was required to among other things, i) obtain a term sheet for additional financing of no less than $15.0 million by July 31, 2021 and ii) file a registration statement on Form S-3 registering Company securities by no later than August 31, 2021. The Company has met each of the aforementioned obligations. The Form S-3 registering Company securities was filed with the Securities and Exchange Commission on August 27, 2021 and became effective on September 9, 2021.

On July 30, 2021, the Loan Parties entered into an Amendment No. 3 to Credit Agreement (the "Third Amendment") with the Lender and the Agent, pursuant to which, among other things, Lender obtained a standby letter of credit (as may be amended from time to time, the “Third Amendment Letter of Credit”) from Wells Fargo Bank, N.A., in the principal amount of $25,000 for the account of the Company and for the benefit of the “Revolving Loan Lender”(as defined below).

On December 30, 2021, the Loan Parties entered into an Amendment No. 4 to Credit Agreement (the “Fourth Amendment”) with the Lender and the Agent, pursuant to which the principal amount of the term loan credit facility was increased by $15.0 million to a total of $71.0 million, with such additional $15.0 million (the “Delayed Draw Loan”) to be funded, at the Borrower’s option, upon the satisfaction of certain conditions precedent set forth in the Fourth Amendment. The Borrower has the option to draw on the Delayed Draw Loan through January 31, 2023 and may choose not to do so.

The Delayed Draw Loan, if funded, will bear the same interest rate as the original term loan.

Reimbursement Agreement

In addition, pursuant to the Reimbursement Agreement, the Company shall make certain other payments as set forth below, so long as the Third Amendment Letter of Credit remains outstanding:

Letter of Credit Fee

The Company shall pay to Agent, for the account of Lender, an annual fee of $0.5 million, which shall be due and payable quarterly beginning on August 2, 2021, and every three months thereafter.

Equity Fee

Every three months (the “Measurement Period”), commencing on August 6, 2021, the Company shall pay to the Lender (or, so long as Lender is the sole provider of the Third Amendment Letter of Credit, to OC III LVS XII LP, if Lender has timely notified the Company in writing of such designation) a fee (the “Equity Fee”) payable in shares of Common Stock. The Equity Fee shall be calculated by dividing $1.0 million by the volume weighted average price of the Common Stock on the Nasdaq Capital Market for the ten (10) trading days ending on the last business day of the applicable Measurement Period. The Company can opt to pay the Equity Fee in cash, in the amount of $1.0 million, if, and only if, (x) the Company has already issued as Equity Fees a number of shares of Common Stock equal to (I) 5.0% multiplied by (II) the total number of shares of Common Stock outstanding as of July 30, 2021, rounded down to the nearest whole share of Common Stock, and (y) the Company has at least $15.0 million of Repayment Liquidity after giving effect to such payment. The term Repayment Liquidity, as defined in the Term Loan Credit Agreement, means (a) all unrestricted and unencumbered cash and cash equivalents of the Loan Parties, plus (b) the undrawn and available portion of the commitments under that certain Amended and Restated Loan and Security Agreement by and among the Revolving Loan Parties and the Revolving Loan Lender (as described below), minus (c) all accounts payable of the Loan Parties that are more than 30 days past due.

Cash Fee

The Company shall pay to the Agent, for the account of the Lender (or, so long as the Lender is the sole provider of the Third Amendment Letter of Credit, to OC III LVS XII LP, if the Lender has timely notified the Company in writing of such designation) a cash fee (the “Cash Fee”) which shall be due and payable in cash quarterly beginning on the date that the Maximum Equity has been issued and thereafter on the business day immediately succeeding the last business day of the applicable Measurement Period. The Cash Fee shall be equal to $1.0 million, provided that, in the quarter in which the Maximum Equity is issued, such fee shall be equitably reduced by the value of any Equity Fee issued by the Company that quarter.

Warrant

In connection with the entry into the Term Loan Credit Agreement, the Company issued to an affiliate of the Lender (the “Warrantholder”) a warrant (the “Warrant”), pursuant to that certain warrant acquisition agreement, dated as of October 13, 2020 (the “Warrant Acquisition Agreement”), by and between the Company and the Lender to purchase a number of shares of Common Stock equal to 23% of the outstanding Common Stock on a fully-diluted basis at the time the Warrant is exercised (after giving effect to such issuance). The Warrant is exercisable for a term of ten years from the date of the issuance of the Warrant. The Warrant was issued on November 24, 2020 after the Company received stockholder approval of the issuance of the Common Stock issuable upon exercise of the Warrant by the Warrantholder. In connection with the issuance of the Warrant, the Company and the Lender entered into a registration rights agreement (the “Registration Rights Agreement”) as of the Closing Date of November 24, 2020. As of June 30, 2022 and December 31, 2021, the Warrant was exercisable for an aggregate of 6,623,724 and 6,098,217 shares, respectively, of Common Stock with a per share exercise price of $0.01.The Company determined that the Warrant should be accounted for as a derivative instrument and classified as a liability on its Consolidated Balance Sheets primarily due to the instrument obligating the

Company to settle the Warrant in a variable number of shares of Common Stock. The Warrant was recorded at fair value and is treated as a discount on the term loan. The discount on the associated debt is amortized over the life of the Term Loan Credit Agreement and included in interest expense.

Pursuant to the Fourth Amendment and a warrant acquisition agreement, dated as of December 30, 2021 (the “Warrant Acquisition Agreement”), the Company issued to the Lender a warrant (the “December 2021 Warrant”) to purchase a number of shares of Common Stock equal to 5% of the Company’s outstanding Common Stock on a fully-diluted basis at the time the December 2021 Warrant is exercised (after giving effect to such issuance). The December 2021 Warrant has an exercise price of $0.01 and a term of ten years. As of June 30, 2022 and December 31, 2021, the December 2021 Warrant was exercisable for an aggregate of 1,439,940 and 1,325,699 shares, respectively, of Common Stock with a per share exercise price of $0.01.

In addition, to the extent the Delayed Draw Loan is funded, the Company has agreed to issue to the Lender a warrant (the “3% Additional Warrant”) to purchase up to a number of shares of Common Stock equal to 3% of the Company’s outstanding Common Stock on a fully-diluted basis at the time the 3% Additional Warrant is exercised (after giving effect to such issuance). The 3% Additional Warrant, if issued, will have an exercise price of $0.01 and a term of ten years.

Siena Loan and Security Agreement

On October 8, 2020, the Company entered into a Loan and Security Agreement (the “Siena Loan Agreement”) by and among the Company, as guarantor, and certain of its subsidiaries, as borrowers (together with the Company, the “Revolving Loan Parties”), and Siena Lending Group LLC, as lender (“Revolving Loan Lender”). Pursuant to the Siena Loan Agreement, the Revolving Loan Lender provided an asset backed credit facility, in the maximum aggregate principal amount of up to $20.0 million, (the "Maximum Revolving Facility Amount") consisting of revolving loans (the "Revolving Loans").

The Siena Loan Agreement provided for a revolving credit facility with maximum availability of $20.0 million, subject to borrowing base requirements set forth in the Siena Loan Agreement, which generally limited availability under the revolving credit facility to (a) 85% of the value of eligible accounts and (b) up to the lesser of (i) 50% of the lower of cost or market value of eligible inventory and (ii) 85% of the net orderly liquidation value of eligible inventory, and as reduced by reserves established by the Revolving Loan Lender from time to time in accordance with the Siena Loan Agreement.

Pursuant to the Amended and Restated Loan and Security Agreement, the Maximum Revolving Facility Amount was increased to $25.0 million, provided, however, that the outstanding balance of all Revolving Loans may not exceed the lesser of (A) the Maximum Revolving Facility Amount minus the Availability Block and (B) an amount equal to the issued and undrawn portion of the Third Amendment Letter of Credit (as defined above) minus the Availability Block. The term “Availability Block”, as defined in the Amended and Restated Loan and Security Agreement, means 3.0% of the issued and undrawn amount under the Third Amendment Letter of Credit.

On February 23, 2022, the Revolving Loan Parties and the Revolving Loan Lender entered into a First Amendment to Amended and Restated Loan and Security Agreement (the “First Amendment to Amended and Restated Loan and Security Agreement”), pursuant to which, among other things, the Maximum Revolving Facility Amount was increased to $35 million; provided, however, that after giving effect to each Revolving Loan and each letter of credit made available to the Revolving Loan Parties, (A) the outstanding balance of all Revolving Loans and the Letter of Credit Balance (which is defined in the Amended and Restated Loan and Security Agreement as the sum of (a) the aggregate undrawn face amount of all outstanding Letters of Credit and (b) all interest, fees and costs due or, in Lender’s estimation, likely to become due in connection therewith) will not exceed the lesser of (x) the Maximum

Revolving Facility Amount and (y) the Borrowing Base (as defined in the First Amendment to Amended and Restated Loan and Security Agreement), and (B) none of the other Loan Limits (as defined in the First Amendment to Amended and Restated Loan and Security Agreement) for Revolving Loans will be exceeded.

As of June 30, 2022, the Company had $25.0 million in outstanding debt under the Siena Loan Agreement and remaining borrowing availability of $0.6 million. As of December 31, 2021, the Company had $24.0 million in outstanding debt under the Siena Loan Agreement and remaining borrowing availability of $0.1 million. The Company incurred $1.1 million in deferred financing costs related to the Siena Loan Agreement and incurred $1.0 million in additional deferred financing costs related to the Amended and Restated Loan and Security Agreement. The deferred financing costs are presented as an asset and amortized to interest expense on a straight-line basis over the term of the Siena Loan Agreement.

M&T Credit Agreement

On April 16, 2019, FreightCar America Leasing 1, LLC, an indirect wholly-owned subsidiary of the Company (“FreightCar Leasing Borrower”), entered into a Credit Agreement (the “M&T Credit Agreement”) with M & T Bank, N.A., as lender (“M&T”). Pursuant to the M&T Credit Agreement, M&T extended a revolving credit facility to FreightCar Leasing Borrower in an aggregate amount of up to $40.0 million for the purpose of financing railcars to be leased to third parties.

On April 16, 2019, FreightCar Leasing Borrower also entered into a Security Agreement with M&T (the “M&T Security Agreement”) pursuant to which it granted a security interest in all of its assets to M&T to secure its obligations under the M&T Credit Agreement.

On April 16, 2019, FreightCar America Leasing, LLC, a wholly-owned subsidiary of the Company and parent of FreightCar Leasing Borrower (“FreightCar Leasing Guarantor”), entered into (i) a Guaranty Agreement with M&T (the “M&T Guaranty Agreement”) pursuant to which FreightCar Leasing Guarantor guarantees the repayment and performance of certain obligations of FreightCar Leasing Borrower and (ii) a Pledge Agreement with M&T (the “M&T Pledge Agreement”) pursuant to which FreightCar Leasing Guarantor pledged all of the equity of FreightCar Leasing Borrower held by FreightCar Leasing Guarantor.

The loans under the M&T Credit Agreement are non-recourse to the assets of the Company or its subsidiaries other than the assets of FreightCar Leasing Borrower and FreightCar Leasing Guarantor.

On August 7, 2020, FreightCar Leasing Borrower received notice (the “First Notice”) from M&T that, based on an appraisal (the “Appraisal”) conducted by a third party at the request of M&T with respect to the railcars in FreightCar Leasing Borrower’s Borrowing Base (as defined in the M&T Credit Agreement) under the M&T Credit Agreement, the unpaid principal balance under the M&T Credit Agreement exceeded the availability under the M&T Credit Agreement as of the date of the Appraisal by $5.1 million (the “Payment Demand Amount”). In the First Notice, M&T Bank: (a) asserted that an Event of Default under the M&T Credit Agreement has occurred because FreightCar Leasing Borrower did not pay the Payment Demand Amount to M&T within five days of the asserted change in availability; (b) demanded payment of the amount within five days of the date of the First Notice; and (c) terminated the commitment to advance additional loans under the M&T Credit Agreement.

On December 18, 2020, FreightCar Leasing Borrower received a revised notice (the “Second Notice,” and together with the First Notice, the “Notices”) from M&T asserting that: (a) as a result of the continuing Event of Default that M&T alleged to have occurred under the M&T Credit Agreement, M&T has declared a default and accelerated and demands immediate payment by FreightCar Leasing Borrower of $10.1 million (the “Outstanding Amount”); (b) FreightCar Leasing Borrower is liable for all interest that

continues to accrue on the Outstanding Amount; and (c) FreightCar Leasing Borrower is liable for all attorneys’ fees, costs and expenses as set forth in the M&T Credit Agreement.

On April 20, 2021, FreightCar Leasing Borrower received a notice from M&T that an Event of Default had occurred due to all amounts outstanding under the M&T Credit Agreement not having been paid by the Term End.

On December 28, 2021 (the “Execution Date”), FreightCar Leasing Borrower, FreightCar Leasing Guarantor (together with the FreightCar Leasing Borrower, the “Obligors”), the Company, FreightCar America Railcar Management, LLC, a Delaware limited liability company (“FCA Management”), and M&T, entered into a Forbearance and Settlement Agreement (the “Forbearance Agreement”) with respect to the M&T Credit Agreement and its related Credit Documents (as defined in the M&T Credit Agreement), as well as certain intercompany services agreements related thereto.

Pursuant to the Forbearance Agreement, the Obligors will continue to perform and comply with all of their performance obligations (as opposed to payment obligations) under certain provisions of the M&T Credit Agreement (primarily related to information obligations and the preservation of the collateral pledged by FreightCar Leasing Borrower to M&T pursuant to the M&T Security Agreement, between FreightCar Leasing Borrower and M&T (the “Collateral”)) and all the provisions of the M&T Security Agreement. During the period from Execution Date until the termination of the Forbearance Agreement, M&T may not take any action against the Obligors or exercise or enforce any rights or remedies provided for in the Credit Documents or otherwise available to it.

On December 1, 2023, or sooner if requested by M&T (the “Turnover Date”), FreightCar Leasing Borrower shall execute and deliver to M&T documents required to deliver and assign to M&T all the leased railcars and related leases serving as Collateral for the M&T Credit Agreement.

Upon the Turnover Date and the Obligors’ performance of their respective obligations under the Forbearance Agreement, including the delivery of certain Collateral to M&T upon the Turnover Date, all Obligations (as defined in the M&T Credit Agreement) shall be deemed satisfied in full, M&T shall no longer have any further claims against the Obligors under the M&T Credit Documents and the Credit Documents shall automatically terminate and be of no further force or effect except for the provisions thereof that expressly survive termination.

The Forbearance Agreement contains customary releases at execution for all affiliates of the Company (other than the Obligors) and agreements to deliver final releases with respect to the Obligors upon their performance under the Forbearance Agreement. The Company also agreed to turn over to M&T on the Effective Date certain rents in the amount of $0.7 million that it had previously collected as servicing agent for FreightCar Leasing Borrower, and to continue to provide such services through the Turnover Date without a service fee, and after the Turnover Date through the return of the railcars serving as Collateral, for a service fee.

As of June 30, 2022 and December 31, 2021, FreightCar Leasing Borrower had $7.4 million and $7.9 million, respectively, in outstanding debt under the M&T Credit Agreement, which was collateralized by leased railcars with a carrying value of $6.5 million and $6.6 million, respectively. As of June 30, 2022, the interest rate on outstanding debt under the M&T Credit Agreement was 5.75%.

Additional Liquidity Factors

Our restricted cash, restricted cash equivalents and restricted certificates of deposit balances were $3.9 million and $5.0 million as of June 30, 2022 and December 31, 2021, respectively. Restricted deposits of $0.3 million as of each of June 30, 2022 and December 31, 2021, relate to a customer deposit for purchase of railcars. Restricted deposits of $3.6 million as of June 30, 2022 and $4.7 million as of December 31, 2021 are used to collateralize standby letters of credit with respect to performance guarantees. The standby letters of credit outstanding as of June 30, 2022 are scheduled to expire at various dates through December 10, 2022.

Based on our current level of operations and known changes in planned volume based on our backlog, we believe that our cash balances will be sufficient to meet our expected liquidity needs for at least the next twelve months. Our long-term liquidity is contingent upon future operating performance and our ability to continue to meet financial covenants under our revolving credit facilities, our Term Loan Credit Agreement and any other indebtedness and the availability of additional financing if needed. 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. Additionally, we have recovered $35.4 million in Value Added Tax ("VAT") refunds during the six months ended June 30, 2022 relating to production at the Castaños Facility. We continue to work through the VAT refund process as a part of our working capital structure.

