Exhibit 10.32
*** Indicates materials have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission. A complete copy of
this Agreement has been filed with the Securities and Exchange Commission.

 

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March 4, 2005
Mr. Paul R. Brown, CPM
Staff Sourcing Specialist
Texas Genco, LP
12301 Kurland Drive
Houston, TX 77034

     
Subject:
  *** Aluminum BethGon® II Railcars for Texas Genco, LP.
 
  FreightCar America Inc. Proposal No. 04153 Revision A

Dear Mr. Brown:
In response to your inquiry, FreightCar America, Inc. (“FreightCar”) would be
pleased to sell *** new Aluminum BethGon® II Railcars (the “Railcars”) to Texas
Genco, LP (“Purchaser”), per the details listed below:

              Quantity   Car Type   Specification / Date   Price Per Railcar
***
  Aluminum BethGon® II
Railcars   X-04153 / February 14, 2005   $***
***
  Aluminum BethGon® II
Railcars   X-04153 / February 14, 2005   $***
***
  Aluminum BethGon® II
Railcars   X-04153 / February 14, 2005   $***
***
  Aluminum BethGon® II
Railcars   X-04153 / February 14, 2005   $***

The above price is FOB FreightCar’s Plant. Switching and transportation charges
are not included in the price, but can be prepaid by FreightCar and added to
your invoice at your request.
The requirements of the Association of American Railroads (AAR) and the United
States Department of Transportation (DOT) are incorporated in the Specification
for the Railcars. Should these requirements be changed, or should any other
regulatory requirements be imposed prior to delivery of the Railcars, the above
price will be adjusted upward or downward accordingly.
FRA 49 CFR 224 Reflectorization of Rail Freight Rolling Stock is scheduled to go
into effect for all Railcars delivered after May 31, 2005. As of the date of
this letter, the Railcar design offered herein complies with 49 CFR 224 as
currently defined by the FRA. Any additional costs associated with the ongoing
interpretation of 49 CFR 224 are for the account of the Purchaser.
The above proposal price is based upon our ability to obtain certain aluminum,
steel, specialties and other components used in the construction of the Railcars
at the costs included in our estimate. In the unforeseen instance that a
supplier is unable to provide the specified material, specialties and other
components at the costs included in our estimate, and substitute material,
specialties and other

 

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Mr. Paul R. Brown, CPM
March 4, 2005
Page 2
components are supplied the Price per Railcar will be adjusted accordingly. The
material, and casting and steel surcharge costs shown on Exhibit A are included
in the Price per Railcar and reflect our current estimate of the cost of these
items. The Price per Railcar will be adjusted upward or downward to reflect the
actual cost of the items shown on Exhibit A used to manufacture the Railcars.
Texas Genco, LP will be provided the documentation necessary to verify the
actual cost of these items.
DELIVERY: Subject to receipt of prior orders FreightCar can begin delivery of
the first *** Aluminum BethGon® II Railcars during the first week of *** 2006.
Subject to receipt of prior orders FreightCar can begin delivery of the
remaining *** Aluminum BethGon® II Railcars during the last week of *** 2006.
The cars are scheduled to be produced at *** .
This schedule is subject to the availability of castings and other components.
Given the tightness in the availability of castings and other components, there
is reason to be concerned that suppliers may not be able to maintain delivery
schedules.
TERMS: Net due upon receipt of invoice.
This proposal is valid for 70 calendar days and is subject to all respects to
the attached Terms and Conditions of Sale.
Please confirm your acceptance of this proposal by having an authorized officer
of Texas Genco, LP execute this letter agreement and the attached Terms and
Conditions of Sale and returning a copy to my attention within 70 calendar days
from the date of this letter.
FreightCar America, Inc. very much appreciates the opportunity to build these
Railcars for Texas Genco, LP. Should you have any questions concerning this
transaction, please contact me at 312-928-0874.
Very truly yours,
JOHNSTOWN AMERICA CORPORATION
/s/   Tim Johnson
By: Tim Johnson
Its: Vice President Sales — Western Region

 

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ACCEPTANCE BY PURCHASER:
Texas Genco, LP hereby acknowledges its acceptance of the offer to acquire the
Railcars described above, at the price and upon the terms and conditions set
forth herein and in the attached Terms and Conditions of Sale.
Texas Genco, LP

         
By:
       
 
 
 
   
 
       
Its:
       
 
       
 
       
Date:
       
 
       

Quantity of Railcars:

     
Attachments:
  EXHIBIT A
 
  Texas Genco, LP RFQ
 
  Specification X-04153
 
  Terms and Conditions
 
  Specialty Component List
 
  Colin Gibb
 
  EJW, WCH, plm, file

 

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EXHIBIT A
BethGon® II
Material Cost Subject to Adjustment Included in Per Car Price

                      Item   Weight/lbs.   $/lbs.     Cost   COST OF RAW
MATERIALS         Steel  
***
  $ ***     $ ***   Aluminum  
***
  $ ***     $ ***      
 
              Estimated Cost of Raw Materials at Time of Delivery   $ ***      
 
                MAJOR SPECIALTIES         Castings  
 
          $ ***   Forgings  
 
          $ ***   Airbrake (Includes Hoses)   $ ***   Miscellaneous Specialties
  $ ***   Polymers  
 
