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Exhibit 10.22
WAIVER AND AMENDMENT TO
PURCHASE AGREEMENT
This WAIVER AND AMENDMENT TO
PURCHASE AGREEMENT (“Waiver and Amendment”), dated and
effective as of December 17, 2004 (the “Amendment Effective
Date”), is executed by and among FREIGHTCAR AMERICA, INC.,
formerly JAC Holdings International, Inc., a Delaware corporation
(“Company”) and the Purchasers identified on
Schedule A hereto (the “Purchasers”).
R E C I T A L S:
A. Company and Purchasers
entered into that certain Purchase Agreement, dated as of June 3,
1999 among Credit Parties and Purchasers, as amended pursuant to
that certain Waiver and Amendment No. 1 to Purchase Agreement dated
September 11, 2004 (as the same may be amended, supplemented,
restated or otherwise modified, the “Purchase Agreement, and,
together with all documents executed in connection therewith, the
“Financing Documents”).
B. Company requests and
Purchasers are 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, Company and Purchasers 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 Waiver and
Amendment.
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 . Company has informed the Purchasers that (i) EBITDA
for the Covenant Computation Periods ending June 30, 2004 and
September 30, 2004 was less than the $6,500,000 required under the
applicable 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 3.50
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 1.05 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”). Company agrees and acknowledges that, as a
result of the occurrence of such Defaulted Covenants, an Event of
Default has occurred and is continuing under the Financing
Documents. Company has, therefore, requested that Purchasers waive
compliance 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, Company has
informed Purchasers that Company has forecasted that Co-Borrowers
(as defined in the Purchase Agreement) 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 (the
“Additional Defaulted Covenants”). Company has
therefore requested that Purchasers waive compliance with the
Additional Defaulted Covenants for the Covenant Computation Period
ending December 31, 2004.
Purchasers hereby waive: (a)
compliance with 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 (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 and (c) Purchasers’
remedies under the Financing Documents with respect to the
Defaulted Covenants and the Additional Defaulted Covenant and the
subsequent Events of Default. 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 the Purchasers may have or
be entitled to with respect to such future violations or
defaults.
4. AMENDMENTS TO THE
FINANCING DOCUMENTS .
(a) Purchasers acknowledge
and agree that the financial covenants contained in Section 7.14 of
the Purchase Agreement shall be calculated in a manner consistent
with the Revolving Facility (as defined in the Purchase Agreement),
in each case, as the Revolving Facility (as amended pursuant to
that certain Waiver and First Amendment to LaSalle Credit
Agreement, First Amendment to Subordination Agreement,
Reaffirmation of Guaranties and Subordination Agreement dated as of
December 17, 2004 among the Company, the Purchasers, LaSalle Bank
National Association and the other Credit Parties named therein) is
in effect on the Amendment Effective Date. For the avoidance of
doubt, “Amendment Effective Date” shall mean the date
of this Waiver and Amendment.
(b) Minimum EBITDA .
Section 7.14(d) of the Purchase Agreement is hereby amended in its
entirety to read as follows:
“(d) 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 $6,500,000.”
2
(c) TTX . The
following new defined terms are hereby added to the definitions the
Purchase Agreement in their appropriate alphabetical position to
read as follows:
“TTX” means TTX
Company, located at 101 N. Wacker Drive, Chicago, Illinois
60606.
“TTX Losses”
means the losses in 2004 on order 1400-964 to manufacture boxcars
for TTX.
5 REPRESENTATIONS,
WARRANTIES AND COVENANTS . To induce Purchasers to enter into
this Waiver and Amendment, the Company hereby certifies,
represents, warrants and covenants that:
5.1 Organization . The
Company is a corporation duly organized, existing and in good
standing under the laws of the State of Delaware, with full and
adequate corporate power to carry on and conduct its business as
presently conducted. The Company is duly licensed or qualified in
all foreign jurisdictions wherein the nature of its activities
require such qualification or licensing. The articles of
incorporation and bylaws, resolutions and incumbency certificate of
the Company have not been changed or amended since the most recent
date that certified copies thereof were delivered to Purchasers
except in connection with the name change from JAC Holdings
International, Inc. to FreightCar America, Inc. (the “Name
Change”). The exact legal name of the Company is as set forth
in the preamble hereto. Other than in connection with the Name
Change, the Company will not change its name, its organizational
identification number, if it has one, its type of organization, its
jurisdiction of organization or other legal structure.
5.2 Authorization .
The Company is duly authorized to execute and deliver this Waiver
and Amendment and is and will continue to be duly authorized to
borrow monies under the Financing Documents, as amended hereby, and
to perform its obligations under the Financing Documents, as
amended hereby.
5.3 No Conflicts . The
execution and delivery of this Waiver and Amendment and the
performance by the Company of its obligations under the
Financing
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