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 or debt and through long-term borrowings such as the $40.0 million term loan under the Term Loan Credit Agreement. 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.

Cash Flows

The following table summarizes our cash flow activities for the six months ended June 30, 2022 and 2021:


	2022			2021
	(In thousands)
Net cash (used in) provided by:
Operating activities	$	(2,396	)	$	(44,109	)
Investing activities		(2,808	)		(818	)
Financing activities		495			11,610
Total	$	(4,709	)	$	(33,317	)

Operating Activities. Our net cash provided by (used in) operating activities reflects net 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, payments to our suppliers and other operating activities. 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 six months ended June 30, 2022 was $2.4 million compared to net cash used in operating activities of $44.1 million for the six months ended June 30, 2021. Our net cash used in operating activities for the six months ended June 30, 2022 reflects changes in working capital, including an increase in customer deposits of $15.4 million and a decrease in VAT receivable of $16.9 million, all of which were partially offset by increases in both accounts receivable of $13.9 million and inventory of $16.9 million. Increases in customer deposits for the six months ended June 30, 2022 represented a cash advance for cars to be delivered in the third quarter of 2022. Increases in prepayments are due to inventory to be used in production of railcars to be delivered during the second half of 2022. Our VAT receivable decreased as a result of recovering VAT refunds during the six months ended June 30, 2022, while accounts receivable increased as a result of a higher volume of railcars delivered during the six months ended June 30, 2022. Our net cash used in operating activities for the six months ended June 30, 2021 reflects changes in working capital, including increases in VAT receivable of $16.8 million and decreases in deferred revenue of $4.4 million.

Investing Activities. Net cash used in investing activities for the six months ended June 30, 2022 was $2.8 million and consisted of capital expenditures related to the expansion of the Castaños Facility. Net cash used in investing activities for the six months ended June 30, 2021 was $0.8 million and included capital expenditures of $1.4 million related to the construction in progress for our Castaños Facility and the $0.4 million proceeds from sale of equipment from our Shoals Facility.

Financing Activities. Net cash provided by financing activities for the six months ended June 30, 2022 was $0.5 million which consisted of $49.3 million of borrowings on our revolving line of credit, offset by $48.8 million of repayments on our revolving line of credit. Net cash provided by financing activities for the six months ended June 30, 2021 was $11.6 million, which primarily consisted of proceeds from issuance of long-term debt of $16.0 million, partially offset by net repayments on our revolving line of credit of $3.8 million.

Capital Expenditures

Our capital expenditures were $2.8 million in the six months ended June 30, 2022, compared to $1.4 million in the six months ended June 30, 2021. We anticipate capital expenditures during 2022 to be in the range of $7 million to $8 million, primarily related to the expansion of our Castaños Facility.

Item 4. Controls and Procedures.

Management’s Report on Internal Control over Financial Reporting

The Company’s management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of June 30, 2022. Based on their evaluation, the Company’s management concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2022.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a–15(f) and 15d–15(f) under the Exchange Act) during the quarter ended June 30, 2022 that have materially affected, or are 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 12 – Contingencies to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

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:


10.1	Warrant Acquisition Agreement, dated April 4, 2022, by and among the Company and OC III LVS XXVIII LP.
10.2	Warrant to Purchase Common Stock of the Company issued by the Company to OC III LVS XXVIII LP dated April 4, 2022.
10.3	Registration Rights Agreement, dated April 4, 2022, by and between the Company and OC III LVS XXVIII LP.
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	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements 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: August 8, 2022	By:	/s/ JAMES R. MEYER
		James R. Meyer, President and Chief Executive Officer (Principal Executive Officer)

Date: August 8, 2022	By:	/s/ MICHAEL A. RIORDAN
		Michael A. Riordan, Vice President, Finance, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

EX-10.1

Exhibit 10.1

WARRANT ACQUISITION AGREEMENT

by and among

OC III LVS XXVIII LP

and

freightcar america, inc.,

Dated as of April 4, 2022

WARRANT ACQUISITION AGREEMENT

This WARRANT ACQUISITION AGREEMENT (this “Agreement”) is dated as of April 4, 2022 (the “Effective Date”) by and between FreightCar America, Inc., a Delaware corporation (the “Company”) and OC III LVS XXVIII LP, a Delaware limited partnership (the “Investor”).

BACKGROUND

WHEREAS, FreightCar North America, LLC, a Delaware limited liability company, the Company, CO Finance LVS VI LLC, a Delaware limited liability company (“CO Finance”), the other Lenders identified therein, and U.S. Bank National Association, as disbursing agent for the Lenders and as collateral agent for the Secured Parties identified therein, are parties to that certain Credit Agreement, dated as of October 13, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);

WHEREAS, pursuant to section 5.15 of the Credit Agreement, if any Second Amendment Loans (as defined in the Credit Agreement) remain outstanding on March 31, 2022, the Company shall immediately issue to CO Finance and/or its Affiliates additional warrants in form and substance satisfactory to CO Finance to purchase 5.0% of the Common Stock Deemed Outstanding;

WHEREAS, Investor is an Affiliate of CO Finance;

WHEREAS, as of the date hereof, the Second Amendment Loans have not been repaid in full and, accordingly, the Company shall, as requested by CO Finance, issue to the Investor, a warrant, in the form attached hereto as Exhibit A (the “Warrant”), which shall be exercisable for shares (the “Exercise Shares”) of Common Stock, par value $0.01 per share, of the Company (the “Common Stock”) equal, in the aggregate, to five percent (5%) of the Common Stock Deemed Outstanding of the Company on the date or dates the Warrant is exercised, and shall have the other rights set forth in the Warrant and in this Agreement; and

WHEREAS, the Company and the Investor desire to make certain representations and warranties set forth herein and enter into certain other agreements.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement, intending to be legally bound hereby, agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section I.1

Definitions. As used in this Agreement, the following terms have the respective meanings set forth below:

“Affiliate” means, with respect to any Person, (i) any other Person controlled by, controlling or under common control with, such first Person and (ii) each Person in which such first Person owns in excess of a 50% economic interest. As used in this definition, “control”

(including, with its correlative meanings, “controlling,” “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities, by contract or otherwise); provided that, for purposes of this Agreement, the Company and its Subsidiaries shall not be deemed to be Affiliates of the Investor.

“Agreement” has the meaning set forth in the Preamble.

“Applicable Requirements” means (i) all contractual obligations relating to the business of the Company and its Subsidiaries, and (ii) all Legal Requirements applicable to the business of the Company and its Subsidiaries.

“Board of Directors” means the Board of Directors of the Company.

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York City are generally authorized by law to close.

“Closing” has the meaning set forth in Section 2.2.

“Closing Date” means the first Business Day after all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all of the conditions set forth in Sections 2.2, 6.1 and 6.2 hereof are satisfied or waived, or such other date as the parties may agree.

“CO Finance” has the meaning set forth in the Preamble

“Common Stock” has the meaning set forth in the Recitals.

“Common Stock Deemed Outstanding” shall mean the number of shares of Common Stock deemed to be outstanding determined in accordance with the following formula:

Common Stock Deemed Outstanding = A ÷ (1 – B)

For purposes of the foregoing formula, the following definitions shall apply:

“A” shall mean, as of any time of determination, the sum of, without duplication, (i) the number of shares of Common Stock actually outstanding at such time, plus (ii) the number of shares of Common Stock reserved for issuance at such time under any equity incentive plans approved by the board of directors of the Company, regardless of whether the shares of Common Stock are actually subject to outstanding options or other rights to acquire shares, plus (iii) the number of shares of Common Stock issuable upon exercise of any other options, warrants or rights to acquire shares of Common Stock actually outstanding at such time (excluding the shares of Common Stock issuable upon exercise of the Warrant to be exercised and each other warrant (such other warrants, together with the Warrant to be exercised, the “CSDO Warrants”) that has a definition of “Common Stock Deemed Outstanding” substantially similar to this definition), plus (iv) the number of shares of Common Stock issuable upon conversion or exchange of Convertible Securities (excluding all CSDO Warrants) actually outstanding at such time, in each case, regardless of whether the options, warrants, or Convertible Securities are actually exercisable at such time; plus (v) 774,407 shares of Common Stock, which represents 5.0% of the total number


	-3-

of shares of Common Stock outstanding as of July 30, 2021, to the extent such shares of Common Stock have not already been issued as an equity fee and are not currently outstanding.

“B” shall mean, as of any time of determination, the sum of (i) the number (expressed as a decimal value) set forth immediately following clause (a) in the first paragraph of the Warrant to be exercised plus (ii) the number (expressed as a decimal value) set forth immediately following clause (a) in the first paragraph of each other CSDO Warrant.

“Company” has the meaning set forth in the Preamble.

“Company Deliverables” has the meaning set forth in Section 2.2(b)(ii).

“Contract” means any written or, subject to the knowledge of the Company, oral contract, agreement, note, bond, indenture, mortgage, guarantee, option, lease, license, commitment, arrangement, scheme, or other written instrument, in each case, that is legally binding on the Company or any of its Subsidiaries.

“Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for the Common Stock, but excluding any warrants or other rights or options to subscribe for, acquire, purchase or otherwise be issued Common Stock or convertible securities.

“Credit Agreement” has the meaning set forth in the Recitals.

“Disclosure Schedules” has the meaning set forth in Article III.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

“Exercise Shares” has the meaning set forth in the Recitals.

“GAAP” has the meaning set forth in the Credit Agreement.

“Governmental Entity” means any national, state, local, county, parish or municipal government, domestic or foreign, any agency, board, bureau, commission, court, tribunal, subdivision, department or other governmental or regulatory authority or instrumentality or quasi-governmental authority, in each case, that has jurisdiction over the Company or any of its properties, assets or business or any matter relating to the transactions contemplated by this Agreement.

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

“Investor” has the meaning set forth in the Preamble.

“Investor Deliverables” has the meaning set forth in Section 2.2(b)(i).

“Legal Requirements” means any federal, state, provincial, local, municipal, foreign, international, multinational or other law, statute, regulation, rule, directive, guidance, convention,


	-4-

ordinance, code, constitution, order, treaty or judgment, or similar provision or Applicable Requirement of any Governmental Entity, in each case in each case applicable to or binding upon the Company, or any of its Subsidiaries, or to which the Company or any of its Subsidiaries is subject.

“Liens” has the meaning ascribed thereto in the Credit Agreement.

“Material Agreement” has the meaning set forth in Section 3.12.

“Ordinary Course” means the ordinary course of the Company’s business consistent with past practices.

“Permits” has the meaning set forth in Section 3.8(b).

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, association or other entity or a Governmental Entity.

“Preferred Stock” means any Preferred Stock, par value $0.01 per share, of the Company, including any Series A Preferred Stock or Series B Preferred Stock.

“Registration Rights Agreement” means the Registration Rights Agreement in the form attached hereto as Exhibit B.

“Requisite Holders” means the Investor, its Affiliates or any transferee holding the Warrant or Warrants representing Exercise Shares constituting a majority of all Exercise Shares underlying the outstanding Warrant or Warrants.

“SEC” means the United States Securities and Exchange Commission.

“SEC Reports” means all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act or the Exchange Act, including pursuant to Section 13(a) or 15(d) of the Exchange Act.

“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder.

“Series A Preferred Stock” means Series A Voting Preferred Stock, par value $0.01 per share, of the Company.

“Series B Preferred Stock” means Series B Non-Voting Preferred Stock, par value $0.01 per share, of the Company.

“Subsidiary” means, with respect to any Person, any other Person (other than an individual) of which (i) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company,


	-5-

partnership, association or other business entity (other than a corporation), a majority of the profits or losses of such limited liability company, partnership, association or other business entity (as the case may be) is allocated, directly or indirectly, to that Person or one or more Subsidiaries of that Person or a combination thereof, or that Person or one or more Subsidiaries of that Person or a combination thereof controls the general partner, manager, managing member, managing director (or a board or comparable governing body comprised of any of the foregoing) of such limited liability company, partnership, association or other business entity. For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times such Person has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.

“Tax Returns” means all returns, declarations, reports, forms, estimates, information returns and statements filed or required to be filed in respect of any Taxes with a taxing authority (including any schedules thereto or amendments thereof).

“Taxes” means all federal, state, county, local, foreign and other taxes and similar governmental assessments (including, without limitation, income, profits, premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, escheat or unclaimed or abandoned property obligation, withholding, employment, unemployment compensation, payroll-related and property taxes, import duties and other governmental charges and assessments), whether or not measured in whole or in part by net income, and including deficiencies, interest, additions to tax or interest and penalties with respect thereto.

“Transaction Documents” means this Agreement, the schedules and exhibits attached hereto, the Warrant, the Registration Rights Agreement, and any other documents or agreements explicitly contemplated hereunder.

“Warrant” has the meaning set forth in the Recitals.

ARTICLE II

ACQUISITION OF THE WARRANT

Section II.1

Issuance of Warrant. Subject to the terms and conditions set forth in this Agreement, at the Effective Date, the Company shall issue the Warrant to the Investor.

Section II.2

Closing.

(a)

The closing of the acquisition of the Warrant (the “Closing”) shall be held at the offices of Sheppard, Mullin, Richter & Hampton LLP, 333 South Hope Street, 43rd Floor, Los Angeles, California 90071, at 10 a.m. Pacific Time on the Closing Date, or at such other time and place agreed to by the parties in writing. If and to the extent the Company and the Investor mutually agree, the Closing may take place by exchange of facsimile or electronic signatures without the necessity for a physical meeting of the parties.

(b)

At the Closing, upon the terms and subject to the conditions set forth in this Agreement:


	-6-

(i)

the Investor shall execute and deliver to the Company (A) the Warrant duly executed by the Investor, (B) the Registration Rights Agreement duly executed by the Investor and (C) a certificate, dated as of the Closing Date and signed by an officer of the Investor, certifying to the fulfillment of the conditions specified in Section 6.2 of this Agreement (collectively, the “Investor Deliverables”); and

(ii)

the Company shall execute and deliver to the Investor (A) the Warrant duly executed by the Company and registered in the name of the Investor, (B) the Registration Rights Agreement duly executed by the Company and the other parties thereto, (C) a certificate of an officer of the Company, dated the Closing Date, (1) certifying that the resolutions previously adopted by the Board of Directors approving the Credit Agreement and the Warrant have not been modified, rescinded or amended, (2) certifying the current versions of the Company’s certificate of incorporation and bylaws, and (3) certifying as to the signature and authority of the Person executing this Agreement, the Registration Rights Agreement, the Warrant and related Transaction Documents on behalf of the Company and (D) a certificate, dated as of the Closing Date and signed by the Company’s Chief Executive Officer, certifying as to the fulfillment of the conditions specified in Section 6.1 of this Agreement (collectively, the “Company Deliverables”).

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investor that, subject to the qualifications and exceptions set forth in the disclosure schedules delivered to the Investor pursuant to this Agreement (the “Disclosure Schedules”):

Section III.1

Organization. Each of the Company, and its Subsidiaries (a) is duly incorporated or organized, validly existing and, as applicable, in good standing under the laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to own or lease its assets and carry on its business as now conducted and (c) is duly qualified and licensed and, as applicable, in good standing under the laws of each jurisdiction where such qualification or license or, if applicable, good standing is required; except, in the case of clauses (b) and (c) above, where such failure could not reasonably be expected to have a material adverse effect on the business, operations, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole (a “Material Adverse Effect”).

Section III.2

Authorization; Enforceability. The Company has all corporate power and authority to execute and deliver this Agreement, the Warrant, the Registration Rights Agreement, the other Transaction Documents, and any other agreements, certificates, instruments or writings contemplated hereby or thereby, and to perform its obligations hereunder and thereunder. The execution, delivery and performance by the Company of this Agreement, the Warrant, the Registration Rights Agreement, the other Transaction Documents, and any other agreements, certificates, instruments or writings contemplated hereby or thereby, and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company. This Agreement, the Warrant, the Registration Rights Agreement, the other Transaction Documents, and any other agreements


	-7-

contemplated hereby or thereby, assuming due authorization, execution and delivery by the other parties thereto, constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or other similar laws affecting creditors’ rights generally and by general equitable principles.