          $ ***   Coatings  
 
          $ ***   Fasteners  
 
          $ ***   *Wheel Sets  
 
          $ ***      
 
              Estimated Cost of Major Specialties on Date of Proposal   $ ***  
   
 
                SURCHARGES ON RAW MATERIALS         Steel  
 
          $ ***   Aluminum  
 
          $ ***   Estimated Surcharges on Raw Material at Time of Delivery   $  
     
 
                SURCHARGES ON MAJOR SPECIALTIES         Castings  
 
          $ ***   Wheels  
 
          $ ***   Axles  
 
          $ ***   Roller Bearings   $ ***   Springs  
 
          $ ***   Brake System  
 
          $ ***   Forgings  
 
          $ ***   Brake Beams  
 
          $ ***   Fasteners  
 
          $ ***   Miscellaneous         Estimated Surcharges on Major
Specialties at Time of Delivery   $ ***   Estimated Component and Surcharge Cost
Included in Per Car Price   $ ***      
 
             

 

*   Wheel Set Complete Includes Wheels, Axle, Bearings & Mounting

***

 

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FREIGHTCAR AMERICA, INC.
TERMS AND CONDITIONS OF SALE
FOR PROPOSAL NO.: 04153 Revision A
These Terms and Conditions of Sale are incorporated into and made a part of the
Proposal Letter dated March 4, 2005 (the “Proposal Letter”) from FreightCar
America, Inc. (“FreightCar”) to Texas Genco II, LP (“Purchaser”). These Terms
and Conditions of Sale, the Proposal Letter and the Specifications and Specialty
Component List (such Specifications and Specialty Component List being
collectively referred to as the “Specifications”) described therein are
hereinafter referred to as this “Agreement.”
Inspection and Acceptance: FreightCar shall give Purchaser, and/or its
designated agent, reasonable opportunity to inspect FreightCar’s manufacturing
procedures prior to commencement of the start of production of the first Railcar
and during production and the Railcars during the construction process at
FreightCar’s manufacturing facility in Danville, Illinois ( “FreightCar’s
Plant”) during normal operating hours or at such other time as may be mutually
agreed. Purchaser shall have its representative present for inspection of the
Railcars at FreightCar’s Plant prior to the start of production of the first
Railcar. Upon completion of each Railcar, Purchaser shall use its best efforts
to arrange to conduct a final inspection of such Railcar prior to the time such
Railcar is removed from the Final QA Acceptance Building at FreightCar’s Plant.
Such inspection will comply with the safety and inspection procedures specified
by FreightCar and will be conducted so as not to interfere unreasonably with
FreightCar’s operations, and acceptance of the Railcars by Purchaser will be
made before removal of such Railcars from the Final QA Acceptance Building at
FreightCar’s Plant. All storage, transportation and other costs incurred by
FreightCar as a result of any delay by Purchaser in inspecting or accepting the
Railcars shall be for Purchaser’s account. Purchaser, or its designated agent,
shall execute a certificate of inspection and acceptance (“Certificate of
Acceptance”) in the form of Exhibit A hereto covering all Railcars found to be
completed in accordance with the Specifications and shall deliver the executed
Certificate(s) of Acceptance to FreightCar. If, upon inspection of the Railcars
by Purchaser, the Railcars appear not to conform to the Specifications,
Purchaser will immediately notify FreightCar in writing of the condition and
give FreightCar a reasonable opportunity to correct the condition. Such
correction shall not relieve FreightCar of its obligation to adhere to the
production schedule agreed upon by the parties. Each designated agent and
representative selected by Purchaser to inspect the Railcars must be reasonably
acceptable to FreightCar. Prior to the inspection described herein, Purchaser
shall notify FreightCar of the name and company of the designated agent and
representative selected by Purchaser, and if such person(s) are not reasonably
acceptable to FreightCar, FreightCar shall promptly notify Purchaser. FreightCar
shall pre-register the Railcars in UMLER and shall, at the reasonable request of
Purchaser (and at no cost to FreightCar), make any other required initial
filings and registrations of the Railcars.
Price: The purchase price to be paid by Purchaser to FreightCar for each Railcar
purchased by Purchaser pursuant to this Agreement is set forth in the Proposal
Letter and is based upon FreightCar’s ability to obtain certain aluminum, steel,
specialties and other components used in the construction of the Railcars. In
the unforeseen instance that a supplier is unable to provide the specified
material, specialties and other components and substitute material, specialties
and other components are supplied the price per Railcar will be adjusted
accordingly. The material and casting and steel surcharge costs shown on
Exhibit A to the Proposal Letter are included in the price per Railcar and
reflect FreightCar’s current estimate of these items. The price per Railcar will
be adjusted upward or downward to reflect the actual cost of the items shown on
Exhibit A to the Proposal Letter used to manufacture the Railcar. Upon
Purchaser’s request from time to time, FreightCar shall provide to Purchaser any
updated price information relating to the Railcars. If the purchase price of the
Railcars exceeds by more than ***% the purchase price for such Railcars
contained in the Proposal Letter, Purchaser shall, upon

