EXHIBIT 10.40
FIRST AMENDMENT TO AMENDED AND RESTATED
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

 

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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.
      By:   /s/ William P. Benac       William P. Benac        Chief Financial
Officer        LENDERS

NORTH FORK BUSINESS CAPITAL CORPORATION
      By:   /s/ Robert L. Heinz       Robert L. Heinz        Senior Vice
President        THE CIT GROUP/BUSINESS CREDIT, INC.
      By:   /s/ Jack A. Myers       Jack A. Myers         Vice President        
ASSOCIATED BANK, NATIONAL ASSOCIATION
      By:   /s/ Steve Smith       Steve Smith        Vice President       
CITIBANK, N.A.
      By:   /s/ Paul Darrigo       Paul Darrigo        Vice President   

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            AGENT

NORTH FORK BUSINESS CAPITAL CORPORATION
      By:   /s/ Robert L. Heinz       Robert L. Heinz        Senior Vice
President     

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