Section III.3

Capitalization. As of the Effective Date, (a) the Company is authorized to issue up to 50,000,000 shares of Common Stock and 2,500,000 shares of Preferred Stock, of which 100,000 shares have been designated Series A Preferred Stock and 100,000 shares have been designated Series B Preferred Stock and (b) the Company has 16,525,266 shares of Common Stock issued and outstanding, no shares of Common Stock held in treasury and no shares of Preferred Stock issued and outstanding. The outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable and were issued in compliance with all federal and state securities laws. None of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any security holder of the Company. Except as a result of the purchase and sale of the Warrant under this Agreement, and except as set forth in the SEC Reports, there are no outstanding options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock. The issuance and sale of the Warrant will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are no stockholders agreements, voting agreements or other agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

Section III.4

Subsidiaries. Section 3.4 of the Disclosure Schedules sets forth a true and correct list of the Subsidiaries of the Company. Except as described on Section 3.4 of the Disclosure Schedules, the Company owns, directly or indirectly, all of the issued and outstanding shares of capital stock of or all other equity interests in each of its Subsidiaries, free and clear of any Liens (other than Permitted Equity Liens, as defined in the Credit Agreement) and all of such shares or equity interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.

Section III.5

Valid Issuance of Warrant. The Warrant (a) is duly authorized by all necessary corporate action on the part of the Company, (b) when issued and delivered by the Company pursuant to this Agreement will be validly issued, and (c) will not be subject to any Liens or statutory or contractual preemptive rights or other similar rights of equityholders at the time of issuance except for any such rights that have been waived prior to issuance. The Exercise Shares issuable to the Investor upon exercise of the Warrant in accordance with the terms thereof (x) will be, upon issuance, duly authorized by all necessary corporate action on the part of the Company, (y) when issued and delivered by the Company will be validly issued, fully paid and nonassessable and free of Liens, encumbrances or restrictions on transfer (other than those created


	-8-

by this Agreement, the Warrant, the Registration Rights Agreement, the Company’s certificate of incorporation or bylaws and applicable state and/or federal securities laws) and (z) will not be subject to any statutory or contractual preemptive rights or other similar rights of equityholders at the time of issuance. The Company shall at all times have reserved and available for issuance a sufficient number of shares of Common Stock to satisfy any issuance of the Warrant by the Investor.

Section III.6

Non-Contravention. The Company is not in violation or default of any provision of its certificate of incorporation or bylaws (or comparable constituent documents). The Company’s execution, delivery and performance of and compliance with this Agreement, the Warrant, the Registration Rights Agreement, the other Transaction Documents, and any other agreements, certificates, instruments or writings contemplated hereby or thereby to which it is a party, the issuance and delivery by the Company of the Warrant and, upon exercise of the Warrant, the Exercise Shares and the consummation of the other transactions contemplated hereby and thereby (a) will not result in any violation of the provisions of its certificate of incorporation or bylaws (or comparable constituent documents), (b) will not conflict with or constitute a breach of or a default (or constitute an event which with notice or lapse of time or both would become a default) under or give rise to any right of termination, recapture, acceleration or cancellation under any material Contract of the Company, or result in the creation or imposition of any Lien or encumbrance upon any property or assets of the Company or any of its Subsidiaries, or, to the Company’s knowledge, the suspension, revocation, impairment or forfeiture of any material permit, license, authorization, or approval applicable to the Company, its businesses or operations, or any of its assets or properties, (c) to the Company’s knowledge will not result in any violation of any Legal Requirement or any judgment, order or decree of any Governmental Entity applicable to the Company or any of its Subsidiaries, or (d) to the Company’s knowledge require the consent, approval, order, or authorization of, or registration, qualification, declaration, or filing with, any Governmental Entity on the part of the Company or any of its Subsidiaries, in each of clauses (b), (c) and (d), other than those as would not reasonably be expected to have a Material Adverse Effect.

Section III.7

Litigation. There is no action, suit, proceeding or investigation pending or threatened against, nor any outstanding judgment, order or decree affecting, the Company or any of its Subsidiaries before or by any Governmental Entity or arbitral body, that individually or in the aggregate would have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is in default with respect to any judgment, order or decree of any Governmental Entity specifically directed at the Company or any of its Subsidiaries. The Company is not a party or subject to, and none of its assets is bound by, the provisions of any order, writ, injunction, judgment, or decree of any Governmental Entity specifically directed at the Company or any of its Subsidiaries, except as would not reasonably be expected to have a Material Adverse Effect.

Section III.8

Compliance with Legal Requirements; Permits; No Defaults.

(a)

The Company and each of its Subsidiaries is in compliance with all Legal Requirements applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except where the failure thereof would not have a Material Adverse Effect.


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(b)

The Company and each of its Subsidiaries have all required permits, registrations, licenses, authorizations, consents, certificates, orders, clearances, approvals and franchises from Governmental Entities to own, lease and operate their properties and conduct their businesses as currently conducted (“Permits”), such Permits are in full force and effect and there has occurred no violation of, suspension, reconsideration, imposition of penalties or fines, imposition of additional conditions or requirements, default (with or without notice or lapse of time or both) under, or event giving rise to any right of termination, amendment or cancellation of, with or without notice or lapse of time or both, any such Permit, and the Company and each of its Subsidiaries have fulfilled and performed all of their obligations with respect to such Permits to the extent required to be so performed on or prior to the Closing Date and are in compliance with the terms of such Permits, in each case except where any such failure would not have a Material Adverse Effect.

(c)

Since January 1, 2020, the Company and each of its Subsidiaries has timely filed all reports, applications, statements, certifications, documents, registrations, filings, notices or submissions required to be filed with any Governmental Entity, in each case except where any such failure would not have a Material Adverse Effect. All such reports were in compliance with the Applicable Requirements when filed and no deficiencies have been asserted by such Governmental Entity, in each case except where any such noncompliance would not have a Material Adverse Effect.

Section III.9

Financial Statements; Undisclosed Liabilities. The consolidated financial statements of the Company included or incorporated by reference in the SEC Reports filed since January 1, 2019, together with the related notes and schedules, present fairly, in all material respects, the consolidated financial position of the Company and the Subsidiaries as of the dates indicated and the consolidated results of operations, cash flows and changes in stockholders’ equity of the Company for the periods specified and have been prepared in compliance with the requirements of the Securities Act and the Exchange Act, as applicable, and in conformity with GAAP (except (i) for such adjustments to accounting standards and practices as are noted therein or (ii) in the case of unaudited interim financial statements, to the extent that they may not include footnotes or may be condensed or summary statements) during the periods involved. The other financial and statistical data with respect to the Company and the Subsidiaries contained or incorporated by reference in the SEC Reports filed since January 1, 2019 are accurately and fairly presented in all material respects and prepared on a basis consistent with the financial statements and books and records of the Company.

Section III.10

Tax Matters. Since January 1, 2019, each of the Company and its Subsidiaries has (a) filed or caused to be filed all material Tax Returns required to have been filed by it (or has filed timely extensions with respect to such Tax Returns), (b) paid or caused to be paid all material Taxes required to be paid by it, except for those which are being contested in good faith and for which the Company or the applicable Subsidiary has set aside on its books adequate reserves in accordance with GAAP, and (c) complied with all applicable requirements relating to the withholding of material Taxes and timely collected or withheld and paid over to the proper Governmental Entity all material amounts required to be so collected or withheld and paid over by it. Each of the Company and its Subsidiaries has made adequate provisions in accordance with GAAP for all Taxes not yet due and payable. Neither the Company nor any of its Subsidiaries


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has knowledge (or could reasonably have knowledge upon due inquiry) of any proposed or pending tax assessments, deficiencies, audits or other proceedings and no proposed or pending tax assessments, deficiencies, audits or other proceedings have had, or could reasonably be expected to have, individually or in the aggregate, a material adverse effect. Neither the Company nor any of its Subsidiaries has ever “participated” in a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4. Neither the Company nor any of its Subsidiaries is party to any tax sharing or similar agreement.

Section III.11

Not a U.S. Real Property Holding Corporation. Each of the Company and its Subsidiaries is not and has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code at any time during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

Section III.12

Agreements. Since January 1, 2019, neither the Company nor any of its Subsidiaries has received written notice of any violation or default (or any condition which with the passage of time or the giving of notice or both would cause such a violation of or a default) by any party under any material agreement to which the Company or any of its Subsidiaries is a party (“Material Agreement”), nor has such notice been threatened, except as would not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, no other party to any Material Agreement is in material breach or violation of, or default under, or has repudiated any material provision of, any Material Agreement, except as would not reasonably be expected to have a Material Adverse Effect.

Section III.13

SEC Reports. Since January 1, 2019, the Company has filed all SEC Reports on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective filing dates, the SEC Reports filed since January 1, 2019 complied in all material respects with the requirements of the Securities Act and the Exchange Act, and none of such SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company does not have pending before the SEC any request for confidential treatment of information or any comments from the SEC which have not been resolved.

Section III.14

Brokers and Finders. Neither the Company nor any of its Subsidiaries has employed any broker or finder or incurred any liability for any financial advisory fee, brokerage fee, commission or finder’s fee, and no broker or finder has acted directly or indirectly for the Company or any of its Subsidiaries, each in connection with this Agreement or the transactions contemplated hereby.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor represents and warrants to the Company that:

Section IV.1

Organization. The Investor is duly organized and is validly existing and in good standing as a limited liability company under the laws of the State of Delaware and has all


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the requisite power and authority to carry on its business as it is now being conducted, except as would not, individually or in the aggregate, have or reasonably be expected to have a material adverse effect on the Investor.

Section IV.2

Authorization. The Investor has the full limited liability partnership or comparable right, power, authority and capacity to enter into this Agreement, the Warrant, the Registration Rights Agreement and any other agreements contemplated hereby or thereby, and to perform its obligations hereunder and thereunder. The execution, delivery and performance by the Investor of this Agreement, the Warrant, the Registration Rights Agreement and any other agreements contemplated hereby or thereby, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all necessary and proper actions on the part of the Investor. This Agreement, the Warrant, the Registration Rights Agreement and any other agreements contemplated hereby or thereby have been (or will be) duly executed and delivered by the Investor and, assuming due authorization, execution and delivery of this Agreement, the Warrant, the Registration Rights Agreement and any other agreements contemplated hereby or thereby by the other parties thereto, constitute valid and binding obligations of the Investor, enforceable against the Investor in accordance with their respective terms, except as such may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or other similar laws affecting creditors’ rights generally and by general equitable principles.

Section IV.3

Non-Contravention. The execution, delivery and performance by the Investor of this Agreement, the Warrant, the Registration Rights Agreement, and any other agreements contemplated hereby or thereby, the receipt and acceptance of the Warrant and the consummation of the other transactions contemplated hereby and thereby (a) will not conflict with or violate any provision of its limited liability company agreement, (b) will not conflict with or result in any breach of, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any lease, mortgage, license, indenture or any other material agreement to which the Investor is a party or by which its properties may be bound or affected or result in the creation of any lien or encumbrance upon any property or assets of the Investor or the suspension, revocation, impairment or forfeiture of any material permit, license, authorization, or approval applicable to the Investor, its business or operations, or any of its assets or properties, respectively, or (c) will not conflict with or violate any law or regulation applicable to the Investor, in each of clauses (b) and (c), other than those as would not reasonably be expected to have a material adverse effect on the Investor.

Section IV.4

Brokers and Finders. Neither the Investor nor any of its Affiliates or any of their respective officers or directors has employed any broker or finder or incurred any liability for any financial advisory fee, brokerage fee, commission or finder’s fee, and no broker or finder has acted directly or indirectly for the Investor or any of its Affiliates or any of their respective officers or directors, in connection with this Agreement or the transactions contemplated hereby.

Section IV.5

Securities Matters. The Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act, as presently in effect. The Warrant


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and the Exercise Shares issuable to the Investor upon exercise of the Warrant shall be acquired for investment for the Investor’s own account, not as a nominee or agent, and not with a view to the public resale or distribution of such Warrant or Exercise Shares within the meaning of the Securities Act. The Investor has no present intention of selling, granting any participation in or otherwise distributing the Warrant or the Exercise Shares. The Investor acknowledges that the Warrant and Exercise Shares issued to the Investor upon exercise of the Warrant have not been registered under the Securities Act and are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon the representations of the Investor contained in this Agreement.

ARTICLE V

COVENANTS

Section V.1

Further Assurances. Upon the terms and subject to the conditions set forth in this Agreement, following the Closing the parties hereto shall each use their commercially reasonable efforts to promptly take, or to cause to be taken, all actions, and to do, or to cause to be done, and to assist and cooperate with the other parties in doing all things necessary, proper or advisable under applicable Legal Requirements or otherwise to assure compliance with the terms, provisions, purposes and intents of this Agreement.

Section V.2

Warrant Exercise. Concurrently with and as a condition precedent to the exercise by the Investor of the Warrant in accordance with its terms, the Investor shall pay the Exercise Price in accordance with the terms of the Warrant.

Section V.3

Transfer Taxes. The Company shall pay any and all documentary, stamp or similar issue or transfer tax due upon the issuance of the Warrant and issuance of Exercise Shares upon exercise of the Warrant.

ARTICLE VI

CONDITIONS PRECEDENT TO CLOSING

Section VI.1

Conditions Precedent to the Obligations of the Investor. The obligation of the Investor to proceed with the Closing is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by the Investor:

(a)

Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects (except for those representations and warranties which are qualified as to materiality, in which case such representations and warranties shall be true and correct) as of the date when made and as of the Closing Date, as though made on and as of such date, except for such representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date.

(b)

Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the Closing.


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(c)

Closing Deliverables. The Company shall have delivered the Company Deliverables in accordance with Section 2.2(b)(ii).

Section VI.2

Conditions Precedent to the Obligations of the Company. The obligation of the Company to proceed with the Closing is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by the Company:

(a)

Representations and Warranties. The representations and warranties made by the Investor herein shall be true and correct in all material respects (except for those representations and warranties which are qualified as to materiality, in which case such representations and warranties shall be true and correct) as of the date when made, and as of the Closing Date as though made on and as of such date, except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date.

(b)

Performance. The Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to the Closing Date.

(c)

Investor Deliverables. The Investor shall have delivered its Investor Deliverables in accordance with Section 2.2(b)(i).

ARTICLE VII

SURVIVAL

Section VII.1

Survival. The representations and warranties provided for in this Agreement shall survive for a period of eighteen (18) months from the date when made; provided, however, that the representations and warranties in Section 3.1 (Organization), Section 3.2 (Authorization), Section 3.3 (Capitalization), Section 3.4 (Subsidiaries), Section 3.5 (Valid Issuance of Warrant), Section 3.14 (Brokers and Finders), Section 4.1 (Organization) Section 4.2 (Authorization), Section 4.4 (Brokers and Finders), and Section 4.5 (Securities Matters) of this Agreement shall survive the Closing until the expiration of the applicable statute of limitations. The covenants or agreements contained in this Agreement shall survive the Closing until the expiration of the term of the undertaking set forth in such agreements and covenants.

ARTICLE VIII

MISCELLANEOUS

Section VIII.1

No Personal Liability of Directors, Officers, Owners, Etc. Except as set forth herein, no director, officer, employee, incorporator, stockholder, controlling Person, manager, member, general partner, limited partner, principal or other agent of the Investor or the Company shall have any liability for any obligations of the Investor or the Company, as applicable, under this Agreement or for any claim based on, in respect of, or by reason of, the respective obligations of the Investor or the Company, as applicable, under this Agreement.

Section VIII.2

Notices. All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (a)


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on the date of delivery, if delivered personally, (b) by electronic transmission, upon confirmation of receipt; provided, that any electronic transmission delivered after 5:00 p.m. (local time at the recipient’s location) or on a day that is not a Business Day shall be deemed delivered after confirmation of receipt at 9:00 a.m. (local time at the recipient’s location) on the next succeeding Business Day, (b) on the date of delivery according to the records of a nationally recognized overnight courier service, if delivered by such overnight courier service, (c) on the third (3rd) Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid, or (d) on the date the sender’s receipt of an acknowledgement from the intended recipient of e-mail notice (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided, that any e-mail notice delivered after 5:00 p.m. (local time at the recipient’s location) or on a day that is not a Business Day shall be deemed delivered after confirmation of receipt at 9:00 a.m. (local time at the recipient’s location) on the next succeeding Business Day, in each case, to the parties to this Agreement at the following address or to such other address either party to this Agreement shall specify by notice to the other party pursuant to this Section 8.2:

If to the Company:

FreightCar America, Inc.
125 South Wacker Drive

Suite 1500

Chicago, IL 60606

Email: CEppel@freightcar.net

Attention: Vice President and Chief Financial Officer

With a copy (which shall not constitute notice for purposes of this Section 8.2) to:

Winston & Strawn LLP

35 West Wacker Drive

Chicago, IL 60601

Facsimile No.: (312) 558-5700

Email: odavid@winston.com and dsakowitz@winston.com

Attention: Oscar David, Esq. and David A. Sakowitz, Esq.