 

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notice to FreightCar, within ten (10) days of being notified of such purchase
price increase, have the right to cancel this Agreement with respect to the
Railcars subject to such price adjustment, without cost or penalty to Purchaser
or FreightCar.
If the final purchase price (after application of the aforementioned adjustment)
is different than the price set forth in the Proposal Letter, upon Purchaser’s
request, the final purchase price is subject to confirmation by an independent
auditor acceptable to both parties (“Auditor”). Such confirmation will take
place at a mutually acceptable time. The parties agree that information used to
determine the final purchase price (“Information”) is the confidential and
proprietary property of FreightCar and such Information shall be made available
only to the Auditor, subject to the Auditor’s execution of a confidentiality
agreement acceptable to FreightCar, solely for the purpose of confirming such
final purchase price. The Auditor shall not disclose any Information to
Purchaser, but shall confirm its agreement with FreightCar’s calculation of the
final purchase price, or in the event it disagrees with such calculation, shall
provide to both parties a revised final purchase price with such revised final
purchase price being binding on both parties. The cost of the Auditor shall be
borne by Purchaser unless the final purchase price is more than *** lower than
the adjusted purchase price originally submitted by FreightCar, in which case
the cost of the Auditor will be borne by FreightCar.
Payment: Following delivery by Purchaser to FreightCar of a Certificate of
Acceptance for a Railcar, title to such Railcar shall pass to Purchaser, and
FreightCar shall deliver to Purchaser a bill of sale for such Railcar which
shall retain for FreightCar a security interest in such Railcar as further
described in the following sentence. FreightCar shall retain, and Purchaser does
hereby grant to FreightCar, as security for payment of such accepted Railcars
and fulfillment of its obligations to FreightCar hereunder, a purchase money
security interest in such Railcars and the rentals, earnings, products, proceeds
and accessions of and to any of such Railcars, together with all right, title
and interest of Purchaser therein and all rights and remedies which Purchaser
might exercise with respect thereto but for the execution of this Agreement.
Purchaser acknowledges that this Agreement shall constitute a security agreement
between the parties and that FreightCar shall be vested with all of the rights
and remedies available to a secured party under the Uniform Commercial Code in
effect in the State in which FreightCar’s Plant is located upon a default by
Purchaser hereunder, including, without limitation, the right to foreclose upon
and take possession of the Railcars pursuant to public or private sale. Prior to
delivery of any of such Railcars to Purchaser, Purchaser will execute and return
to FreightCar a Memorandum of Railcar Security Agreement (“Memorandum”) covering
the Railcars in form satisfactory to FreightCar and suitable for filing with the
Surface Transportation Board (“STB”). Following receipt by FreightCar of payment
for a Railcar, FreightCar will file with the STB a termination of the Memorandum
with respect to such Railcar and deliver such other evidence of clear title as
Purchaser shall reasonably request. Not less than five (5) days prior to the
completion of the final Railcar in a trainset, FreightCar shall invoice
Purchaser for the Railcars in such trainset and Purchaser shall pay the purchase
price for the Railcars in such trainset, as hereinafter provided, upon
acceptance, by Purchaser at FreightCar’s Plant, of the final Railcar in such
trainset. Purchaser shall make such payment of the purchase price for such
Railcars in the form of a wire transfer of immediately available U.S. funds, in
accordance with the instructions from FreightCar, provided that Purchaser shall
make such wire transfer no later than (i) the business day following the day on
which Purchaser receives, before 2:00 p.m. Central Time, the Certificate of
Acceptance for the final Railcar in such trainset (the “Final Certificate”) or
(ii) the second business day following the day on which Purchaser receives,
after 2:00 p.m. Central Time, the Final Certificate; provided further that
FreightCar shall have no obligation to deliver such Railcars to the Connection
Point (as hereinafter defined) until FreightCar has confirmed receipt of such
wire payment. If all or any portion of the purchase price for the Railcars is
not paid to FreightCar when due, such nonpayment shall result in the additional
obligation on the part of Purchaser to pay interest to FreightCar on the unpaid
amount, on demand, at the applicable Prime Rate, as reported by The Wall Street
Journal. If Purchaser shall not make payment as aforesaid, Purchaser agrees to
execute such instruments and to take such other action as shall be reasonably
requested by FreightCar to vest in FreightCar or its designee good and

 

