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Exhibit 10.21
WAIVER AND FIRST AMENDMENT
TO LASALLE CREDIT AGREEMENT,
FIRST AMENDMENT TO
SUBORDINATION AGREEMENT,
AND REAFFIRMATION OF
GUARANTIES
AND SUBORDINATION
AGREEMENT
This WAIVER AND FIRST
AMENDMENT TO LASALLE CREDIT AGREEMENT, FIRST AMENDMENT TO
SUBORDINATION AGREEMENT, REAFFIRMATION OF GUARANTIES AND
SUBORDINATION AGREEMENT, dated and effective as of December 17,
2004 (the “Agreement”), is executed by and among
JOHNSTOWN AMERICA CORPORATION, a Delaware corporation
(“JAC”), FREIGHT CAR SERVICES, INC., a Delaware
corporation (“Freight Car”), JAC OPERATIONS, INC., a
Delaware corporation (“JAC Operations”), JAIX LEASING
COMPANY, a Delaware corporation (“JAIX”; JAC
Operations, JAC, Freight Car and JAIX each being referred to herein
as a “Borrower” and collectively referred to herein as
the “Co-Borrowers”), FREIGHTCAR AMERICA, INC. (formerly
JAC HOLDINGS INTERNATIONAL, INC.), a Delaware corporation
(“JAC Holdings”), JAC INTERMEDCO, INC., a Delaware
corporation (“JAC Intermedco”), JAC PATENT COMPANY, a
Delaware corporation (“JAC Patent”; JAC Holding, JAC
Intermedco and JAC Patent each being referred to herein as a
“Guarantor” and collectively referred to herein as the
“Guarantors”), those individuals and entities
identified on Schedule A hereto (the “Junior
Creditors”) and LASALLE BANK NATIONAL ASSOCIATION
(“LaSalle”). The Co-Borrowers and Guarantors are
sometimes hereinafter referred to collectively as the “Credit
Parties.”
R E C I T A L S:
A. The Credit Parties have
entered into certain financing arrangements with LaSalle including
that certain Credit Agreement, dated as of September 11, 2003 (as
the same may be amended, supplemented, restated or otherwise
modified, the “Credit Agreement”) among Co-Borrowers
and LaSalle (the Credit Agreement and all documents executed in
connection therewith are referred to collectively as the
“Financing Documents”).
B. In connection with the
Credit Agreement, the Junior Creditors executed and delivered to
LaSalle that certain Subordination Agreement, dated as of September
11, 2003 in favor of LaSalle (as the same may be amended,
supplemented, restated or otherwise modified, the
“Subordination Agreement”).
D. At the present time the
Credit Parties request, and LaSalle is agreeable to waiving
violations by the Credit Parties of certain financial covenants and
making certain amendments to the Financing Documents, pursuant and
subject to the terms and conditions hereinafter set
forth.
NOW THEREFORE, in
consideration of the premises and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the Credit Parties, the Junior Creditors and LaSalle
hereby agree as follows:
A G R E E M E N T
S:
1 RECITALS . The
foregoing Recitals are hereby made a part of this
Agreement.
2 DEFINITIONS .
Capitalized words and phrases used herein without definition shall
have the respective meanings ascribed to such words and phrases in
the Financing Documents.
3 WAIVER OF DEFAULTED
COVENANTS . The Credit Parties have informed LaSalle that (i)
EBITDA for the Covenant Computation Periods ending June 30, 2004
and September 30, 2004 was less than the $8,500,000 required under
the Financing Documents; (ii) the Interest Coverage Ratio for the
Covenant Computation Periods ending March 31, 2004, June 30, 2004,
and September 30, 2004 was less than the allowed 3.75 to 1.00 set
forth in the Financing Documents; (iii) the Fixed Charge Coverage
Ratio for the Covenant Computation Periods ending March 31, 2004,
June 30, 2004, and September 30, 2004 was less than the allowed
1.15 to 1.00 set forth in the Financing Documents; and (iv) the
Leverage Ratio for the Covenant Computation Periods ending
September 30, 2004 was more than as allowed as set forth in the
Financing Documents (collectively, the “Defaulted
Covenants”). The Credit Parties agree and acknowledge that,
as a result of the occurrence of such Defaulted Covenants, an Event
of Default has occurred and is continuing under the applicable
Financing Documents. The Credit Parties have, therefore, requested
that LaSalle waive compliance by the Credit Parties with the
Defaulted Covenants for the Covenant Computation Periods ending
March 31, 2004, June 30, 2004, and September 30, 2004, as well as
the resulting Events of Default.