If to the Investor:

OC III LVS XXVIII LP
650 Newport Center Drive
Newport Beach, California 92660
Telephone No.: (949) 720-6809
Email: chris.neumeyer@pimco.com
Attention: Chris Neumeyer


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With a copy (which shall not constitute notice for purposes of this Section 8.2) to:

Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 43rd Floor
Los Angeles, California 90071
Email: srosenberg@sheppardmullin.com
Attention: Stacey L. Rosenberg, Esq.

Section VIII.3

Amendments and Waivers. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is duly executed and delivered by the Company and the Requisite Holders. No failure or delay by any party to this Agreement in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

Section VIII.4

Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. The Investor’s rights, interests and obligations under this Agreement may be assigned to any transferee of the Warrant in which the Investor owns a majority of the equity interests or any other investment entity that is controlled, advised or managed by the same person or persons that control the Investor or is an Affiliate of that person.

Section VIII.5

Governing Law. THIS AGREEMENT, THE WARRANT AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER AT LAW, IN CONTRACT, IN TORT OR OTHERWISE) THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TO THIS AGREEMENT, THE WARRANT, OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT OR THE WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT AND THE WARRANT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

Section VIII.6

Consent to Jurisdiction; Venue; Waiver of Jury Trial.

(a)

EACH PARTY HERETO IRREVOCABLY AGREES AND CONSENTS TO THE EXCLUSIVE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE CITY AND COUNTY OF NEW YORK, WITH RESPECT TO ALL MATTERS RELATING TO THIS AGREEMENT AND THE WARRANT AND TO THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, WAIVES ALL OBJECTIONS BASED ON LACK OF VENUE AND FORUM NON CONVENIENS AND


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IRREVOCABLY CONSENTS TO THE PERSONAL JURISDICTION OF ALL SUCH COURTS.

(b)

THE PARTIES HERETO FURTHER AGREE THAT THE MAILING BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, TO THE ADDRESS SET FORTH IN Section 8.2, OF ANY PROCESS REQUIRED BY ANY SUCH COURT SHALL CONSTITUTE VALID AND LAWFUL SERVICE OF PROCESS AGAINST THEM, WITHOUT NECESSITY FOR SERVICE BY ANY OTHER MEANS PROVIDED BY STATUTE OR RULE OF COURT.

(c)

EACH PARTY HERETO 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 LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY HERETO WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES SUCH WAIVER VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 8.6(c).

Section VIII.7

Entire Agreement. This Agreement, the Warrant, the Registration Rights Agreement, the other Transaction Documents and any agreements, certificates, instruments or other writings delivered in connection therewith, together with the exhibits and schedules hereto (including the Disclosure Schedules) and thereto, constitute the entire agreement among the Company and the Investor with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, both oral and written, between the Company and the Investor and/or their Affiliates with respect to the subject matter of this Agreement.

Section VIII.8

Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

Section VIII.9

Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable Legal Requirements, such provision shall be deemed to be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforced in accordance with its terms to the maximum extent permitted by Legal Requirements and the parties shall enter into alternative arrangements to implement the economic effect of such unenforceable provisions in an enforceable way.


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Section VIII.10

Counterparts. This Agreement may be executed in any number of counterparts, and with signatures to this Agreement by facsimile or in electronic format, each of which shall be an original, but all of which when taken together shall constitute one and the same Agreement. Signatures of the parties transmitted electronically or by facsimile shall be deemed to be their original signatures for all purposes.

Section VIII.11

No Third-Party Beneficiaries. Nothing in this Agreement, expressed or implied, is intended to confer on any Person (other than the parties hereto) any rights, remedies, obligations or liabilities under or by reason of this Agreement, and no Person that is not a party to this Agreement (including any director, officer, employee, incorporator, stockholder, controlling Person, manager, member, general partner, limited partner, principal or other agent of any party to this Agreement, in its own capacity as such or in bringing a derivative action on behalf of such party) shall have standing as third-party beneficiary with respect to this Agreement or the transactions contemplated by this Agreement.

Section VIII.12

Enforcement of Agreement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties to this Agreement shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any state or federal court located in the city or county of New York, this being in addition to any other remedy to which the parties to this Agreement are entitled at law or in equity. Additionally, each party to this Agreement hereto irrevocably waives any defenses based on adequacy of any other remedy, whether at Law or in equity, that might be asserted as a bar to the remedy of specific performance of any of the terms or provisions hereof or injunctive relief in any action brought therefor.

Section VIII.13

Terms and Usage Generally. The definitions in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Articles, Sections, Exhibits and Schedules shall be deemed to be references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “or” shall be deemed to mean “and/or”. All accounting terms not defined in this Agreement shall have the meanings determined by GAAP as in effect from time to time. The words “hereof”, “herein”, “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

* * * * *


	-18-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the Effective Date.

FREIGHTCAR AMERICA, INC.
By: /s/ Michael A. Riordan	
Name: Michael A. Riordan
Title: Vice President, Finance, Chief Financial Officer and Treasurer

OC III LVS XXVIII LP 
By: /s/ Adam L. Gubner	
Name: Adam L. Gubner
Title: Authorized Person


	-19-

EXHIBIT A

WARRANT

[See attached]


	-20-

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT.

WARRANT TO PURCHASE COMMON STOCK

FREIGHTCAR AMERICA, INC.

NO. W-003 April 4, 2022

THIS WARRANT CERTIFIES THAT, for value received, OC III LVS XXVIII LP, a Delaware limited partnership, or its assigns (the “Holder”), is entitled to subscribe for and purchase from FreightCar America, Inc., a Delaware corporation (the “Company”), a number of shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), equal to (a) 5.0% of the Common Stock Deemed Outstanding on the date of any exercise of this Warrant less (b) the aggregate number of shares of Common Stock previously issued from time to time as a result of any partial exercise of this Warrant in accordance with the terms set forth herein (collectively, the “Exercise Shares”), at a purchase price per share of $0.01 (the “Exercise Price”), all subject to the terms, conditions and adjustments set forth below in this Warrant (this “Warrant”).

This Warrant is being issued pursuant to the terms of the Warrant Acquisition Agreement, dated as of April 4, 2022, by and between the Company and the Holder (the “Warrant Agreement”). Certain capitalized terms used herein are defined in Section 1 hereof. Capitalized terms not otherwise defined herein shall have the meaning given to such terms in the Warrant Agreement. The Exercise Shares are subject to adjustment as provided herein.

This Warrant is subject to the following terms and conditions:

DEFINITIONS. As used herein, the following terms shall have the following respective meanings:

(a)

“Aggregate Exercise Price” means an amount equal to the product of (a) the number of Exercise Shares in respect of which this Warrant is then being exercised pursuant to Section 2 hereof, multiplied by (b) the Exercise Price.

(b)

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York City are generally authorized by law to close.

(c)

“Change of Control” means: (i) a capital reorganization or reclassification of the capital stock of the Company resulting in any Person or group of Persons other than holders of the voting securities of the Company outstanding immediately prior to such transaction, becoming the holder, directly or indirectly, of more than 50% of the combined voting power of the outstanding voting securities of the Company having the right to vote for the election of members

of the Board of Directors of the Company; (ii) a merger, consolidation or reorganization or other similar transaction or series of related transactions, in each case which results in the voting securities of the Company outstanding immediately prior thereto representing immediately thereafter (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity) less than 50% of the combined voting power of the outstanding voting securities of the Company having the right to vote for the election of members of the Board of Directors of the Company or such surviving or acquiring entity outstanding immediately after such merger, consolidation or reorganization; (iii) the issuance by the Company of equity securities of the Company, in a single transaction or series of related transactions, representing at least 50% of the combined voting power of the outstanding voting securities of the Company having the right to vote for the election of members of the Board of Directors of the Company; or (iv) the acquisition by any “person” (together with his, her or its Affiliates) or “group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), directly or indirectly, of the beneficial ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) of outstanding shares of capital stock and/or other equity securities of the Company, in a single transaction or series of related transactions (including, without limitation, one or more tender offers or exchange offers), representing at least 50% of the combined voting power of the outstanding voting securities of the Company having the right to vote for the election of members of the Board of Directors of the Company; provided that a transaction (or series of related transactions) consisting solely of the issuance by the Company of equity securities of the Company, representing less than 20% of the combined voting power of the outstanding voting securities of the Company, for cash consideration in a bona fide capital raising transaction shall not be considered a Change of Control.

(d)

“Common Stock Deemed Outstanding” shall mean the number of shares of Common Stock deemed to be outstanding for purposes of this Warrant determined in accordance with the following formula:

Common Stock Deemed Outstanding = A ÷ (1 – B)

For purposes of the foregoing formula, the following definitions shall apply:

“A” shall mean, as of any time of determination, the sum of, without duplication, (i) the number of shares of Common Stock actually outstanding at such time, plus (ii) the number of shares of Common Stock reserved for issuance at such time under any equity incentive plans approved by the Board of Directors of the Company, regardless of whether the shares of Common Stock are actually subject to outstanding options or other rights to acquire shares, plus (iii) the number of shares of Common Stock issuable upon exercise of any other options, warrants or rights to acquire shares of Common Stock actually outstanding at such time (excluding the shares of Common Stock issuable upon exercise of this Warrant and each other warrant (such other warrants, together with this Warrant, the “CSDO Warrants”) that has a definition of “Common Stock Deemed Outstanding” substantially similar to this definition), plus (iv) the number of shares of Common Stock issuable upon conversion or exchange of Convertible Securities (excluding all CSDO Warrants) actually outstanding at such time, in each case, regardless of whether the options, warrants, or Convertible Securities are actually exercisable at such time; plus (v) 774,407 shares of Common Stock, which represents 5.0% of the total number of shares of Common Stock


	A-2

outstanding as of July 30, 2021, to the extent such shares of Common Stock have not already been issued as an equity fee and are not currently outstanding.

“B” shall mean, as of any time of determination, the sum of 0.05 plus the number (expressed as a decimal value) set forth immediately following clause (a) in the first paragraph of each other CSDO Warrant; provided that, for the avoidance of doubt, as of the date hereof “B” equals 0.33.

(a)

(e)

“Exercise Period” means the period commencing on the date hereof and ending on the Expiration Date.

(f)

“Expiration Date” means ten (10) years from the Original Issuance Date.

(g)

“Fair Market Value” means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Stock for such day on all U.S. national securities exchanges on which the Common Stock may at the time be listed; (b) if there have been no sales of the Common Stock on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Stock on all such exchanges at the end of such day; (c) if on any such day the Common Stock is not listed on a domestic securities exchange, the closing sales price of the Common Stock as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Common Stock on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Stock quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided that, if the Common Stock is listed on any U.S. national securities exchange, the term “Business Day” as used in this sentence means Business Days on which such national securities exchange is open for trading. If at any time the Common Stock is not listed on any domestic securities exchange or quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the “Fair Market Value” of the Common Stock shall be the fair market value per share as determined jointly by the Company’s Board of Directors and the Holder.

(h)

“Liquid Securities” means a class of securities registered under Section 12(b) of the Exchange Act, which are listed or quoted for trading on a U.S. national securities exchange.

(i)

“Original Issue Date” means April 4, 2022.

(j)

“OTC Bulletin Board” means the Financial Industry Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system.


	A-3

(k)

“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

(l)

“Pink OTC Markets” means the OTC Markets Group Inc. electronic inter-dealer quotation system, including OTCQX, OTCQB and OTC Pink.

(m)

“Securities Act” means the United States Securities Act of 1933, as amended.

EXERCISE OF WARRANT.

2.1

Exercise. The rights represented by this Warrant may be exercised in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth in Section 8.2 of the Warrant Agreement (or at such other address as it may designate by notice in writing to the Holder):

(a)

an executed Notice of Exercise in the form attached hereto;

(b)

payment of the Exercise Price in cash (by wire transfer to the account designated in writing by the Company) or by check; and

(c)

this Warrant.

Upon receipt by the Company of this Warrant and payment of the Exercise Price in cash (by wire transfer to the account designated in writing by the Company) or by check, or pursuant to Section 2.2, shares of Common Stock in certificated or book entry form representing the Exercise Shares so purchased, registered in the name of the Holder or Persons affiliated with the Holder, if the Holder so designates, shall be issued and delivered to the Holder at the Company’s expense within three (3) Business Days after the Company’s receipt of such Notice of Exercise and/or Exercise Price.

The Person in whose name any certificate or book entry representing the Exercise Shares that are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of delivery of such shares.

2.2

Net Exercise. Notwithstanding any provisions herein to the contrary, if the Fair Market Value of one Exercise Share issuable hereunder is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a number of Exercise Shares computed using the following formula:

X = Y * (A-B)

Where X = the number of Exercise Shares to be issued to the Holder


	A-4

Y = the number of Exercise Shares purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such exercise)

A = the Fair Market Value of one Exercise Share purchasable under the Warrant (at the date of such exercise)

B = Exercise Price (as adjusted to the date of such exercise)

The Company acknowledges that the provisions of this Section 2.2 are intended, in part, to ensure that a full or partial exchange of this Warrant pursuant to this Section 2.2 will qualify as a conversion, within the meaning of paragraph (d)(3)(iii) of Rule 144 under the Securities Act. At the request of the Holder, the Company will accept reasonable modifications to the exchange procedures provided for in this Section in order to accomplish such intent. For the avoidance of doubt, the Holder shall not be required to pay any cash upon any exercise of this Warrant pursuant to this Section 2.2. For all purposes of this Warrant (other than this Section 2), any reference herein to the exercise of this Warrant shall be deemed to include a reference to the exchange of this Warrant for Exercise Shares in accordance with the terms of this Section 2.2.

2.3

Automatic Exercise.

(a)

Change of Control. In the event of a Change of Control, if the fair market value of the consideration payable in connection with such Change of Control for each share of Common Stock is greater than the per share Exercise Price hereunder, the Company may elect by providing proper notice pursuant to Section 3.4 hereof (“Auto-Exercise Notice”) to cause this Warrant to be automatically exercised (even if this Warrant is not surrendered), in lieu of an exercise in accordance with Section 2.1 or Section 2.2, upon consummation of such Change of Control to the extent that any portion of the Warrant remains unexercised at the time of the consummation of the Change of Control. The Holder shall be entitled to receive consideration in the amount equal to the difference between the consideration payable in connection with such Change of Control for the Exercise Shares, if exercised, and the Aggregate Exercise Price for such Exercise Shares. The consideration payable to the Holder in connection with this Section 2.3(a) shall be in the same form as the consideration distributed to holders of Common Stock in connection with such Change of Control; provided that, if the consideration distributed to holders of Common Stock in connection with such Change of Control consists of consideration other than cash or Liquid Securities (or a combination thereof), the consideration payable to the Holder in connection with this Section 2.3(a) shall be an amount of cash payable by the Company equal to the aggregate Fair Market Value of the Exercise Shares minus the Aggregate Exercise Price. To the extent this Warrant or any portion thereof is automatically exercised pursuant to this Section 2.3(a), the Company agrees to promptly notify the Holder of the amount and form of consideration payable to the Holder in connection with such Change of Control. This Warrant shall terminate in connection with a deemed exercise pursuant to this Section 2.3 after payment in full to the Holder of the amounts payable to the Holder under this Section 2.3. If the fair market value of the consideration payable in connection with a Change of Control for each share of Common Stock is equal to or less than the per share Exercise Price, this Warrant will expire upon the consummation of a Change of Control to the extent this Warrant has not been previously exercised as to all Exercise Shares subject hereto.


	A-5

(b)

Expiration Date. To the extent that there has not been an exercise of this Warrant pursuant to this Section 2, any portion of the Warrant that remains unexercised shall be exercised automatically in whole (not in part), upon the Expiration Date in the manner set forth in Section 2.2.

2.4

Delivery of New Warrant. Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the shares of Common Stock representing the Exercise Shares being issued in accordance with this Section 2, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unexpired and unexercised Exercise Shares called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

COVENANTS OF THE COMPANY.

3.1

Covenants as to Exercise Shares. The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable. The Company further covenants and agrees that the Company will at all times during the Exercise Period have authorized and reserved, free from preemptive rights, a sufficient number of Exercise Shares to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period the number of authorized but unissued Exercise Shares shall not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Exercise Shares to such number of shares as shall be sufficient for such purposes.