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marketable title to such Railcars, free and clear of all liens, claims and
encumbrances arising by, through or under Purchaser, and, at FreightCar’s
option, possession and control of the Railcars, whereupon FreightCar may, at its
election, terminate this Agreement and sell, lease, retain or otherwise dispose
of such Railcars.
Credit Approval: If, subsequent to the date hereof, a material adverse change in
Purchaser’s creditworthiness, financial condition or prospects occurs, as
reasonably determined by FreightCar, FreightCar may cease the ordering or
accepting of materials to build the Railcars and cease the manufacture of the
Railcars until FreightCar has received from Purchaser a monetary deposit of up
to ***, as requested by FreightCar, or other assurances of payment satisfactory
to FreightCar.
Delivery: Following Purchaser’s delivery of a Certificate of Acceptance, at the
request of Purchaser, FreightCar shall arrange to deliver such accepted Railcars
from FreightCar’s Plant to the railroad connection contiguous to FreightCar’s
Plant (the “Connection Point”). The purchase price set forth in this Agreement
is FOB FreightCar’s Plant. All movement of the Railcars, following their initial
delivery by FreightCar to the Connection Point, shall be at the cost and risk of
Purchaser. Delayed delivery of the Railcars due to an event of Force Majeure (as
defined below) shall be without penalty or cost to FreightCar. Notwithstanding
any other provision to the contrary, FreightCar acknowledges that Purchaser is
purchasing the Railcars to replace certain railcars that Purchaser currently
leases, and that said lease, and Purchaser’s right to use the railcars pursuant
thereto expires in conjunction with Purchaser’s purchase of the Railcars from
FreightCar. Should FreightCar fail to deliver any Railcar by the thirtieth
(30) day after the date shown on Exhibit B, and such failure is not excused by
an event of Force Majeure, FreightCar shall, at its option, (i) pay any
reasonable costs associated with Purchaser securing temporary replacement
railcars or (ii) supply Purchaser with replacement railcars at FreightCar’s sole
expense.
Specifications and Changes: The Railcars shall be constructed in accordance with
the Specifications. The Specifications shall comply with the applicable
published requirements of the Federal Railroad Administration (“FRA”) and the
Association of American Railroads (“AAR”) in effect on the date of manufacture
of the Railcars. If it shall become impossible or impracticable for FreightCar
to secure the materials required for the manufacture of the Railcars in exact
accordance with the Specifications, including without limitation by reason of
any subsequent interpretation of or changes to such FRA or AAR requirements,
FreightCar may, upon notice to Purchaser, make changes in the Specifications not
materially affecting the strength, size, capacity or efficiency of the Railcars
for railroad use and interchange, provided that FreightCar shall not substitute
any of the materials identified in FreightCar’s Specialty Component List without
Purchaser’s consent. If such change will result in an increase in the cost to
FreightCar over the anticipated cost to produce the Railcar without giving
effect to such change, the purchase price for the Railcars shall be adjusted to
reflect such increased cost, provided that FreightCar shall obtain the prior
written consent of Purchaser to such adjustment. If Purchaser fails to consent
to such adjustment, FreightCar shall have the right to cancel this Agreement
without penalty to either party. Any other changes in the Specifications desired
by either party must be requested in writing and specify the amount of any
adjustment in the purchase price (as determined by FreightCar), and must be
approved in writing by the other party. Each party agrees that it will not
unreasonably withhold its consent to any requested change by the other.
FreightCar is under no obligation to arrange for shipment and acceptance of any
required materials in advance of FreightCar’s needs.
Permissible Tolerances: Except in the particulars specified by Purchaser and
expressly agreed to in writing by FreightCar, all Railcars will be manufactured
in accordance with FreightCar’s standard practices and will be subject to
tolerances and variations consistent with usages of the trade and regular
practices including deviations from tolerances and variations consistent with
practical testing and inspection methods.

 

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Force Majeure: An event of “Force Majeure” shall include extraordinary and
unforeseeable occurrences such as strikes, lockouts or other labor disturbances,
shortages or late delivery of material (due to no fault of FreightCar);
unavailability, interruptions or inadequacy of fuel supplies; acts of God; war,
preparation for war or other acts or interventions of naval or military
personnel or other agencies of government; governmental rules or regulations (or
interpretation of or changes to the existing rules or regulations); priorities
given to defense orders; riot, embargoes, sabotage, act of terrorism, vandalism,
malicious mischief, landslides, floods, hurricanes, earthquakes, collisions,
fires or other calamities; delays of carriers (due to no fault of FreightCar);
shortages of labor, non-delivery and/or late delivery of any Purchaser-furnished
supplies, material, equipment or labor, including plans, drawings or
engineering; delays due to changes by Purchaser in drawings or specifications or
any circumstance or cause beyond the reasonable control of FreightCar in the
conduct of its business. Notwithstanding the foregoing, FreightCar shall, during
any period of Force Majeure, exercise such diligence as the circumstances
reasonably require.
Risk of Loss: FreightCar shall bear all risks of physical loss of the Railcars
at FreightCar’s Plant and until receipt by FreightCar of the Certificate of
Acceptance from Purchaser for such Railcars (such date of receipt being
hereinafter referred to as the “Transfer Date”) and delivery of Railcars to the
Connection Point. From and after the Transfer Date for a Railcar, and after
delivery of a Railcar to the Connection Point, Purchaser shall bear all risk of
loss of such Railcar. Notwithstanding the foregoing, FreightCar shall not be
responsible for any loss or damages to property (including the Railcars) or
injury to or death of any person arising out of or in connection with any
Railcar (including, without limitation, any inspection of such Railcar) prior to
the Transfer Date when such loss, damage or death is caused by the actions of
Purchaser’s or any of Purchaser’s affiliated corporation’s officers, managers,
directors, employees, inspectors, representatives or agents. If, for any reason,
FreightCar does not receive a Certificate of Acceptance for a Railcar, then the
Transfer Date for such Railcar shall mean the date on which such Railcar is
first delivered by FreightCar to the Connection Point.
Warranty:
     (a) FreightCar warrants that all goods and services sold hereunder or
pursuant hereto will be free of any claims of any nature by any third person
(other than claims, liens, security interests and encumbrances arising by,
through or under Purchaser) and that, upon delivery of the Bill of Sale with
respect to a Railcar, FreightCar will convey to Purchaser good and marketable
title to such Railcar, free and clear of all claims, liens, security interests,
encumbrances and rights of others of any nature whatsoever (other than claims,
liens, security interests and encumbrances arising by, through or under
Purchaser).
     (b) FreightCar warrants that each Railcar will be free from defects in
material and workmanship under normal use and service for a period of *** from
the Transfer Date of such Railcar by Purchaser. With respect to parts and
materials manufactured by others and incorporated by FreightCar in the Railcars,
such parts and material shall be covered only by the warranty, if any, of the
manufacturer thereof, and FreightCar shall assign to Purchaser any such
warranty, to the extent assignable by FreightCar, and FreightCar will cooperate
with Purchaser to assist in enforcing any such warranty not so assigned at its
own expense. FreightCar shall not provide any other relief or warranty with
respect to such parts and materials. FreightCar’s obligations with respect to
any Railcar for breach of this warranty, whether or not due to FreightCar’s
negligent acts or omissions, is limited to either replacement or repair, which
option shall be mutually agreed upon by the parties and which Purchaser shall
not unreasonably withhold agreement, of such non-conforming or defective
component (or Railcar) on Purchaser’s normal route of railcar movement, but at
all time subject to FreightCar’s prior approval of the respective repair shop or
facility. FreightCar’s agreement set forth above to repair or replace defective
parts and materials (other than with respect to parts and materials manufactured
by others and incorporated by FreightCar in the Railcars, the remedy for which
is provided for above in this Warranty section) shall be Purchaser’s sole and
exclusive remedy with respect to the Railcars that are defective in any respect
or