In addition, the Credit
Parties have informed LaSalle that (i) JAC Holdings intends to
increase the capitalization of JAC Holdings by means of selling
shares of its common stock, following the reclassification of JAC
Holdings’ Class A voting common stock and Class B nonvoting
common stock, through an underwritten initial public offering (the
“Offering”) and to file a Registration Statement on
Form S-1 with the Securities and Exchange Commission in connection
with the Offering; and (ii) the Credit Parties have forecasted that
the Credit Parties do not anticipate the ability to achieve
compliance with the minimum EBITDA, Fixed Charge Coverage, Interest
Rate Coverage Ratio or the Leverage Ratio for the Covenant
Calculation Period ending December 31, 2004, as originally set
forth in the Financing Documents or as amended by this Agreement
(the “Additional Defaulted Covenants”). The Credit
Parties have, therefore, requested that LaSalle waive compliance by
the Credit Parties with any Change of Control which is triggered as
a result of the Offering and with the Additional Defaulted
Covenants for the Covenant Computation Period ending December 31,
2004, as well as any resulting Events of Default.
LaSalle hereby waives: (a)
compliance by the Credit Parties with (1) the Defaulted Covenants
and the Additional Defaulted Covenants for the Covenant Computation
Periods ending March 31, 2004, June 30, 2004, September 30, 2004
and December 31, 2004 and (2) the Change of Control provisions with
respect to the Offering; (b) the Events of Default occurring by
reason of the Credit Parties’ failure to comply with the
Defaulted Covenants and the Additional Defaulted Covenants, solely
for the Covenant Computation Periods ending March 31, 2004, June
30, 2004, September 30, 2004 and December 31, 2004; (c) any Events
of Default occurring by reason of the Credit Parties’ failure
to comply with the Change of Control provisions, solely with
respect to the Offering; and (d) LaSalle’s remedies under the
Financing Documents with respect
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to the Defaulted Covenants and the
Additional Defaulted Covenant and the subsequent Events of Default,
including any Events of Default with respect to any failure to
comply with the Change of Control provisions due to the Offering.
This waiver shall be narrowly construed and shall neither extend to
any other violations under, or default of, the Financing Documents,
nor shall this waiver prejudice any rights or remedies which
LaSalle may have or be entitled to with respect to such future
violations or defaults.
4. AMENDMENTS TO THE
FINANCING DOCUMENTS .
4.1 Fixed Charge Coverage
Ratio .
(a) The definition of
“Fixed Charge Coverage Ratio” in the Credit Agreement
is hereby amended in its entirety to read as follows:
“Fixed Charge Coverage
Ratio” of the Consolidated Group means, with respect to any
Covenant Computation Date, the ratio (a) of the Consolidated
Group’s EBITDA plus expenses and/or settlement costs,
without duplication, of up to $9,200,000 in the aggregate related
to the Pending Employment Litigation plus non-cash expenses
relating to the Borrower’s employee stock option plan
plus the TTX Losses and minus the sum of the
Consolidated Group’s (i) Capital Expenditures (net of Capital
Expenditures made using the Consolidated Group’s cash not
financed by the Bank or another lender) and (ii) Cash Taxes, to (b)
the sum of the Consolidated Group’s (i) net Interest Expense,
(ii) Holding Company Note Payments to the extent such payments
exceed the Minimum Account Balance under the Securities Account
Pledge Agreement and only to the extent such Holding Company Note
Payments are permitted under this Agreement, the GE Capital Loan
Agreement, the Holding Company Subordination Agreement, and the
subordination granted GE Capital in connection with the GE Capital
Loan Agreement, (iii) GE Capital Loan Agreement Payments, (iv)
Capital Lease Payments, and (v) debt service on any Debt permitted
under Section 6.2. The one-time payment of $9,000,000 to be made
from proceeds of the GE Capital Loan Agreement concurrently with
the execution of such agreement shall not be included in the
calculation of Fixed Charge Coverage Ratio.
4.2 Interest Coverage
Ratio .
(a) The definition of
“Interest Coverage Ratio” in the Credit Agreement is
hereby amended in its entirety to read as follows:
“Interest Coverage
Ratio” of the Consolidated Group means, with respect to any
Covenant Computation Date, the ratio of (a) the Consolidated
Group’s EBITDA plus expenses and/or settlement costs,
without duplication, of up to $9,200,000 in the aggregate related
to the Pending Employment Litigation plus non-cash expenses
relating to the Borrower’s employee stock option plan
plus the TTX Losses minus Capital Expenditures (net
of Capital Expenditures made using the Consolidated
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Group’s cash not
financed by the Bank or another lender) minus Cash Taxes, to
(b) Interest Expense.