3.2

Expenses and Taxes. The Company shall pay all reasonable and documented expenses, taxes and owner charges payable in connection with the preparation, issuance and delivery of certificates (if any) for the Exercise Shares and any new Warrants.

3.3

No Impairment. Except and to the extent waived or consented to by the Requisite Holders, the Company will not (a) adopt any amendment to its certificate of incorporation or bylaws after the date hereof which (i) results in any increase in the issued or authorized number of equity securities of the Company or (ii) otherwise has a disproportionate and adverse impact on the Holder, including through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, or (b) avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company. The Company will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder as set forth herein against impairment.

3.4

Notices. Prior to (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, (b) a Change of Control, or (c) the issuance by the Company of any shares of Common Stock, Convertible Securities, any warrants or other rights or options to subscribe for, acquire, purchase or otherwise be issued Common Stock or Convertible Securities, or any other equity securities of the Company, in each case, that would result in an adjustment pursuant to Section 4 to the number of Exercise Shares issuable upon exercise of this Warrant, the


	A-6

Company shall send to the Holder, at least thirty (30) days prior to the date of any such action, a notice specifying the date on which any such proposed action is to be taken and, in the case of a Change of Control, whether the Company intends to exercise its automatic exercise rights under Section 2.3(a) upon consummation of the Change of Control.

EFFECT OF CERTAIN EVENTS ON EXERCISE SHARES.

4.1

Adjustment to Exercise Shares Upon Reorganization, Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the capital stock or other equity securities of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person, or (v) other similar transaction, in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) capital stock, securities or assets with respect to or in exchange for Common Stock, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Exercise Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Exercise Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Warrant shall thereafter be applicable, as nearly as possible, to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant. The provisions of this Section 4.1 shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transaction. The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of capital stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 4.1, the Holder shall have the right to elect, prior to the consummation of such event or transaction, to exercise this Warrant pursuant to Section 2 instead of giving effect to the provisions contained in this Section 4.1 with respect to this Warrant.

4.2

Dividends and Distributions. Subject to the provisions of Section 4.1, as applicable, if the Company shall, at any time or from time to time after the Original Issue Date, make or declare, or fix a record date for the determination of holders of Common Stock entitled to


	A-7

receive, a dividend or any other distribution payable in securities of the Company (other than a dividend or distribution of shares of Common Stock, Convertible Securities, warrants or other rights or options to subscribe for, acquire, purchase or otherwise be issued Common Stock or Convertible Securities, in respect of outstanding shares of Common Stock), cash or other property, then, and in each such event, provision shall be made so that the Holder shall receive upon exercise of the Warrant, in addition to the number of Exercise Shares receivable thereupon, the kind and amount of securities of the Company, cash or other property which the Holder would have been entitled to receive had the Warrant been exercised in full for Exercise Shares on the date of such event and had the Holder thereafter, during the period from the date of such event to and including the Exercise Date, retained such securities, cash or other property receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this Section 4.2 with respect to the rights of the Holder; provided that no such provision shall be made if the Holder receives, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities, cash or other property in an amount equal to the amount of such securities, cash or other property as the Holder would have received if the Warrant had been exercised in full for Exercise Shares on the date of such event.

4.3

Certificate as to Adjustment.

(a)

As promptly as reasonably practicable following any adjustment to the Exercise Shares, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

(b)

As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Exercise Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant.

FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. Except in the case of a net exercise of all or a portion of this Warrant pursuant to Section 2.2, if, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then current Fair Market Value of an Exercise Share by such fraction. In the event of a net exercise of all or a portion of this Warrant pursuant to Section 2.2 which would otherwise result in the issuance of a fraction of a shares of Common Stock, the Holder and the Company agree that the number of shares of Common Stock issuable pursuant to this Warrant shall be rounded down to the nearest whole share and, for the avoidance of doubt, no cash shall be paid to the Holder in lieu of such fractional share.

NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not entitle the Holder to any rights as a stockholder of the Company, and prior to the issuance to the Holder of the Exercise Shares to which the Holder is then entitled to receive upon the due exercise of this


	A-8

Warrant, the Holder shall not be entitled to vote or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, or subscription rights, or otherwise; provided that, in the event the Company declares a dividend during the Exercise Period, the Holder shall be entitled to participate in such dividend in accordance with Section 4.2 hereof and the Holder shall be entitled to receive notices regarding any Change of Control or other corporate events contemplated elsewhere in this Warrant.

COMPLIANCE WITH THE SECURITIES ACT; LEGEND. The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 7 and the restrictive legend requirements set forth on the face of this Warrant. This Warrant and all Exercise Shares issued upon exercise of this Warrant (unless registered under the Securities Act or unless such legend may otherwise be removed in accordance with applicable law (including Rule 144 promulgated under the Securities Act)) shall be stamped or imprinted with a legend in substantially the following form:

TRANSFER OF WARRANT. Subject to applicable laws and the restriction on transfer set forth on the first page of this Warrant and the Warrant Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon the books of the Company by the registered holder hereof in person or by duly authorized attorney, and a new warrant shall be made and delivered by the Company, of the same tenor and date as this Warrant but registered in the name of one or more transferees, upon surrender of this Warrant, duly endorsed, to the office or agency of the Company described in Section 10. All expenses (other than stock transfer taxes) and other charges payable in connection with the preparation, execution and delivery of the new warrants pursuant to this Section 8 shall be paid by the Company.

LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.

10.

NOTICES, ETC. Any notice required or permitted hereunder shall be given in writing in accordance with Section 8.2 of the Warrant Agreement, which is incorporated herein mutatis mutandis.


	A-9

11.

AMENDMENT AND WAIVER. Any term of this Warrant may be amended or waived with the written consent of the Company and the Requisite Holders.

12.

DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Exercise Price, the Fair Market Value or the arithmetic calculation of the Exercise Shares, as the case may be, the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the case may be) via electronic mail (i) within two (2) Business Days after receipt of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to agree upon such determination or calculation (as the case may be) of the Exercise Price, the Fair Market Value or the number of Exercise Shares (as the case may be) within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Business Days submit the disputed determination of the Exercise Price or the Fair Market Value to an independent, reputable investment bank selected by the Company and reasonably acceptable to the Holder. The Company shall cause the investment bank to perform the determinations or calculations (as the case may be) and notify the Company and the Holder of the results as soon as reasonably practicable. Such investment bank’s determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable error. The fees and expenses of the investment bank shall be borne by the Company unless the number is question, as finally determined by such investment bank, is within one percent (1%) of the Company’s originally proposed number, in which case such fees and expenses shall be borne by the Holder.

13.

GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. Section 8.5 and 8.6 of the Warrant Agreement are incorporated herein mutatis mutandis. For the avoidance of doubt, any dispute governed by Section 12 shall be determined exclusively pursuant to Section 12.

[signature page follows]


	A-10

IN WITNESS WHEREOF, the Company and the Holder have each caused this Warrant to be executed by its duly authorized officer as of the date first above written.

FREIGHTCAR AMERICA, INC.
By:  	
Name:
Title:

OC III LVS XXVIII LP 
By:  	
Name:
Title:


	A-11

NOTICE OF EXERCISE

1.a. ❑ The undersigned hereby elects to purchase a number of shares of Common Stock, par value $0.01 per share (“Common Stock”), of FreightCar America, Inc. (the “Company”) equal to ___% of the Common Stock Deemed Outstanding pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full.

1.b ❑ The undersigned hereby elects to purchase a number of shares of Common Stock equal to ___% of the Common Stock Deemed Outstanding pursuant to the terms of the net exercise provisions set forth in Section 2.2 of the attached Warrant.

2. Please issue said shares of Common Stock in the name of the undersigned or in such other name as is specified below:



(Name)

(Address)


(Date)		(Signature)


		(Print name)


	A-12

ASSIGNMENT FORM

(To assign the foregoing Warrant or a portion thereof, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant (or portion thereof) and all rights evidenced thereby are hereby assigned to

Name: (“Assignee”)

(Please Print)

Address:

(Please Print)

Assignee agrees to take and hold the Warrant and any shares of stock to be issued upon exercise of the rights thereunder subject to, and to be bound by, the terms and conditions set forth in the Warrant to the same extent as if Assignee were the original holder thereof.

Dated: , 20__

Holder’s
Signature:

Holder’s
Address:

Assignee’s
Signature:

Assignee’s
Address:

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant (or portion thereof).


	A-13

EXHIBIT B

REGISTRATION RIGHTS AGREEMENT

[See attached]


	B-14

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is dated as of April 4, 2022 (the “Effective Date”), by and between FreightCar America, Inc., a Delaware corporation (the “Company”), and OC III LVS XXVIII LP, a Delaware limited liability partnership (the “Investor”).

RECITALS

A. The Investor acquired a warrant (the “Warrant”) which is exercisable for shares of Common Stock, par value $0.01 per share, of the Company (the “Common Stock”) equal, in the aggregate, to five percent (5.0%) of the Common Stock Deemed Outstanding (the “Shares”) pursuant to that certain Warrant Acquisition Agreement, dated as of April 4, 2022, by and between the Company and the Investor (the “Warrant Agreement”).

B. In connection with the closing of the transactions contemplated by the Warrant Agreement (the “Closing”), the Company desires to enter into this Agreement with the Investor to grant the Investor the registration rights set forth below.

AGREEMENT

The parties to this Agreement, intending to be legally bound, agree as follows:

DEFINITIONS

All capitalized terms used but not defined herein shall have the meanings ascribed to those terms in the Warrant Agreement. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:

“Agreement” has the meaning set forth in the Preamble.

“Business Day” is any day other than a day on which banks and other financial institutions are authorized or required to be closed for business in the State of New York.

“Closing” has the meaning set forth in the Recitals.

“Common Stock” has the meaning set forth in the Recitals.

“Company” has the meaning set forth in the Preamble.

“Demand Registration Notice” has the meaning set forth in Section 2.1.

“Demand Registration Statement” has the meaning set forth in Section 2.1.

“Effective Date” has the meaning set forth in the Preamble.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder.

B-1

“FINRA” means the Financial Industry Regulatory Authority, Inc.

“General Disclosure Package” has the meaning set forth in Section 6.1(a).

“Indemnified Party” has the meaning set forth in Section 6.3.

“Indemnifying Party” has the meaning set forth in Section 6.3.

“Initiating Investor” has the meaning set forth in Section 3.2.

“Investor” has the meaning set forth in the Preamble.

“Permitted Transferee” means, with respect to any Investor, any other person in which the Investor owns a majority of the equity interests or any other investment entity that is controlled, advised or managed by the same person or persons that control the Investor or is an affiliate of that person.

“Piggyback Registration Statement” has the meaning set forth in Section 3.1.

“Registrable Shares” means the Common Stock held by the Investor in the Company or any successor to the Company (including (x) any shares of Common Stock acquired prior to, on, or after the Effective Date, (y) any shares of Common Stock acquired upon the exercise of the Warrant, and (z) all of the shares of Common Stock issuable upon exercise of the Warrant (whether or not the Warrant has been exercised at the time the applicable Registration Statement is filed to register such Registrable Shares)), excluding any Common Stock that (a) has been disposed of pursuant to any offering or sale in accordance with a Registration Statement, or has been sold pursuant to Rule 144 or Rule 145 (or any successor provisions) under the Securities Act or in any other transaction in which the purchaser does not receive “restricted securities” (as that term is defined for purposes of Rule 144 under the Securities Act), (b) has been transferred to a transferee that has not agreed in writing and for the benefit of the Company to be bound by the terms and conditions of this Agreement or (c) has ceased to be of a class of securities of the Company that is listed and traded on a recognized national securities exchange or automated quotation system. For the avoidance of doubt, the Company and the Investor acknowledge and agree that the shares of Common Stock underlying the Warrant shall be deemed to be Registrable Shares for all purposes under this Agreement.

“Registration Expenses” means all expenses incurred in connection with the preparation, printing and distribution of any Registration Statement and Prospectus and all amendments and supplements thereto, and any and all expenses incident to the performance by the Company of its registration obligations pursuant to this Agreement, including: (a) all registration, qualification and filing fees; (b) all fees and expenses associated with a required listing of the Registrable Shares on any securities exchange or market; (c) fees and expenses with respect to filings required to be made with The Nasdaq Stock Market (or such other securities exchange or market on which the Shares are then listed or quoted) or FINRA; (d) fees and expenses of compliance with securities or “blue sky” laws; (e) fees and expenses related to registration in any non U.S. jurisdictions, as applicable; (f) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses of any comfort


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letters, costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters, and expenses of any special audits incident to or required by any such registration); (g) all internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties); (h) the fees and expenses of any person, including special experts, retained by the Company in connection with the preparation of any Registration Statement; and (i) the reasonable fees and disbursements of one legal counsel to represent the Investor.

“Registration Statement” and “Prospectus” mean, as applicable, any Demand Registration Statement and related prospectus (including any preliminary prospectus) and/or any Piggyback Registration Statement and related prospectus (including any preliminary prospectus), whichever is utilized by the Company to satisfy the Investor’s registration rights pursuant to this Agreement, including, in each case, any documents incorporated therein by reference.

“Rule 144” means Rule 144 under the Securities Act or any successor rule thereto.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Suspension Event” has the meaning set forth in Section 4.

“Warrant Agreement” has the meaning set forth in the recitals to this Agreement.

DEMAND REGISTRATION RIGHTS

13.1

Demand Rights. At any time, and from time to time, the Investor may deliver to the Company one or more written notices (each, a “Demand Registration Notice”) informing the Company of its desire to have some or all of its Registrable Shares registered for sale. As soon as reasonably practicable after receiving any Demand Registration Notice, but in no event more than sixty (60) calendar days following receipt of such notice, the Company shall file a registration statement and related prospectus that complies as to form and substance in all material respects with applicable SEC rules providing for the sale by the Investor of all of the Registrable Shares requested to be registered by the Investor (each, a “Demand Registration Statement”), and agrees (subject to Sections 4 and 5.2) to use commercially reasonable efforts to cause such Demand Registration Statement to be declared effective by the SEC upon, or as soon as practicable following, the filing thereof. Subject to Section 4, the Company agrees to use commercially reasonable efforts to keep any Demand Registration Statement continuously effective (including the preparation and filing of any amendments and supplements necessary for that purpose) until the date on which the Investor consummates the sale of all of the Registrable Shares registered for resale under such Demand Registration Statement or such earlier date on which all Registrable Shares held by the Investor are freely tradeable in a single transaction pursuant to Rule 144 (or any successor provision.

13.2

Underwritten Offering. If the Investor intends to distribute the Registrable Shares covered by any Demand Registration Notice by means of an underwriting, it shall so advise the


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Company as a part of such Demand Registration Notice. Notwithstanding any other provision of this Section 2, if an underwriter advises the Company that, in the opinion of the underwriter, the distribution of all of the Registrable Shares requested to be registered would materially and adversely affect the distribution of all of the securities to be underwritten, then (a) the Company shall deliver to the Investor a copy of the underwriter’s opinion, which shall be in writing and state the reasons for its opinion, and (b) the number of Registrable Shares that may be included in such registration shall be allocated: (i) first, to the Investor; and (ii) second, to the other persons proposing to register securities in such registration, if any; provided, however, that the number of Registrable Shares to be included in the underwriting shall not be reduced unless all other securities are entirely excluded from the underwriting. Any Registrable Shares excluded or withdrawn from the underwriting shall be withdrawn from the registration.

13.3

Selection of Underwriter. The Investor shall have the right to select the underwriter or underwriters to administer any underwritten demand registration offering or underwritten takedown under a Demand Registration Statement; provided that the underwriter or underwriters shall be reasonably acceptable to the Company.

INCIDENTAL OR “PIGGY-BACK” REGISTRATION

13.4

Piggy-Back Rights. If the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of its Common Stock, whether to be sold by the Company or by one or more selling securityholders, other than (a) any Demand Registration Statement (in which case the ability of an Investor to participate in such Demand Registration Statement shall be governed by Section 2.1) or (b) a registration statement (i) on Form S-8 or any successor form to Form S-8 or in connection with any employee or director welfare, benefit or compensation plan, (ii) in connection with an exchange offer or an offering of securities exclusively to existing securityholders of the Company or its subsidiaries or (iii) relating to a transaction pursuant to Rule 145 under the Securities Act, the Company shall give written notice of the proposed registration to the Investor at least twenty (20) calendar days prior to the filing of such Registration Statement. The Investor shall have the right to request that all or any portion of its Registrable Shares be included in such Registration Statement by giving written notice to the Company within ten (10) calendar days after receipt of the foregoing notice by the Company. Subject to the provisions of Sections 3.1, 3.2 and 5.2, the Company will include all such Registrable Shares requested to be included by the Investor in such Piggyback Registration Statement. For purposes of this Agreement, any Registration Statement of the Company in which Registrable Shares are included pursuant to this Section 3.1 shall be referred to as a “Piggyback Registration Statement.”