 

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that fail to conform to the Specifications or to any express or implied
warranty, and FreightCar will not in any event be liable for the cost of any
transportation charges expended on or in connection with the repair, replacement
or return of any component (or Railcar) or for any special, indirect, incidental
or consequential damages. FreightCar’s warranty set forth in this Warranty
section shall be void and of no force and effect if repairs made to the Railcar
are not made in conformity with FreightCar’s Specifications or, if in the
process of making repairs to the Railcar, parts originally manufactured by
FreightCar (including, without limitation, all car body components, such as side
stakes, top chords, side sills, end posts, tubs, gate systems, etc.) are removed
and not replaced with like parts manufactured by FreightCar. FreightCar shall
provide to Purchaser copies of the warranties received by FreightCar on parts
and materials purchased by FreightCar from the manufacturers and suppliers
listed on Exhibit C hereto and any manufacturers or suppliers substituted
therefore after the date of this Agreement.
THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
PURCHASER ACKNOWLEDGES THAT ITS SOLE REMEDY FOR BREACH OF THIS WARRANTY BY
FREIGHTCAR IS AS PROVIDED ABOVE AND FREIGHTCAR SHALL NOT BE LIABLE IN TORT, FOR
NEGLIGENCE OR STRICT LIABILITY OR FOR LOSS OR INTERRUPTION OF USE, PROFIT OR
BUSINESS OR ANY OTHER INCIDENTAL OR CONSEQUENTIAL INJURY OR DAMAGE, ALL OF WHICH
ARE EXPRESSLY WAIVED AND RELEASED BY PURCHASER.
FREIGHTCAR’S OBLIGATIONS UNDER THIS WARRANTY ARE CONDITIONED UPON COMPLIANCE BY
PURCHASER AND ALL OTHER USERS OF THE RAILCARS WITH OPERATION, LOADING, USE,
HANDLING, MAINTENANCE AND STORAGE IN ACCORDANCE WITH GOOD COMMERCIAL PRACTICES
OF THE RAILROAD INDUSTRY. FREIGHTCAR SHALL NOT BE RESPONSIBLE FOR FAILURES
CAUSED BY MISLOADING, OVERLOADING, OVERHEATING, IMPROPER CLEANING, PHYSICAL
ABUSE, ACCIDENT, DERAILMENT OR FOR OTHER DAMAGE CAUSED BY FIRE, FLOOD OR OTHER
EXTERNAL CONDITIONS UNRELATED TO THE MANUFACTURE OF THE RAILCAR OR FOR NORMAL
WEAR AND TEAR.
Representations and Warranties:
          (a) FreightCar represents and warrants that the Railcars manufactured
pursuant to this Agreement will meet all published U.S. laws, rules and
regulations governing the manufacture of railcars in effect on the date of
manufacture of the Railcars, including, but not limited to, the applicable
published requirements of the Federal Railway Administration and the Association
of American Railroads. FreightCar represents that it is in material compliance
with all such laws, regulations and orders applicable to FreightCar.
          (b) FreightCar and Purchaser each hereby represent and warrant to the
other that: (a) it is incorporated or registered and existing in good standing
as a corporation or limited partnership, as the case may be, under the laws of
the state in which it is organized and all states in which it is authorized to
do business, with full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder; (b) neither the execution
and delivery of this Agreement by it, nor the performance of its obligations
hereunder, will result in any violation of its certificate of incorporation or
bylaws, or its Certification of Formation on limited partnership agreement, as
applicable; and (c) this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency and other similar laws affecting creditors’
rights generally, and to equitable principals of general applicability.