4.3 Leverage Ratio
.
(a) The definition of
“Leverage Ratio” in the Credit Agreement is hereby
amended in its entirety to read as follows:
“Leverage Ratio”
of the Consolidated Group means, with respect to any Covenant
Computation Date, the ratio of (a) the Consolidated Group’s
Funded Debt, to (b) the Consolidated Group’s EBITDA
plus expenses and/or settlement costs, without duplication,
of up to $9,200,000 in the aggregate related to the Pending
Employment Litigation, plus non-cash expenses relating to
the Borrower’s employee stock option plan plus the TTX
Losses; provided , however , that for purposes of
determining Status, (i) no expenses and/or settlement costs related
to the Pending Employment Litigation, (ii) no non-cash expenses
relating to the Borrower’s employee stock option plan, and
(ii) no TTX Losses shall be added to the Consolidated Group’s
EBITDA.
4.4 Payment Conditions
. The definition of “Payment Conditions” in Section 1.1
of the Credit Agreement is hereby amended in its entirety to read
as follows:
“Payment
Conditions” shall mean (a) no Default or Event of Default
shall be in existence or shall occur as a result of the proposed
payment on the Holding Company Notes and (b) the following tests
are met: (i) the Co-Borrowers are in compliance with the minimum
Fixed Charge Coverage Ratio requirements set forth in Section 5.11
for the two Covenant Computation Dates immediately preceding the
date of such proposed payment of the Holding Company Notes; (ii)
the Co-Borrowers are in compliance with the minimum EBITDA
requirements set forth in Section 5.9 for the four quarters
immediately preceding the date of the proposed payment of the
Holding Company Notes, with compliance under Section 5.9 being
re-determined as if the TTX Losses were not added to EBITDA; and
(iii) availability under the Credit Agreement shall equal or exceed
$15,000,000 on the date of (and after giving effect to) the
proposed payment of the Holding Company Notes. The determination of
compliance with the foregoing shall be made by the Bank in its good
faith judgment based upon information furnished by the Co-Borrowers
and in form and substance acceptable to the Bank and such other
information as the Bank shall request.
4.5 TTX . The
following new defined terms are hereby added to the definitions in
the Financing Documents in their appropriate alphabetical position
to read as follows:
“TTX” means TTX
Company, located at 101 N. Wacker Drive, Chicago, Illinois
60606.
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“TTX Losses”
means the losses in 2004 on order 1400-964 to manufacture boxcars
for TTX.
4.6 Terms Defined in
UCC . The following new Section 1.2 of the Credit Agreement
hereby added to the Credit Agreement immediately following Section
1.1 of the Credit Agreement:
Section 1.2 Other Terms
Defined in UCC . All other capitalized words and phrases used
herein and not otherwise specifically defined shall have the
respective meanings assigned to such terms in the UCC in effect
from time to time, including, without limitation, as amended by
Revised Article 9 as enacted in the State of Illinois, to the
extent the same are used or defined therein.
4.7 Minimum EBITDA
.
(a) Section 5.9 of the Credit
Agreement is hereby amended in its entirety to read as
follows:
Section 5.9 Minimum
EBITDA . As of each Covenant Computation Date, the Co-Borrowers
will achieve minimum EBITDA ( plus expenses and/or
settlement costs, without duplication, of up to $9,200,000 in the
aggregate related to the Pending Employment Litigation plus
non-cash expenses relating to the Borrower’s employee stock
option plan plus the TTX Losses) for the Consolidated Group
of not less than $8,500,000.
4.8 Application of
Offering Proceeds . Article V of the Credit Agreemet is amended
by inserting the following Section 5.14:
Section 5.14 Application
of Offering Proceeds . The Credit Parties covenant and agree
that the net proceeds of the Offering (as defined in the Waiver and
First Amendment to Lasalle Credit Agreement, First Amendment to
Subordination Agreement, Reaffirmation of Guaranties and
Subordination Agreement, dated and effective as of December 17,
2004) shall be used to, among other things, redeem all of the
outstanding indebtedness of the Credit Parties to (i) General
Electric Capital Corporation, (ii) LaSalle, and (iii) the Junior
Creditors on the closing date of the Offering.
5 AMENDMENT TO
SUBORDINATION AGREEMENT .
5.1 Payment Conditions
. The definition of “Payment Conditions” in Section 1
of the Subordination Agreement is hereby amended in its entirety to
read as follows:
“ Payment
Conditions ” shall mean (a) no Default or Event of
Default shall be in existence under the Credit Agreement or shall
occur as a result of the proposed payment and (b) the
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