13.5

Withdrawal of Exercise of Rights. If, at any time after giving written notice of its intention to register any securities and prior to the effective date of any Piggyback Registration Statement filed in connection with such registration, the Company or any other holder of securities that initiated such registration (each, an “Initiating Investor”) determines for any reason not to proceed with the proposed registration, the Company may at its election (or the election of the Initiating Investor(s), as applicable) give written notice of the determination to the Investor and thereupon shall be relieved of its obligation to register any Registrable Shares in connection with


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such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith).

13.6

Underwritten Offering. If a registration pursuant to this Section 3 involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number of securities which the Company and the holders of the Registrable Shares and any other persons intend to include in the registration exceeds the largest number of securities that can be sold in the offering without having an adverse effect on the offering (including the price at which the securities can be sold), then the Company shall include in the registration the maximum number of securities as follows: (a) first, all of the securities the Company proposes to sell for its own account, if any; provided that the registration of the securities was initiated by the Company with respect to securities intended to be registered for sale for its own account; (b) second, the number of Registrable Shares requested to be included in the registration by the Investor which, in the opinion of the managing underwriter, can be sold without having the adverse effect described above; and (c) third, the securities requested to be included therein by holders of Common Stock other than holders of Registrable Securities, allocated among such holders in such manner as they may agree.

13.7

Selection of Underwriter. Except to the extent Section 2.3 applies, Registrable Shares proposed to be registered and sold under this Section 3 pursuant to an underwritten offering for the account of the Investor holding Registrable Shares shall be sold to prospective underwriters selected by the Company; provided that such underwriters shall be reasonably acceptable to the Investor.

SUSPENSION OF OFFERINGS. Notwithstanding the provisions of Section 2 or 3, the Company shall be entitled to postpone the effectiveness of a Registration Statement, and from time to time to require the Investor not to sell under such Registration Statement or to suspend the effectiveness thereof, if the negotiation or consummation of a significant transaction by the Company or its subsidiaries is pending or another event has occurred, in each case, which negotiation, consummation or event the Company reasonably believes would require additional disclosure by the Company in such Registration Statement of material information that the Company has a bona fide business purpose for keeping confidential and the non-disclosure of which in such Registration Statement would be expected, in the Company’s reasonable determination, to cause such Registration Statement to fail to comply with applicable disclosure requirements (each such circumstance, a “Suspension Event”); provided, however, that the Company may not delay or suspend such Registration Statement on more than two (2) occasions or for more than thirty (30) consecutive calendar days, or more than one hundred twenty (120) total calendar days, during any twelve (12) month period. Upon receipt of any written notice from the Company of the happening of any Suspension Event during the period that any Registration Statement is effective or, if as a result of a Suspension Event, such Registration Statement or related Prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the Prospectus) not misleading, the Investor agrees that it will immediately discontinue offers and sales of the Registrable Shares under the Registration Statement until the Investor receives copies of a supplemental or amended Prospectus (which the Company agrees to promptly prepare) that corrects the misstatement(s) or


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omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Company that it may resume such offers and sales. If so directed by the Company, the Investor will deliver to the Company or, in the Investor’s sole discretion, destroy all copies of the Prospectus covering the Registrable Shares in the Investor’s possession.

REGISTRATION PROCEDURES

13.8

Obligations of the Company. When the Company is required to effect the registration of Registrable Shares under the Securities Act pursuant to this Agreement, the Company shall:

(a)

use commercially reasonable efforts to register or qualify the Registrable Shares by the time the applicable Registration Statement is declared effective by the SEC under all applicable state securities or “blue sky” laws of such jurisdictions as the Investor may reasonably request in writing, to keep each such registration or qualification effective during the period such Registration Statement is required to be kept effective pursuant to this Agreement, and to do any other similar acts and things that may be reasonably necessary or advisable to enable the Investor to consummate the disposition of the Registrable Shares owned by the Investor in each such jurisdiction; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction or to register as a broker or dealer in such jurisdiction where it would not otherwise be required to qualify but for this Agreement, (ii) take any action that would cause it to become subject to any taxation in any jurisdiction where it would not otherwise be subject to such taxation or (iii) take any action that would subject it to the general service of process in any jurisdiction where it is not then subject;

(b)

prepare and file with the SEC such amendments and supplements as to such Registration Statement and the Prospectus used in connection therewith as may be necessary to (i) keep such Registration Statement effective, and (ii) comply with the provisions of the Securities Act with respect to the disposition of the Registrable Shares covered by such Registration Statement, in each case for such time as is contemplated in the applicable provisions above;

(c)

promptly furnish, without charge, to the Investor the number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits), and the Prospectus included in such Registration Statement (including each preliminary Prospectus) in conformity with the requirements of the Securities Act, the documents incorporated by reference in such Registration Statement or Prospectus and such other documents as the Investor may reasonably request to facilitate the public sale or other disposition of the Registrable Shares owned by the Investor;

(d)

promptly notify the Investor (i) when such Registration Statement, any pre-effective amendment, the Prospectus or any prospectus supplement related thereto or post-effective amendment to such Registration Statement has been filed, and, with respect to such Registration Statement or any post-effective amendment, when the same has become effective, (ii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation or threat of any proceedings for that purpose, (iii) of any delisting or


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pending delisting of the Common Stock by any national securities exchange or market on which the Common Stock is then listed or quoted, and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Shares for sale under the securities or “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose;

(e)

use commercially reasonable efforts to prevent the issuance of any order suspending the effectiveness of such Registration Statement, and, if any such order suspending the effectiveness of such Registration Statement is issued, shall promptly use commercially reasonable efforts to obtain the withdrawal of such order at the earliest possible moment;

(f)

until the expiration of the period during which the Company is required to maintain the effectiveness of the applicable Registration Statement as set forth in the applicable sections hereof, promptly notify the Investor: (i) of the existence of any fact of which the Company is aware or the happening of any event that has resulted, or could reasonably be expected to result, in (x) such Registration Statement, as is then in effect, containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein not misleading, or (y) the Prospectus included in such Registration Statement containing an untrue statement of a material fact or omitting to state a material fact necessary to make any statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) of the Company’s reasonable determination that a post-effective amendment to such Registration Statement would be appropriate or that there exist circumstances not yet disclosed to the public which make further sales under such Registration Statement inadvisable pending such disclosure and post-effective amendment;

(g)

if any event or occurrence giving rise to an obligation of the Company to notify the Investor pursuant to Section 5.1(f) takes place, subject to Section 4, the Company shall prepare and, to the extent the exemption from prospectus delivery requirements in Rule 172 under the Securities Act is not available, furnish to the Investor a reasonable number of copies of a supplement or post-effective amendment to such Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document, and shall use commercially reasonable efforts to have the supplement or amendment declared effective, if required, as soon as practicable following the filing thereof, so that (i) such Registration Statement shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) as thereafter delivered to the purchasers of the Registrable Shares being sold thereunder, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(h)

use commercially reasonable efforts to cause all such Registrable Shares to be listed or quoted on the national securities exchange or market on which the Common Stock is then listed or quoted, if the listing or quotation of the Registrable Shares is then permitted under the rules of such national securities exchange or market;


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(i)

if requested by any Investor participating in an offering of Registrable Shares, as soon as practicable after such request, but in no event later than fifteen (15) calendar days after such request, incorporate in a prospectus supplement or post-effective amendment such information concerning the Investor or the intended method of distribution as the Investor reasonably requests to be included therein and is reasonably necessary to permit the sale of the Registrable Shares pursuant to the Registration Statement, including information with respect to the number of Registrable Shares being sold, the purchase price being paid therefor and any other material terms of the offering of the Registrable Shares to be sold in such offering; provided, however, that the Company shall not be obligated to include in any such prospectus supplement or post-effective amendment any requested information that is not required by the rules of the SEC and is unreasonable in scope compared with the Company’s most recent prospectus or prospectus supplement used in connection with a primary or secondary offering of equity securities by the Company;

(j)

in connection with the preparation and filing of any Registration Statement, the Company will give the Investor and its counsel (i) the opportunity to review and provide comments on such Registration Statement, each Prospectus included therein or filed with the SEC and each amendment thereof or supplement thereto (other than amendments or supplements that do not make any material change in the information related to the Company); provided that the Company shall not file any such Registration Statement including Registrable Shares or an amendment thereto or any related Prospectus or any supplement thereto to which the Investor or the managing underwriter or underwriters, if any, shall reasonably object in writing), and (ii) such access to its books and records and such opportunities to discuss the business of the Company and its subsidiaries with its officers, its counsel and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of the Investor’s and underwriters’ respective counsel, to conduct a reasonable due diligence investigation within the meaning of the Securities Act;

(k)

provide a transfer agent and registrar and a CUSIP number for the Registrable Shares not later than the effective date of the first Registration Statement filed hereunder;

(l)

cooperate with the Investor to facilitate the timely preparation and delivery of certificates for the Registrable Shares to be offered pursuant to the applicable Registration Statement and enable such certificates for the Registrable Shares to be in such denominations or amounts as the case may be, as the Investor may reasonably request and, within three (3) Business Days after a Registration Statement that includes Registrable Shares is declared effective by the SEC, the Company shall deliver, or shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registrable Shares (with copies to the Investor) an appropriate instruction and opinion of such counsel;

(m)


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or warranties to or agreement with the Company or the underwriters other than representations, warranties or agreements regarding the Investor and its intended method of distribution and any other representation or warranty required by law or reasonably requested by the underwriters. The Company shall cooperate and participate in the marketing of Registrable Shares, including participating in customary “roadshow” presentations, as the Investor and/or the managing underwriters may reasonably request;

(n)

furnish, at the request of the Investor on the date that any Registrable Shares are to be delivered to the underwriters for sale in connection with a registration pursuant to this Agreement, if such Registrable Shares are being sold through underwriters, or, if such Registrable Shares are not being sold through underwriters, on the date that the Registration Statement with respect to such Registrable Shares becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters, if any, to the Investor, and (ii) a comfort letter dated such date, from the independent certified public accountants of the Company who have certified the Company’s financial statements included in such Registration Statement, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Investor;

(o)

make available to the Investor, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months, but not more than eighteen (18) months, beginning with the first month of the first fiscal quarter after the effective date of the applicable Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, including Rule 158 promulgated thereunder; and

(p)

take all other reasonable actions necessary to expedite and facilitate disposition by the Investor pursuant to the applicable Registration Statement.

13.9

Obligations of the Investor. In connection with any Registration Statement utilized by the Company to satisfy the provisions of this Agreement, the Investor agrees to reasonably cooperate with the Company in connection with the preparation of such Registration Statement, and the Investor agrees that such cooperation shall include (a) responding within fifteen (15) calendar days to any written request by the Company to provide or verify information regarding the Investor or the Registrable Shares (including the proposed manner of sale) that may be required to be included in such Registration Statement pursuant to the rules and regulations of the SEC, and (b) providing in a timely manner information regarding the proposed distribution by the Investor of the Registrable Shares and any other information as may be requested by the Company from time to time in connection with the preparation of and for inclusion in such Registration Statement and related Prospectus.

13.10


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and (b) completes and executes all questionnaires, powers of attorney, indemnities, and other documents in customary form as reasonably required under the terms of such underwriting arrangements; provided, however, that, in the case of each of clause (a) and (b), if the provisions of the underwriting arrangements, or the terms or provisions of the questionnaires, powers of attorney, indemnities, underwriting agreements or other documents, are less favorable in any respect to an Investor than to any other person or entity that is party to the underwriting arrangements as a selling stockholder, then the Company shall use commercially reasonable efforts to cause the parties to the underwriting arrangements to amend the arrangements so that the Investor receives the benefit of any provisions thereof that are more favorable to such other person or entity. If the Investor does not approve of the terms of the underwriting arrangements, the Investor may elect to withdraw from the offering by providing written notice to the Company and the underwriter(s).

13.11

Offers and Sales. All offers and sales by an Investor under any Registration Statement shall be completed within the period during which such Registration Statement is required to remain effective pursuant to the applicable provision above and not the subject of any stop order, injunction or other order of the SEC. Upon expiration of that period, no Investor will offer or sell the Registrable Shares under such Registration Statement. If directed in writing by the Company, the Investor will return or, in the Investor’s sole discretion, destroy all undistributed copies of the applicable Prospectus in its possession upon the expiration of the period.

INDEMNIFICATION; CONTRIBUTION

13.12

Indemnification by the Company. The Company agrees to indemnify and hold harmless the Investor and each person, if any, who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and any of their partners, members, managers, officers, directors, trustees, employees or representatives, as follows:

(a)

against all loss, liability, claim, damage, judgment and expense whatsoever, as incurred (including reasonable fees and disbursements of counsel to the Investor), arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) pursuant to which the applicable Registrable Shares were registered under the Securities Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any “issuer free writing prospectus” (within the meaning of Rule 433 under the Securities Act, and together with any preliminary Prospectus and other information conveyed to the purchaser of Registrable Shares at the time of sale (as such terms are used in Rule 159(a) under the Securities Act), the “General Disclosure Package”), the General Disclosure Package or any Prospectus (or any amendment or supplement thereto), including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;


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(b)

against any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law;

(c)

against all loss, liability, claim, damage, judgment and expense whatsoever, as incurred (including reasonable fees and disbursements of counsel to the Investor), and to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, any such alleged untrue statement or omission or any such violation or alleged violation, if such settlement is effected with the written consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed); and

(d)

against any and all expense whatsoever, as incurred (including reasonable fees and disbursements of counsel to the Investor), reasonably incurred in investigating, preparing, defending against or participating in (as a witness or otherwise) any litigation, arbitration, action, or investigation or proceeding by any governmental agency or body, commenced or threatened, in each case whether or not a party, or any claim whatsoever based upon any such untrue statement or omission, any such alleged untrue statement or omission or any such violation or alleged violation, to the extent that any such expense is not indemnified under Section 6.1(a), (b), or (c) above; provided, however, that the indemnity provided pursuant to this Section 6 does not apply to the Investor with respect to any loss, liability, claim, damage, judgment or expense to the extent arising out of (i) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in strict conformity with written information furnished to the Company by the Investor expressly for use in the applicable Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) (such information, the “Investor Information”), or (ii) the Investor’s failure to deliver an amended or supplemental Prospectus furnished to the Investor by the Company, if required by law to have been delivered, if such loss, liability, claim, damage, judgment or expense would not have arisen had such delivery occurred.

13.13

Indemnification by Investor. The Investor agrees to indemnify and hold harmless the Company, and each of its directors and officers (including each director and officer of the Company who signed the applicable Registration Statement), and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, as follows:

(a)

against all loss, liability, claim, damage, judgment and expense whatsoever, as incurred (including reasonable fees and disbursements of counsel), arising out of or based upon any untrue statement or alleged untrue statement of a material fact in the Investor Information contained in the Registration Statement (or any amendment thereto) pursuant to which the Registrable Shares were registered under the Securities Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated as part of the Investor Information or necessary to make the Investor Information included therein not misleading or arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any “issuer free writing prospectus” (within the meaning of Rule 433 under the Securities Act), the General Disclosure Package, or any Prospectus (or any amendment or supplement thereto), including all documents incorporated therein by reference, or


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the omission or alleged omission therefrom in the Investor Information of a material fact necessary in order to make the Investor Information included therein, in the light of the circumstances under which they were made, not misleading;

(b)

against all loss, liability, claim, damage, judgment and expense whatsoever, as incurred (including reasonable fees and disbursements of counsel), and to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, in in each case, directly related to the Investor Information, if such settlement is effected with the written consent of the Investor (which consent shall not be unreasonably withheld, conditioned or delayed); and

(c)

against all expense whatsoever, as incurred (including reasonable, documented, out-of-pocket, fees and disbursements of counsel), reasonably incurred in investigating, preparing, defending against or participating in (as a witness or otherwise) any litigation, arbitration, action, or investigation or proceeding by any governmental agency or body, commenced or threatened, in each case whether or not a party, or any claim whatsoever based upon any such untrue statement or omission, any such alleged untrue statement or omission or any such violation or alleged violation, in each case, directly related to the Investor Information, to the extent that any such expense is not indemnified under Section 6.2(a) or (b) above;

provided, however, that the Investor shall only be liable under the indemnity provided pursuant to Section 6.2 with respect to any loss, liability, claim, damage, judgment or expense to the extent directly related to (i) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in strict conformity with the Investor Information, or (ii) the Investor’s failure to deliver an amended or supplemental Prospectus furnished to the Investor by the Company, if required by law to have been delivered by the Investor, if such loss, liability, claim, damage or expense would not have arisen had such delivery occurred. Notwithstanding the provisions of this Section 6, the Investor and any of its Permitted Transferees shall not be required to indemnify the Company, its directors, officers or control persons for any amount in excess of the amount of the aggregate net cash proceeds received by the Investor or its Permitted Transferee, as the case may be, from sales of the Registrable Shares of the Investor (or Permitted Transferee) under the Registration Statement that is the subject of the indemnification claim.