 

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          (c) The representations and warranties contained in this Agreement
shall survive the execution, delivery and performance of this Agreement, subject
to the applicable statute of limitations period.
Non-Disclosure: The parties each agree that the provisions of this Agreement
shall not be disclosed to any person other than the parties’ directors,
managers, officers, employees, affiliates, agents (including consultants,
auditors and accountants, but excluding any manufacturer of railcars or
components or affiliate thereof) or legal counsel (herein “Purchaser’s or
FreightCar’s representatives”), who shall be subject to the non-disclosure
provisions contained herein; except (i) upon the written consent of the other
party, (ii) to any federal, state or local governmental agency to whose
jurisdiction a party is subject pursuant to regulation, regulatory body policy,
order of court or order of administrative judge or hearing examiner (provided,
however, that unless specifically required by law, neither party shall provide
the Price for the Railcars or any other terms of conditions of sale to the STB,
including without limitation in any filing made with the STB), (iii) in response
to warrant, subpoena, interrogatory, investigative demand or other legal process
in any legal proceeding, including a proceeding for enforcement of this
Agreement, (iv) to any third party or parties for the purpose of financing the
Railcars or the debt of the Purchaser, provided, that, prior to such disclosure
each such party agrees to be bound by the terms of this agreement of
non-disclosure, and provided, further, that any breach by such third party shall
be deemed to be a breach by Purchaser of this Agreement, or (v) in connection
with any filings made to the Securities and Exchange Commission. In situations
(ii), (iii) or (v) above, when disclosure is to be made to any person other than
Purchaser’s or FreightCar’s representatives, the disclosing party shall use
reasonable efforts to notify the other party of its intent to disclose such
information so that the other party may, if it so elects, seek an appropriate
protective order or other appropriate relief to avoid or limit such disclosure.
In situation (iv) above, no disclosure by Purchaser shall be made to any
manufacturer of railcars or components or affiliate thereof.
Drawings: All drawings and technical material, including specifications,
descriptions and tolerances relating to the Railcars or any components thereof
supplied by FreightCar to Purchaser pursuant to the Specifications (the
“Drawings”) are the exclusive property of FreightCar and contain confidential
and proprietary information. By accepting the Drawings from FreightCar,
Purchaser agrees to limit its use of the Drawings solely to matters relating to
Purchaser’s use of the Railcars, including the repair and maintenance of the
Railcars. Purchaser further agrees not to disclose the Drawings, or to disclose
any information contained in or derived from the Drawings, to any person,
including, but not limited to, any other manufacturer of railcars or components
or affiliate thereof; provided, however, that Purchaser may provide the Drawings
to a car repair shop for the sole purpose of maintaining and repairing the
Railcars, provided that such car repair shop agrees in advance in writing to be
bound by the terms of the confidentiality provisions contained herein and,
provided further, that any breach of such agreement by such car repair shop
shall be deemed a breach by Purchaser of this Agreement.
Sales Tax: Notwithstanding anything herein this Agreement to the contrary,
Purchaser shall pay, and shall indemnify and hold FreightCar harmless against,
all state or local sales, use or related taxes arising out of this transaction
which FreightCar may be required to pay or collect with respect to this
Agreement.
Order Cancellation: The Railcars to be manufactured by FreightCar for Purchaser
pursuant to this Agreement are to be built to order and Purchaser’s purchase
commitment contained herein is non-cancellable. Notwithstanding the foregoing,
if Purchaser, for whatever reason, cancels its order, it shall upon demand pay
to FreightCar, as liquidated damages and not as a penalty, all costs theretofore
incurred by FreightCar in the manufacture of the Railcars, including, without
limitation, labor costs, and the costs of material, components and supplies
ordered by FreightCar to fulfill this Agreement (net of the fair market salvage
value of such material, components or partially manufactured Railcars), together
with FreightCar’s lost profits, if any, attributable to the cancellation of
Purchaser’s purchase commitment (provided, however, that FreightCar shall not be
entitled to any such lost profits if FreightCar sells the Cars to a third party
for a purchase price which

 

