FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
EXHIBIT 10.40
FIRST AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT
FIRST AMENDMENT, dated as of October 6, 2006 (this “Amendment”), to the Amended and Restated
Loan and Security Agreement, dated as of January 24, 2006 (the “Loan Agreement”), among AMERICAN
RAILCAR INDUSTRIES, INC., a Delaware corporation, as successor-by-merger to American Railcar
Industries, Inc., a Missouri corporation (the “Borrower”), each of the financial institutions
identified as a Lender on Schedule 1 thereto (together with each of their respective direct or
indirect successors and assigns, and collectively, the “Lenders”), and NORTH FORK BUSINESS CAPITAL
CORPORATION, a New York corporation (“NFBC”), as agent for the Lenders (the “Agent”). Capitalized
terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms
in the Loan Agreement.
WITNESSETH:
WHEREAS, the Borrower, the Agent and the Lenders are parties to the Loan Agreement;
WHEREAS, the parties wish to amend the Loan Agreement (a) to increase the amounts of (i) the
revolving credit facility available to the Borrower and (ii) the subfacility for the borrowing of
loans for capital expenditures available to the Borrower and (b) to include Citibank, N.A.
(“Citibank”) as a Lender under the revolving credit facility (including the subfacility for the
borrowing of loans for capital expenditures); and
WHEREAS, upon the terms and subject to the conditions set forth herein, the parties are
willing to add Citibank as a Lender under the revolving credit facility (including the subfacility
for the borrowing of loans for capital expenditures), and the Lenders (including Citibank) are
willing to make revolving loans and term loans to the Borrower in an aggregate amount not to exceed
$100,000,000, of which no more than $30,000,000 may be term loans;
NOW, THEREFORE, the Borrower, the Lenders and the Agent agree as follows:
SECTION 1. Amendments to the Loan Agreement. Effective as of the date hereof, the
Loan Agreement is amended as follows:
(a) Section 1.1 is amended as follows:
(i) The definition of “Eligible Inventory” is amended by inserting “, work in
process” immediately before “or finished goods” in the first sentence;
(ii) Clause (h) of the definition of “Eligible Receivables” is amended and
restated as follows:
“(h) except for Receivables due from (i) American Railcar
Leasing, LLC (if it is not an Affiliate of the Borrower at
such time), (ii) any of the Persons specified in Schedule 3 and any
of their respective Affiliates and (iii) any other account debtor
which the Agent shall approve, in writing, in its sole discretion,
which approval shall not be unreasonably withheld, the amount owed
by the account debtor under such Receivable and under all other
Receivables owed by such account debtor exceeds twenty percent (20%)
of all Eligible Receivables, but only to the extent of such excess;
or”
(iii) The definition of “Expiration Date” is amended by deleting “January 23,
2009” and substituting “October 5, 2009” therefor;
(iv) The definition of “Maximum Amount of the Facility” is amended by deleting
“Seventy-Five Million Dollars ($75,000,000)” and substituting “One Hundred Million
Dollars ($100,000,000)” therefor; and
(v) The definition of “Required Lenders” is amended and restated as follows:
“Required Lenders” means (i) before the Expiration
Date, the Lenders holding more than fifty percent of the aggregate
Commitments at such time and (ii) on and after the Expiration Date,
the Lenders holding more than fifty percent of the aggregate unpaid
principal amount of the Loans at such time, provided that,
at any time (i.e., whether before, on or after the Expiration Date)
that there are at least three Lenders, no single Lender shall
constitute the “Required Lenders.”
(b) Section 2.1(a) is amended by deleting “(not to exceed $40,000,000)”.
(c) Section 2.2(a) is amended by:
(i) deleting “$15,000,000” and substituting “$30,000,000” therefor; and
(ii) inserting “, it being understood that proceeds of the CapEx Loans shall
not be used to finance the acquisition by the Borrower of real property or the
construction of improvements to any real property” immediately following “(the
“CapEx Loans”)”.
(d) Section 2.2(b) is amended by deleting “five CapEx Loans” and substituting “ten CapEx
Loans” therefor.
(e) Section 2.2(c) is amended by deleting “$15,000,000” and substituting “$30,000,000”
therefor.