13.14


SMRH:4880-9769-2423.5	B-12

the defense of such action or proceeding at such Indemnifying Party’s own expense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval shall not be unreasonably withheld or delayed; provided, however, that the Indemnifying Party will not settle, compromise or consent to the entry of any judgment with respect to any such action or proceeding without the written consent of the Indemnified Party unless such settlement, compromise or consent (a) secures the unconditional release of the Indemnified Party, (b) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of the Indemnified Party or any of its affiliates; (c) does not impose any restriction upon the operations of the Indemnified Party or any of its affiliates; and (d) relates solely to monetary damages indemnifiable hereunder; and provided further that, if the Indemnified Party reasonably determines that a conflict of interest exists where it is advisable for the Indemnified Party to be represented by separate counsel or that, upon advice of counsel, there may be legal defenses available to the Indemnified Party that are different from or in addition to those available to the Indemnifying Party, then the Indemnifying Party shall not be entitled to assume such defense and the Indemnified Party shall be entitled to separate counsel at the Indemnifying Party’s expense. If the Indemnifying Party is not entitled to assume the defense of such action or proceeding as a result of the second proviso to the preceding sentence, the Indemnifying Party’s counsel shall be entitled to conduct the Indemnifying Party’s defense and counsel for the Indemnified Party shall be entitled to conduct the defense of the Indemnified Party, at the Indemnifying Party’s expense, it being understood that both such counsel will cooperate with each other to conduct the defense of such action or proceeding as efficiently as possible. If the Indemnifying Party (x) is not so entitled to assume the defense of such action, (y) does not assume such defense, after having received the notice referred to in the first sentence of this paragraph, or (z) indicates that it will assume such defense but thereafter fails to diligently pursue such defense, in any such case, the Indemnifying Party will pay the reasonable fees and expenses of counsel for the Indemnified Party. In such event, however, the Indemnifying Party will not be liable for any settlement effected without the written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, conditioned, or delayed. If an Indemnifying Party is entitled to assume, and assumes and diligently pursues, the defense of such action or proceeding in accordance with this paragraph, the Indemnifying Party shall not be liable for any fees and expenses of counsel for the Indemnified Party incurred thereafter in connection with such action or proceeding.

13.15

Contribution.

(a)

To provide for just and equitable contribution in circumstances in which the indemnity agreement in Sections 6.1 through 6.3 is for any reason held to be unenforceable in favor of the Indemnified Party although applicable in accordance with its terms, the Indemnified Party and the Indemnifying Party shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement incurred by the Indemnified Party and the Indemnifying Party, in such proportion as is appropriate to reflect the relative fault of the Indemnified Party, on the one hand, and the Indemnifying Party, on the other hand, in connection with the statements or omissions that resulted in such losses, liabilities, claims, damages or expenses. The relative fault of the Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether the action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, the Indemnifying Party or


SMRH:4880-9769-2423.5	B-13

the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, that, for the avoidance of doubt the only information supplied by the Investor is the Investor Information.

(b)

The parties agree that it would not be just or equitable if contribution pursuant to this Section 6.4 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 6.4(a). Notwithstanding the provisions of this Section 6.4, the Investor shall not be required to contribute any amount (together with the amount of any indemnification payments made by the Investor pursuant to Section 6.2) in excess of the amount of the aggregate net cash proceeds received by the Investor from sales of the Registrable Shares of the Investor under the Registration Statement that is the subject of the indemnification claim.

(c)

Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6.4, each person, if any, who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and any of their partners, members, officers, directors, trustees, employees or representatives, shall have the same rights to contribution as the Investor, and each director of the Company, each officer of the Company who signed the applicable Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company.

EXPENSES. The Company will pay all Registration Expenses in connection with each registration of Registrable Shares pursuant to Section 2 or 3. The Investor shall be responsible for the payment of all brokerage and sales commissions, fees and disbursements of the Investor’s counsel that are not Registration Expenses, accountants and other advisors, and any transfer taxes relating to the sale or disposition of the Registrable Shares by the Investor pursuant to any Registration Statement or otherwise.

RULE 144 REPORTING. With a view to making available to the Investor the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit an Investor to sell securities of the Company to the public without registration or pursuant to a registration statement, for so long as the Common Stock is registered under the Exchange Act, the Company agrees to:

(d)

make and keep available adequate current public information, as those terms are understood and defined in Rule 144;

(e)

file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(f)


SMRH:4880-9769-2423.5	B-14

most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and (iii) such other information as may be reasonably requested in availing any Investor of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to a registration statement.

MISCELLANEOUS

13.16

Waivers. No waiver by a party hereto shall be effective unless made in a written instrument duly executed by the party against whom the waiver is sought to be enforced, and only to the extent set forth in that instrument. Neither the waiver by any of the parties hereto of a breach or a default under any of the provisions of this Agreement, nor the failure of any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or privileges hereunder.

13.17

Notices. Notices to the Company and to the Investor shall be sent to their respective addresses as set forth in Section 8.2 of the Warrant Agreement which is incorporated herein mutatis mutandis.

13.18

Public Announcements and Other Disclosure. The Company and the Investor shall not make any press release, public announcement or other disclosure (“Disclosure”) with respect to this Agreement unless such Disclosure is mutually agreed to by the Company and the Investor in writing; provided, that the Company and the Investor may make any Disclosure required by law or the rules or regulations of any securities exchange or national market system upon which the securities of the Investor are listed or quoted; provided, further, that, in the case of any Disclosure required by law, rule or regulation, the party making the disclosure shall use all reasonable efforts to consult with the other party prior to making the disclosure.

13.19

Headings and Interpretation. All section and subsection headings in this Agreement are for convenience of reference only and are not intended to qualify the meaning, construction or scope of any of the provisions hereof. The Company and the Investor hereby disclaim any defense or assertion in any litigation or arbitration that any ambiguity herein should be construed against the drafter.

13.20

Entire Agreement; Amendment. This Agreement, together with the Warrant Agreement and any related exhibits and schedules hereto or thereto, constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter hereof and thereof, and supersede all prior agreements and understandings of the parties with respect to the subject matter hereof and thereof. Notwithstanding the foregoing, in the event of any conflict between the terms and provisions of this Agreement and those of the Warrant Agreement, the terms and conditions of this Agreement shall control. Except as otherwise expressly provided in this Agreement, no amendment, modification or discharge of this Agreement shall be valid or binding unless set forth in writing and duly executed by the Company and the Investor.

13.21


SMRH:4880-9769-2423.5	B-15

this Agreement may be assigned by an Investor to a Permitted Transferee of the Investor’s Registrable Shares; and provided further that in each case the transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement. This Agreement and the rights granted hereunder may not be assigned by the Company without the prior written consent of the Investor. Any attempted assignment of this Agreement or the rights granted hereunder in violation of this Section 9.6 shall be void ab initio. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto, their successors, heirs, legatees, devisees, permitted assigns, legal representatives, executors and administrators, except as otherwise provided herein.

13.22

Saving Clause. If any provision of this Agreement, or the application of such provision to any person or circumstance, is held invalid, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby. If the operation of any provision of this Agreement would contravene the provisions of any applicable law, such provision shall be void and ineffectual. In the event that applicable law is subsequently amended or interpreted in such a way to make any provision of this Agreement that was formerly invalid valid, such provision shall be considered to be valid from the effective date of such interpretation or amendment.

13.23

Counterparts; Exchanges. This Agreement may be executed in multiple counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. The execution and exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile, electronic mail or another form of electronic signature or transmission (including .pdf) shall be sufficient to bind the parties to the terms of this Agreement.

13.24

Representations and Warranties. Each of the parties hereto, as to itself only, represents and warrants that this Agreement has been duly authorized and executed by it and that all necessary corporate actions have been taken by it in order for this Agreement to be enforceable against it under all applicable laws. Each party hereto, as to itself only, further represents and warrants that all persons signing this Agreement on such party’s behalf have been duly authorized to do so.

13.25

Governing Law; Service of Process and Venue; Waiver of Jury Trial. Section 8.5 and 8.6 of the Warrant Agreement are incorporated herein mutatis mutandis.

13.26

Specific Performance. The parties agree that irreparable damage would occur in the event the provisions of this Agreement were not performed in accordance with the terms hereof, and that the Investor and the Company shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity.

13.27

No Third-Party Beneficiaries. Except as expressly set forth in Section 6, it is the explicit intention of the parties that no person other than the parties hereto is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants, undertakings and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto or their respective successors, heirs, executors, administrators, legal representatives and permitted assigns.


SMRH:4880-9769-2423.5	B-16

13.28

General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a)

the terms defined in this Agreement include the plural as well as the singular, and the use of any gender or neuter form herein shall be deemed to include the other gender and the neuter form;

(b)

references herein to “Sections”, “subsections,” “paragraphs”, and other subdivisions without reference to a document are to designated Sections, paragraphs and other subdivisions of this Agreement;

(c)

a reference to a paragraph without further reference to a Section is a reference to the paragraph contained in the same Section in which the reference appears, and this rule shall also apply to other subdivisions;

(d)

the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision;

(e)

the term “include”, includes” or “including” shall be deemed to be followed by the words “without limitation”;

(f)

the term “person” means any individual, corporation, partnership, limited liability company, association, joint venture, an association, a joint stock company, trust, unincorporated organization, governmental or political subdivision or agency or any other entity of whatever nature; and

(g)

any reference to dollars or “$” shall be deemed to refer to U.S. dollars.

13.29

Termination. This Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earlier to occur of (a) the date and time that the Warrant Agreement is terminated in accordance with its terms, (b) upon the mutual written agreement of the parties to terminate this Agreement or (c) the date and time at which no Registrable Securities remain outstanding; provided that Sections 6 and 7 of this Agreement shall survive any termination (along with any other provision necessary to give effect thereto).

13.30

Limitations on Subsequent Registration Rights. From and after the Effective Date, the Company shall not, without the prior written consent of the Investor enter into any agreement with any holder or prospective holder of any securities of the Company that (a) would provide to such holder the right to include securities in any registration on other than a subordinate basis after the Investor has had the opportunity to include in the registration and offering all Registrable Shares that it wishes to so include or (b) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder.

[Signature Page Follows]


SMRH:4880-9769-2423.5	B-17

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

FREIGHTCAR AMERICA, INC.
By:	

Name: 	

Title: 

OC III LVS XXVIII LP 
By:	

Name: 	

Title: 


SMRH:4880-9769-2423.5	B-18

EX-10.2

Exhibit 10.2

WARRANT TO PURCHASE COMMON STOCK

FREIGHTCAR AMERICA, INC.

NO. W-003 April 4, 2022

This Warrant is subject to the following terms and conditions:

DEFINITIONS. As used herein, the following terms shall have the following respective meanings:

(a)

(b)

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York City are generally authorized by law to close.

(c)


	A-1

outstanding voting securities of the Company having the right to vote for the election of members of the Board of Directors of the Company; (ii) a merger, consolidation or reorganization or other similar transaction or series of related transactions, in each case which results in the voting securities of the Company outstanding immediately prior thereto representing immediately thereafter (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity) less than 50% of the combined voting power of the outstanding voting securities of the Company having the right to vote for the election of members of the Board of Directors of the Company or such surviving or acquiring entity outstanding immediately after such merger, consolidation or reorganization; (iii) the issuance by the Company of equity securities of the Company, in a single transaction or series of related transactions, representing at least 50% of the combined voting power of the outstanding voting securities of the Company having the right to vote for the election of members of the Board of Directors of the Company; or (iv) the acquisition by any “person” (together with his, her or its Affiliates) or “group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), directly or indirectly, of the beneficial ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) of outstanding shares of capital stock and/or other equity securities of the Company, in a single transaction or series of related transactions (including, without limitation, one or more tender offers or exchange offers), representing at least 50% of the combined voting power of the outstanding voting securities of the Company having the right to vote for the election of members of the Board of Directors of the Company; provided that a transaction (or series of related transactions) consisting solely of the issuance by the Company of equity securities of the Company, representing less than 20% of the combined voting power of the outstanding voting securities of the Company, for cash consideration in a bona fide capital raising transaction shall not be considered a Change of Control.

(d)

“Common Stock Deemed Outstanding” shall mean the number of shares of Common Stock deemed to be outstanding for purposes of this Warrant determined in accordance with the following formula:

Common Stock Deemed Outstanding = A ÷ (1 – B)

For purposes of the foregoing formula, the following definitions shall apply:

“A” shall mean, as of any time of determination, the sum of, without duplication, (i) the number of shares of Common Stock actually outstanding at such time, plus (ii) the number of shares of Common Stock reserved for issuance at such time under any equity incentive plans approved by the Board of Directors of the Company, regardless of whether the shares of Common Stock are actually subject to outstanding options or other rights to acquire shares, plus (iii) the number of shares of Common Stock issuable upon exercise of any other options, warrants or rights to acquire shares of Common Stock actually outstanding at such time (excluding the shares of Common Stock issuable upon exercise of this Warrant and each other warrant (such other warrants, together with this Warrant, the “CSDO Warrants”) that has a definition of “Common Stock Deemed Outstanding” substantially similar to this definition), plus (iv) the number of shares of Common Stock issuable upon conversion or exchange of Convertible Securities (excluding all CSDO Warrants) actually outstanding at such time, in each case, regardless of whether the options, warrants, or Convertible Securities are actually exercisable at such time; plus (v) 774,407 shares


	A-2

of Common Stock, which represents 5.0% of the total number of shares of Common Stock outstanding as of July 30, 2021, to the extent such shares of Common Stock have not already been issued as an equity fee and are not currently outstanding.

(a)

(e)

“Exercise Period” means the period commencing on the date hereof and ending on the Expiration Date.

(f)

“Expiration Date” means ten (10) years from the Original Issuance Date.

(g)

(h)

“Liquid Securities” means a class of securities registered under Section 12(b) of the Exchange Act, which are listed or quoted for trading on a U.S. national securities exchange.

(i)

“Original Issue Date” means April 4, 2022.

(j)

“OTC Bulletin Board” means the Financial Industry Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system.


	A-3

(k)

(l)

“Pink OTC Markets” means the OTC Markets Group Inc. electronic inter-dealer quotation system, including OTCQX, OTCQB and OTC Pink.

(m)

“Securities Act” means the United States Securities Act of 1933, as amended.

EXERCISE OF WARRANT.

2.1

(a)

an executed Notice of Exercise in the form attached hereto;

(b)

payment of the Exercise Price in cash (by wire transfer to the account designated in writing by the Company) or by check; and

(c)

this Warrant.

2.2

X = Y * (A-B)

Where X = the number of Exercise Shares to be issued to the Holder


	A-4

Y = the number of Exercise Shares purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such exercise)

A = the Fair Market Value of one Exercise Share purchasable under the Warrant (at the date of such exercise)

B = Exercise Price (as adjusted to the date of such exercise)

2.3

Automatic Exercise.

(a)


	A-5

(b)

2.4

COVENANTS OF THE COMPANY.

3.1

3.2

3.3

3.4


	A-6

EFFECT OF CERTAIN EVENTS ON EXERCISE SHARES.

4.1

4.2


	A-7

4.3

Certificate as to Adjustment.

(a)

(b)


	A-8

10.

NOTICES, ETC. Any notice required or permitted hereunder shall be given in writing in accordance with Section 8.2 of the Warrant Agreement, which is incorporated herein mutatis mutandis.


	A-9

11.

AMENDMENT AND WAIVER. Any term of this Warrant may be amended or waived with the written consent of the Company and the Requisite Holders.