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equals or exceeds the purchase price for the Cars which would have been paid by
Purchaser had Purchaser not cancelled this Agreement), all as reasonably
calculated by FreightCar.
Patents: FreightCar will indemnify Purchaser against any judgment for damages
and costs which may be rendered against Purchaser in any suit brought as a
result of the alleged infringement of any United States patent by any Railcar
supplied by FreightCar, unless made in accordance with materials, designs or
specifications furnished or designated by Purchaser, in which case Purchaser
will indemnify FreightCar against any judgment for damages and costs which may
be rendered against FreightCar in any suit brought as a result of the alleged
infringement of any United States patent by such Railcar as a consequence of
such materials, designs or specifications; provided that prompt written notice
be given to the party from whom indemnity is sought and that an opportunity be
given to that party to settle or defend such action as that party may see fit
and that each party render to the other party every reasonable assistance in
settling or defending such action. Neither party will be liable to the other for
special, indirect, incidental or consequential damages arising out of or
resulting from infringement of patents. In the event the Railcars are held to
constitute infringement for which FreightCar has agreed to indemnify Purchaser
hereunder and the use of the Railcars, or any part thereof, is enjoined,
FreightCar shall, at its option and expense, either procure for Purchaser the
right to continue using said Railcar, replace same with non-infringing equipment
of like kind and quality, modify said Railcar so that it becomes non-infringing
or refund the purchase price of said Railcar (following the return of such
Railcar by Purchaser to FreightCar’s Plant).
Assignment: Neither FreightCar nor Purchaser may assign all or any portion of
its rights or obligations under this Agreement without the prior written
approval of the other party, which shall not be unreasonably withheld; provided,
however, that notwithstanding the foregoing, FreightCar may assign its right to
receive any or all payments due hereunder to a third party without the approval
of Purchaser. In connection with Purchaser’s financing of the Railcars,
Purchaser shall provide to FreightCar sufficient opportunity to review and
approve any assignment documents which the financing source requests be executed
by FreightCar. Such assignment documents shall provide that (i) Purchaser shall
remain liable to FreightCar in accordance with this Agreement (including,
without limitation, the obligation to pay the purchase price for the Railcars)
to the extent such obligations are not fully and timely performed by such
assignee, and (ii) nothing contained in such assignment shall be deemed to
modify FreightCar’s rights or obligations under this Agreement.
Binding Effect: This Agreement shall be binding upon and inure to the benefit of
FreightCar and Purchaser and to their respective successors and permitted
assigns.
Notices: All notices, demands, requests and other communications required or
permitted under this Agreement shall be in writing or by a telecommunications
device capable of creating a written record, and shall become effective:
(a) upon personal delivery thereof, including, without limitation, by overnight
mail and courier service, (b) five (5) days after the date on which it shall
have been mailed by United States mail (certified mail, postage prepaid, return
receipt requested), or (c) in the case of a communication by a
telecommunications device, when properly transmitted during normal business
hours (or if not, then on the following business day) addressed to each party at
its address or facsimile number set forth on the signature page of the body of
this Agreement or at such other address or facsimile number as such party may
have specified previously by notice delivered in accordance with this section.
Entire Agreement; No Third Party Beneficiaries: This Agreement (which includes
these Terms and Conditions of Sale, the Proposal Letter and the Specifications
and the exhibits and attachments hereto and thereto) contains the entire
agreement of FreightCar and Purchaser with respect to the subject matter hereof
and supersedes all prior written or oral agreements of the parties. This
Agreement is not intended to confer upon

 

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any person other than the parties hereto, any rights or remedies, and shall not
be enforceable by any person or entity who or which is not a party hereto.
Professional Fees and Brokerage Fees: Each party to this Agreement shall be
responsible for all professional fees and brokerage fees, if any, incurred by
such party in connection with the transaction evidenced by this Agreement.
Disclaimer of Special or Punitive Damages: Notwithstanding anything in this
Agreement to the contrary, in no event shall any party to this Agreement be
obligated to any other party for any punitive or special damages arising from
any breach or violation of this Agreement.
Severability: Any provision of this Agreement that is inoperative, unenforceable
or invalid in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of the operation, unenforceability or invalidity without affecting
the remaining provisions of this Agreement or affecting the operation,
enforceability or validity of that provision in any other jurisdiction.
Amendments, Waiver: None of the terms of this Agreement may be waived or
modified except in writing signed by both FreightCar and Purchaser. Any
additional or different terms or conditions proposed by Purchaser are rejected
unless expressly assented to in writing by FreightCar. No waiver of any of the
provisions of this Agreement by either party shall constitute a waiver of any
other provision nor shall any such waiver constitute a continuing waiver.
Miscellaneous: The section headings contained in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement. This Agreement may be executed
in multiple counterpart copies, all of which taken together shall be deemed one
original for all purposes.
Governing Law and Jurisdiction: This Agreement shall be governed by, and
construed according to, the laws of the State of Illinois, without regard to its
conflict of laws doctrine. FreightCar and Purchaser hereby submit to the
jurisdiction of, and waive any venue objections against, the United States
District Court for the Northern District of Illinois (or any court of the State
of Illinois located in such district) in any litigation arising out of this
Agreement.
Interpretation: To the extent there is a conflict between the provisions of the
Proposal Letter and these Terms and Conditions of Sale, the provisions of the
Proposal Letter shall govern.
[SIGNATURE PAGE TO FOLLOW]

 

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ACCEPTANCE:
FreightCar and Purchaser hereby acknowledge their acceptance of the above
described Terms and Conditions of Sale.