(f) The first sentence of Section 2.2(d) is amended and restated as follows:
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“(d) The principal amount of each CapEx Loan shall be payable
in equal and consecutive monthly installments each in an amount
equal to 1.67% of the amount of such CapEx Loan on the first
Business Day of each month commencing on the first Business Day
following the earlier of (i) the date of completion of the project
to which the Equipment purchased with the proceeds of such CapEx
Loan relates and (ii) one year from the date on which such CapEx
Loan is made, provided that the entire unpaid principal
balance of each CapEx Loan shall be payable in full, with all
interest accrued thereon, on the Expiration Date.”
(g) Section 2.5(a) is amended by deleting “$15,000,000” and substituting “$30,000,000”
therefor.
(h) Section 11.5 is amended by deleting ““Borrowing Base”
or modify Section 2.2(a)( ii)” and
substituting ““Borrowing Base,” “Eligible Inventory” or “Eligible Receivables” or modify Section
2.2(a)(ii), in each case” therefor.
(i) The signature page to the Loan Agreement is supplemented with an additional signature
block for Citibank in the form of Annex I hereto.
(j) Schedule 1 to the Loan Agreement is amended and restated in the form of Annex II hereto.
(k) A new Schedule 3 to the Loan Agreement is added in the form of Annex III hereto.
(l) Schedule 6.1(g) to the Loan Agreement is amended and restated in the form of Annex IV
hereto.
SECTION 2. Rights and Obligations. Subject to the satisfaction of the conditions
precedent set forth in Section 3, from and after the date hereof, (a) the Lenders shall be deemed
to include Citibank and (b) Citibank shall be a party to the Loan Agreement, and, to the extent
provided in the Loan Agreement, this Amendment and the other Loan Documents, have the rights and
obligations of a Lender thereunder.
SECTION 3. Conditions of Effectiveness. This Amendment shall become effective when,
and only when, the Agent shall have received (a) payment of the costs and expenses (including,
without limitation, reasonable attorneys’ fees) incurred by the Agent in connection with this
Amendment, (b) payment of a closing fee for the benefit of the Lenders as provided in the letter
agreement specified in clause (c)(v) below and (c) each of the following documents (collectively,
the “Amendment Documents”), which documents shall be in form and substance satisfactory to the
Agent:
(i) a counterpart of this Amendment, duly executed by the Borrower and each
Lender;
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(ii) a Promissory Note payable to the order of each of the Lenders,
substantially in the form of Exhibit A hereto, each in an amount equal to such
Lender’s Pro Rata Share of $100,000,000 and duly executed by the Borrower;
(iii) a CapEx Loan Promissory Note payable to the order of each of the Lenders,
substantially in the form of Exhibit B hereto, each in an amount equal to such
Lender’s Pro Rata Share of $30,000,000 and duly executed by the Borrower;
(iv) a copy of the resolutions of the Board of Directors (or similar evidence
of authorization) of the Borrower authorizing the execution, delivery and
performance of this Amendment and the other Amendment Documents to which the
Borrower is a party and the transactions contemplated hereby and thereby, attached
to which is a certificate of the Secretary or an Assistant Secretary of the Borrower
certifying the incumbency, names and true signatures of the officers of the Borrower
authorized to sign this Amendment and the other Amendment Documents to which the
Borrower is a party;
(v) a letter agreement as to the payment by the Borrower of certain fees to the
Agent for the benefit of the Lenders, duly executed by the Borrower; and
(vi) such other agreements, instruments, documents and evidence as the Agent
deems necessary in its reasonable discretion in connection with the transactions
contemplated hereby.
Notwithstanding the foregoing conditions, this Amendment shall become effective and the
conditions set forth above shall be deemed to have been satisfied upon delivery to the Borrower by
the Agent of a copy of this Amendment, fully executed by the Agent and the Lenders.
SECTION 4. Representations and Warranties of the Borrower. The Borrower represents
and warrants as follows:
(a) The Borrower is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and is duly qualified, authorized to do business and in good
standing in each jurisdiction in which it is presently engaged in business except to the extent
that the failure to so qualify or be in good standing could not reasonably be expected to have a
Material Adverse Effect.
(b) The execution, delivery and performance by the Borrower of this Amendment and the other
Amendment Documents (i) are within the Borrower’s corporate powers, have been duly authorized by
all necessary corporate action, (ii) do not contravene (A) any of the Borrower’s Governing
Documents, (B) any Requirement of Law or (C) any contract of the Borrower listed as an exhibit to
the Registration Statement or otherwise filed by the Borrower with the Securities and Exchange
Commission and (iii) will not result in the imposition of any Lien upon any of its properties
except in favor of the Agent.