12.

13.

[signature page follows]


	A-10

IN WITNESS WHEREOF, the Company and the Holder have each caused this Warrant to be executed by its duly authorized officer as of the date first above written.

FREIGHTCAR AMERICA, INC.
By: /s/ Michael A. Riordan	
Name: Michael A. Riordan
Title: Vice President, Finance, Chief Financial Officer and Treasurer

OC III LVS XXVIII LP 
By: /s/ Adam L. Gubner	
Name: Adam L. Gubner
Title: Authorized Person


	A-11

NOTICE OF EXERCISE

2. Please issue said shares of Common Stock in the name of the undersigned or in such other name as is specified below:



(Name)

(Address)


(Date)		(Signature)


		(Print name)


	A-12

ASSIGNMENT FORM

(To assign the foregoing Warrant or a portion thereof, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant (or portion thereof) and all rights evidenced thereby are hereby assigned to

Name: (“Assignee”)

(Please Print)

Address:

(Please Print)

Dated: , 20__

Holder’s
Signature:

Holder’s
Address:

Assignee’s
Signature:

Assignee’s
Address:


	A-13

EX-10.3

Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

RECITALS

The Investor acquired a warrant (the “Warrant”) which is exercisable for shares of Common Stock, par value $0.01 per share, of the Company (the “Common Stock”) equal, in the aggregate, to five percent (5.0%) of the Common Stock Deemed Outstanding (the “Shares”) pursuant to that certain Warrant Acquisition Agreement, dated as of April 4, 2022, by and between the Company and the Investor (the “Warrant Agreement”).

In connection with the closing of the transactions contemplated by the Warrant Agreement (the “Closing”), the Company desires to enter into this Agreement with the Investor to grant the Investor the registration rights set forth below.

AGREEMENT

The parties to this Agreement, intending to be legally bound, agree as follows:

DEFINITIONS

“Agreement” has the meaning set forth in the Preamble.

“Business Day” is any day other than a day on which banks and other financial institutions are authorized or required to be closed for business in the State of New York.

“Closing” has the meaning set forth in the Recitals.

“Common Stock” has the meaning set forth in the Recitals.

“Company” has the meaning set forth in the Preamble.

“Demand Registration Notice” has the meaning set forth in Section 2.1.

“Demand Registration Statement” has the meaning set forth in Section 2.1.

“Effective Date” has the meaning set forth in the Preamble.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder.

“FINRA” means the Financial Industry Regulatory Authority, Inc.

“General Disclosure Package” has the meaning set forth in Section 6.1(a).

“Indemnified Party” has the meaning set forth in Section 6.3.

“Indemnifying Party” has the meaning set forth in Section 6.3.

“Initiating Investor” has the meaning set forth in Section 3.2.

“Investor” has the meaning set forth in the Preamble.

“Piggyback Registration Statement” has the meaning set forth in Section 3.1.

(f) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses of any comfort letters, costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters, and expenses of any special audits incident to or required by any such registration); (g) all internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties); (h) the fees and expenses of any person, including special experts, retained by the Company in connection with the preparation of any Registration Statement; and (i) the reasonable fees and disbursements of one legal counsel to represent the Investor.

“Rule 144” means Rule 144 under the Securities Act or any successor rule thereto.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Suspension Event” has the meaning set forth in Section 4.

“Warrant Agreement” has the meaning set forth in the recitals to this Agreement.

DEMAND REGISTRATION RIGHTS

2.1

2.2

Underwritten Offering. If the Investor intends to distribute the Registrable Shares covered by any Demand Registration Notice by means of an underwriting, it shall so advise the Company as a part of such Demand Registration Notice. Notwithstanding any other provision of this Section 2, if an underwriter advises the Company that, in the opinion of the underwriter, the distribution of all of the Registrable Shares requested to be registered would materially and adversely affect the distribution of all of the securities to be underwritten, then (a) the Company shall deliver to the Investor a copy of the underwriter’s opinion, which shall be in writing and state the reasons for its opinion, and (b) the number of Registrable Shares that may be included in such registration shall be allocated: (i) first, to the Investor; and (ii) second, to the other persons proposing to register securities in such registration, if any; provided, however, that the number of Registrable Shares to be included in the underwriting shall not be reduced unless all other securities are entirely excluded from the underwriting. Any Registrable Shares excluded or withdrawn from the underwriting shall be withdrawn from the registration.

2.3

INCIDENTAL OR “PIGGY-BACK” REGISTRATION

3.1

3.2

such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith).

3.3

3.4

SUSPENSION OF OFFERINGS.

Notwithstanding the provisions of Section 2 or 3, the Company shall be entitled to postpone the effectiveness of a Registration Statement, and from time to time to require the Investor not to sell under such Registration Statement or to suspend the effectiveness thereof, if the negotiation or consummation of a significant transaction by the Company or its subsidiaries is pending or another event has occurred, in each case, which negotiation, consummation or event the Company reasonably believes would require additional disclosure by the Company in such Registration Statement of material information that the Company has a bona fide business purpose for keeping confidential and the non-disclosure of which in such Registration Statement would be expected, in the Company’s reasonable determination, to cause such Registration Statement to fail to comply with applicable disclosure requirements (each such circumstance, a “Suspension Event”); provided, however, that the Company may not delay or suspend such Registration Statement on more than two (2) occasions or for more than thirty (30) consecutive calendar days, or more than one hundred twenty (120) total calendar days, during any twelve (12) month period. Upon receipt of any written notice from the Company of the happening of any Suspension Event during the period that any Registration Statement is effective or, if as a result of a Suspension Event, such Registration Statement or related Prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the Prospectus) not misleading, the Investor agrees that it will immediately discontinue offers and sales of the Registrable Shares under the Registration Statement until the Investor receives copies of a supplemental or amended Prospectus (which the Company agrees to promptly prepare) that

corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Company that it may resume such offers and sales. If so directed by the Company, the Investor will deliver to the Company or, in the Investor’s sole discretion, destroy all copies of the Prospectus covering the Registrable Shares in the Investor’s possession.

REGISTRATION PROCEDURES

5.1

Obligations of the Company. When the Company is required to effect the registration of Registrable Shares under the Securities Act pursuant to this Agreement, the Company shall:

(a)

(b)

(c)

(d)

promptly notify the Investor (i) when such Registration Statement, any pre- effective amendment, the Prospectus or any prospectus supplement related thereto or post- effective amendment to such Registration Statement has been filed, and, with respect to such Registration Statement or any post-effective amendment, when the same has become effective, (ii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation or threat of any proceedings for that purpose, (iii) of any delisting or pending delisting of the Common Stock by any national securities exchange or market on which

the Common Stock is then listed or quoted, and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Shares for sale under the securities or “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose;

(e)

(f)

(g)

(h)

(i)

information concerning the Investor or the intended method of distribution as the Investor reasonably requests to be included therein and is reasonably necessary to permit the sale of the Registrable Shares pursuant to the Registration Statement, including information with respect to the number of Registrable Shares being sold, the purchase price being paid therefor and any other material terms of the offering of the Registrable Shares to be sold in such offering; provided, however, that the Company shall not be obligated to include in any such prospectus supplement or post-effective amendment any requested information that is not required by the rules of the SEC and is unreasonable in scope compared with the Company’s most recent prospectus or prospectus supplement used in connection with a primary or secondary offering of equity securities by the Company;

(j)

(k)

provide a transfer agent and registrar and a CUSIP number for the Registrable Shares not later than the effective date of the first Registration Statement filed hereunder;

(l)

(m)

enter into an underwriting agreement in customary form and substance reasonably satisfactory to the Company, the Investor and the managing underwriter or underwriters of the public offering of Registrable Shares, if the offering is to be underwritten, in whole or in part, provided that the Investor may, at its option, require that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of the Investor. The Investor shall not be required to make any representations or warranties to or agreement with the Company or the underwriters other than representations, warranties or agreements regarding the Investor and its intended method of distribution and any other representation or warranty required by law or reasonably requested by the underwriters. The Company shall cooperate and participate in the marketing of Registrable Shares, including

participating in customary “roadshow” presentations, as the Investor and/or the managing underwriters may reasonably request;

(n)

(o)

(p)

take all other reasonable actions necessary to expedite and facilitate disposition by the Investor pursuant to the applicable Registration Statement.

5.2

5.3

Participation in Underwritten Registrations. No Investor may participate in any underwritten registration hereunder unless the Investor (a) agrees to sell the Registrable Shares on the basis provided in the applicable underwriting arrangements (that shall include a customary form of underwriting agreement, reasonably satisfactory to the Investor, which will provide that the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of the underwriters shall also be made to and for the benefit of the Investor), and (b) completes and executes all questionnaires, powers of attorney, indemnities, and other documents in customary form as reasonably required under the terms of such underwriting arrangements; provided, however, that, in the case of each of clause (a) and (b), if the provisions of the underwriting arrangements, or the terms or provisions of the questionnaires, powers of attorney, indemnities, underwriting agreements or other documents, are less favorable in any

respect to an Investor than to any other person or entity that is party to the underwriting arrangements as a selling stockholder, then the Company shall use commercially reasonable efforts to cause the parties to the underwriting arrangements to amend the arrangements so that the Investor receives the benefit of any provisions thereof that are more favorable to such other person or entity. If the Investor does not approve of the terms of the underwriting arrangements, the Investor may elect to withdraw from the offering by providing written notice to the Company and the underwriter(s).

5.4

INDEMNIFICATION; CONTRIBUTION

6.1

(a)

(b)

(c)

upon any such untrue statement or omission, any such alleged untrue statement or omission or any such violation or alleged violation, if such settlement is effected with the written consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed); and

(d)

6.2

(a)

(b)

each case, directly related to the Investor Information, if such settlement is effected with the written consent of the Investor (which consent shall not be unreasonably withheld, conditioned or delayed); and

(c)

6.3

Conduct of Indemnification Proceedings. An indemnified party hereunder (the “Indemnified Party”) shall give reasonably prompt notice to the indemnifying party hereunder (the “Indemnifying Party”) of any action or proceeding commenced against such Indemnified Party in respect of which indemnity may be sought hereunder, but failure to so notify the Indemnifying Party (a) shall not relieve the Indemnifying Party from any liability which it may have under the indemnity provisions of Section 6.1 or 6.2 unless and only to the extent the Indemnifying Party did not otherwise learn of such action and the lack of notice by the Indemnified Party results in the forfeiture by the Indemnifying Party of substantial rights and defenses, and (b) shall not, in any event, relieve the Indemnifying Party from any obligations to any Indemnified Party other than the indemnification obligation provided under Section 6.1 or 6.2 above. If the Indemnifying Party so elects within a reasonable time after receipt of such notice, the Indemnifying Party may assume the defense of such action or proceeding at such Indemnifying Party’s own expense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval shall not be unreasonably withheld or delayed; provided, however, that the Indemnifying Party will not settle, compromise or consent to the entry of any judgment with respect to any such action or proceeding without the written consent of the Indemnified Party unless such settlement, compromise or consent (a) secures the unconditional release of the Indemnified Party, (b) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of the Indemnified Party or any of its affiliates; (c) does not impose any restriction upon the operations of the Indemnified Party or any of its affiliates; and (d) relates solely to monetary damages indemnifiable hereunder; and provided further that, if the Indemnified Party reasonably

determines that a conflict of interest exists where it is advisable for the Indemnified Party to be represented by separate counsel or that, upon advice of counsel, there may be legal defenses available to the Indemnified Party that are different from or in addition to those available to the Indemnifying Party, then the Indemnifying Party shall not be entitled to assume such defense and the Indemnified Party shall be entitled to separate counsel at the Indemnifying Party’s expense. If the Indemnifying Party is not entitled to assume the defense of such action or proceeding as a result of the second proviso to the preceding sentence, the Indemnifying Party’s counsel shall be entitled to conduct the Indemnifying Party’s defense and counsel for the Indemnified Party shall be entitled to conduct the defense of the Indemnified Party, at the Indemnifying Party’s expense, it being understood that both such counsel will cooperate with each other to conduct the defense of such action or proceeding as efficiently as possible. If the Indemnifying Party (x) is not so entitled to assume the defense of such action, (y) does not assume such defense, after having received the notice referred to in the first sentence of this paragraph, or (z) indicates that it will assume such defense but thereafter fails to diligently pursue such defense, in any such case, the Indemnifying Party will pay the reasonable fees and expenses of counsel for the Indemnified Party. In such event, however, the Indemnifying Party will not be liable for any settlement effected without the written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, conditioned, or delayed. If an Indemnifying Party is entitled to assume, and assumes and diligently pursues, the defense of such action or proceeding in accordance with this paragraph, the Indemnifying Party shall not be liable for any fees and expenses of counsel for the Indemnified Party incurred thereafter in connection with such action or proceeding.

6.4

Contribution.

(a)

(b)

the Investor from sales of the Registrable Shares of the Investor under the Registration Statement that is the subject of the indemnification claim.

(c)

EXPENSES.

The Company will pay all Registration Expenses in connection with each registration of Registrable Shares pursuant to Section 2 or 3. The Investor shall be responsible for the payment of all brokerage and sales commissions, fees and disbursements of the Investor’s counsel that are not Registration Expenses, accountants and other advisors, and any transfer taxes relating to the sale or disposition of the Registrable Shares by the Investor pursuant to any Registration Statement or otherwise.

RULE 144 REPORTING.

With a view to making available to the Investor the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit an Investor to sell securities of the Company to the public without registration or pursuant to a registration statement, for so long as the Common Stock is registered under the Exchange Act, the Company agrees to:

(a)

make and keep available adequate current public information, as those terms are understood and defined in Rule 144;

(b)

file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c)

for so long as the Investor owns any Registrable Shares, furnish to the Investor upon request (i) a written statement from the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to a registration statement, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and (iii) such other information as may be reasonably requested in availing any Investor of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to a registration statement.

MISCELLANEOUS

9.1

9.2

Notices. Notices to the Company and to the Investor shall be sent to their respective addresses as set forth in Section 8.2 of the Warrant Agreement which is incorporated herein mutatis mutandis.

9.3

9.4

9.5

9.6

Assignment; Successors and Assigns. This Agreement and the rights granted hereunder may not be assigned by the Investor without the prior written consent of the Company; provided, however, that the rights to cause the Company to register Registrable Shares pursuant to this Agreement may be assigned by an Investor to a Permitted Transferee of the Investor’s Registrable Shares; and provided further that in each case the transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement. This Agreement and the rights granted hereunder may not be assigned by the Company without the prior written consent of the Investor. Any attempted assignment of this Agreement or the rights granted

hereunder in violation of this Section 9.6 shall be void ab initio. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto, their successors, heirs, legatees, devisees, permitted assigns, legal representatives, executors and administrators, except as otherwise provided herein.

9.7

9.8

9.9

9.10

Governing Law; Service of Process and Venue; Waiver of Jury Trial. Section 8.5 and 8.6 of the Warrant Agreement are incorporated herein mutatis mutandis.

9.11

9.12

9.13

General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a)

the terms defined in this Agreement include the plural as well as the singular, and the use of any gender or neuter form herein shall be deemed to include the other gender and the neuter form;

(b)

(c)

(d)

the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision;

(e)

the term “include”, includes” or “including” shall be deemed to be followed by the words “without limitation”;

(f)

(g)

any reference to dollars or “$” shall be deemed to refer to U.S. dollars.

9.14

9.15

[Signature Page Follows]

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

FREIGHTCAR AMERICA, INC.


By:	/s/ Michael A. Riordan
Name:	Michael A. Riordan
Title	Vice President, Finance, Chief Financial Officer and Treasurer

OC III LVS XXVIII LP


By:	/s/ Adam L. Gubner
Name:	Adam L. Gubner
Title	Authorized Person

EX-31.1

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: August 8, 2022	By:	/s/ JAMES R. MEYER
		James R. Meyer
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

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

I, Michael A. Riordan, 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: August 8, 2022	By:	/s/ MICHAEL A. RIORDAN
		Michael A. Riordan
		Vice President, Finance, Chief Financial Officer and Treasurer

EX-32

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 June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, James R. Meyer, President and Chief Executive Officer, and Michael A. Riordan, 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: August 8, 2022	By:	/s/ JAMES R. MEYER
		James R. Meyer
		President and Chief Executive Officer (Principal Executive Officer)




Date: August 8, 2022	By:	/s/ MICHAEL A. RIORDAN
		Michael A. Riordan
		Vice President, Finance, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

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

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