                      FREIGHTCAR AMERICA, INC.   TEXAS GENCO II, LP    
 
                   
 
          By:   New Genco GP, LLC, its general partner      
By:
  /s/ Sean Hankinson       By:   /s/ Jack Fusco    
Its:
 
 
Product Line Manager       Its:  
 
Jack Fusco, President    
 
                   
Date:
  October 5, 2005       Date:   September 30, 2005    
 
                   

     
Address:
  Address:
FreightCar America, Inc.
  Texas Genco II, LP
17 Johns Street
  1301 McKinney, Suite 2300
Johnstown, PA 15901
  Houston, TX 77010
Attention: Sean Hankinson, Product Line Manager
  Attention: Colin Gibb, Transportation Specialist
Fax: 814/533-5010
  Fax: 713/795-7441

 

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EXHIBIT A
CERTIFICATE OF ACCEPTANCE

         
Type of Railcars:
       
 
     
Place Accepted:
       
 
     
Date Accepted:
       
 
     
Number of Railcars:
       
 
     
Reporting Marks:
       
 
     

              Car Numbers   Car Weights   Car Numbers   Car Weights
 
           
 
           
 
           
 
           
 
           
 
           
 
           
 
           
 
           

I have been appointed as the duly authorized representative of TEXAS GENCO II,
LP (“Purchaser”) for the purpose of inspecting and accepting the units of
railroad equipment described above (the “Railcars”), which are referred to in
the agreement dated as of ___, 2005 (the “Agreement”), between FREIGHTCAR
AMERICA, INC. (“Builder”) and Purchaser.
I hereby certify that with respect to the Railcars:

  A.   Each Railcar has been inspected and is in good order.     B.   Based on
my determination that each Railcar is in compliance with all applicable
Specifications (as defined in the Agreement), each Railcar is hereby accepted
for all purposes of the Agreement.

         
 
       
 
  Authorized Representative of Purchaser    

 

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EXHIBIT B
FINAL DELIVERY DATE FOR THE RAILCARS
***

 

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EXHIBIT C
COMPONENT WARRANTIES
Attached are copies of warranties from the following manufacturers and
suppliers:
ASF-Keystone, Inc.
ZefTek, Inc.
Cardwell Westinghouse Co./Universal Railway Devices Co.
A. Stucki Company
New York Air Brake Corporation
Miner Enterprises Inc.
Schaefer Equipment, Inc.
Strato
Klasing Industries, Inc. d/b/a Klasing Hand Brake Company
Union Spring & Manufacturing Corp.
Holland
Brenco
Standard Forged Products, Inc.
Additional warranties may be added from time to time.

 

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August 31, 2005
FreightCar America Inc.
17 Johns Street
Johnstown, PA 15901

     
Re:
  Aluminum BethGon® II Railcars for Texas Genco II, LP.,
 
  FreightCar America Inc. Proposal No. 04153 Revision A

Gentlemen:
     Texas Genco II, LP (“Texas Genco”) hereby confirms that it intends to
purchase (the “Transaction”) from FreightCar America Inc. (“FreightCar America”,
and together with Texas Genco, the “Parties”, and each, a “Party”) an additional
*** Aluminum Outside Stake BethGon II® open top coal railcars conforming to
Specification X-04153 dated February 14, 2005 (“Specification”), and provided by
FreightCar America (f/k/a Johnstown America Corporation) to Texas Genco, for a
total of *** railcars. The price per railcar shall be as outlined in your
proposal dated March 4, 2005, FOB FreightCar America’s plant in *** . Delivery
shall begin no later than the first week of *** 2006 for the first *** railcars.
An additional delivery of *** railcars shall occur in *** and *** 2006. An
additional delivery of *** railcars and a final delivery of *** railcars shall
be completed by *** 2006 and *** 2007, respectively.
     The Transaction is subject to mutual agreement between Texas Genco and
FreightCar America on the terms and conditions of the Transaction, including
pricing on, and changes to, the Specialty Component List. Accordingly, the
Parties intend that no legally binding obligations shall arise between them
under this letter. Such obligations shall arise only to the extent set forth in
a purchase agreement duly executed and delivered by each Party. Notwithstanding
the foregoing, unless and until the negotiations required by the following
sentence have been had and discontinued, FreightCar America shall not enter into
any agreement that would require it to deliver railcars to any third party on a
schedule that would prevent it from delivering the railcars contemplated by this
letter to Texas Genco on the schedule set forth above. Notwithstanding the
aforementioned required board approval, Texas Genco and FreightCar America shall
use commercially reasonable efforts to negotiate and agree on the terms and
conditions within 30 days of the date of this letter. Should the Parties fail to
enter into such terms and conditions within 30 days of the date of this letter,
FreightCar America shall not be barred from entering into an agreement that
would require it to deliver railcars to a third party on a schedule that would
prevent it from delivering the railcars according to the schedule contemplated
by the Parties.

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     Please confirm by signing a copy of this letter in the space provided below
and returning it to the undersigned that this letter of intent is sufficient to
allow FreightCar America to take all action required to assure that the railcars
that are the subject of the Transaction can be delivered on the schedule set
forth above.
     Please call if you have any questions or would like to discuss the matter.

                      FREIGHTCAR AMERICA INC.       TEXAS GENCO II, LP    
 
                                By: New Genco GP, LLC, its general partner    
 
                   
By:
  /s/Tim Johnson       By:   /s/Tyler Reeder    
 
                    Name: Tim Johnson       Name: Tyler Reeder     Title: VP —
Sales, Western Region       Title: 8/31/05    

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