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(c) No consent, authorization or approval of, or filing with or other act by, any shareholders
of the Borrower, any Governmental Authority or any other Person is required in connection with the
execution, delivery, performance, validity or enforceability of this Amendment or any other
Amendment Document to which the Borrower is a party, the consummation of the transactions
contemplated hereby or thereby or the continuing operations of the Borrower following such
consummation.
(d) This Amendment, the other Amendment Documents to which the Borrower is a party and the
Loan Agreement as amended hereby constitute the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective terms, except as
enforceability may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors’
rights generally and (ii) general principles of equity.
(e) No judgments, orders, writs or decrees are outstanding against it, nor is there now
pending or, to its knowledge, threatened litigation, contested claim, investigation, arbitration,
or governmental proceeding by or against the Borrower that (i) individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect or (ii) purports to affect the
legality, validity or enforceability of this Amendment, any of the other Amendment Documents to
which the Borrower is a party, the Loan Agreement as amended hereby or the consummation of the
transactions contemplated hereby or thereby.
(f) No Default or Event of Default has occurred and is continuing.
SECTION 5. Reference to and Effect on the Loan Agreement.
(a) On and after the date hereof, each reference in the Loan Agreement to “this Agreement,”
“hereunder,” “hereof,” “herein” and words of like import, and each reference in the other Loan
Documents to the Loan Agreement shall mean and be a reference to the Loan Agreement as amended
hereby.
(b) The Loan Agreement and each other Loan Document shall remain in full force and effect and
are hereby ratified and confirmed by each of the parties hereto.
(c) Neither the Agent nor the Lenders shall be deemed to have waived any rights or remedies
they may have under the Loan Agreement, any other Loan Document or applicable law.
(d) The execution, delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as an amendment to any right, power or remedy of the Agent or the Lenders
under any of the Loan Documents, or constitute a waiver of or an amendment to any provision of any
of the Loan Documents.
SECTION 6. Costs and Expenses. The Borrower agrees to pay, on demand, all reasonable
out-of-pocket costs and expenses incurred by the Agent in connection with the preparation,
negotiation and execution of this Amendment and the other Amendment Documents (including, without
limitation, the reasonable fees and expenses of counsel to the Agent).
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SECTION 7. Counterparts; Telecopied Signatures. This Amendment may be executed in
counterparts and by the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one and the same
instrument. This Amendment may be executed and delivered by telecopier or other facsimile
transmission all with the same force and effect as if the same were a fully executed and delivered
original manual counterpart.
SECTION 8. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AMENDMENT, WHETHER SOUNDING IN
CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICTS OF LAW PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND
DECISIONS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
proper and duly authorized officers as of the date first set forth above.
| BORROWER AMERICAN RAILCAR INDUSTRIES, INC. |
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| By: | /s/ Xxxxxxx X. Xxxxx | ||||
| Xxxxxxx X. Xxxxx | |||||
| Chief Financial Officer | |||||
| LENDERS NORTH FORK BUSINESS CAPITAL CORPORATION |
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| By: | /s/ Xxxxxx X. Xxxxx | ||||
| Xxxxxx X. Xxxxx | |||||
| Xxxxxx Vice President | |||||
| THE CIT GROUP/BUSINESS CREDIT, INC. |
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| By: | /s/ Xxxx X. Xxxxx | ||||
| Xxxx X. Xxxxx | |||||
| Vice President | |||||
| ASSOCIATED BANK, NATIONAL ASSOCIATION |
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| By: | /s/ Xxxxx Xxxxx | ||||
| Xxxxx Xxxxx | |||||
| Vice President | |||||
| CITIBANK, N.A. |
|||||
| By: | /s/ Xxxx Xxxxxxx | ||||
| Xxxx Xxxxxxx | |||||
| Vice President | |||||
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| AGENT NORTH FORK BUSINESS CAPITAL CORPORATION |
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| By: | /s/ Xxxxxx X. Xxxxx | |||
| Xxxxxx X. Xxxxx | ||||
| Xxxxxx Vice President | ||||
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