AMENDMENT   No.   2,   dated  as  of
                                    December 31, 1996 (this "Amendment"), to the
                                    Credit Agreement dated as of August 23, 1995
                                    (the  "Credit  Agreement"),  as  amended  by
                                    Amendment No. 1 thereto dated as of December
                                    31,   1995,    among    Johnstown    America
                                    Industries,  Inc.,  a  Delaware  corporation
                                    (the "Borrower"), the Lenders (as defined in
                                    the Credit  Agreement),  The Chase Manhattan
                                    Bank,   a  New  York   banking   corporation
                                    formerly   known  as   Chemical   Bank,   as
                                    swingline  lender  (in  such  capacity,  the
                                    "Swingline Lender"), as administrative agent
                                    (in  such  capacity,  the  "Adfminmistrative
                                    Agent")  and as  collateral  agent  (in such
                                    capacity,  the  "Collateral  Agent") for the
                                    Lenders,  The First  National Bank of Boston
                                    and The First  National Bank of Chicago,  as
                                    co0agents    (in    such    capacity,    the
                                    "Co-Agents"),  and The Chase  Manhattan Bank
                                    Delaware,  a  Delaware  banking  corporation
                                    formerly known as Chemical Bank Delaware, as
                                    Issuing  Bank  (as  defined  in  the  Credit
                                    Agreement).

               A. Pursuant to the Credit Agreement,  the Lenders,  the Swingline
Lender and the  Issuing  Bank have  extended  credit to the  Borrower,  and have
agreed to extend credit to the Borrower,  in each case pursuant to the terms and
subject to the conditions set forth therein.

               B. The Borrower has  requested  that  certain  provisions  of the
Credit Agreement be amended as set forth herein.

               C.  The  Required   Lenders  are  willing  to  amend  the Credit
Agreement, pursuant to the terms and subject to the conditions set forth herein.

               D. Capitalized  terms used and not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement.

               Accordingly,  in  consideration of the mutual  agreements  herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:

               SECTION 1.  Amendment  to Section  6.10 of the Credit  Agreement.
Section  6.10 of the Credit  Agreement  is hereby  amended  and  restated in its
entirety as follows:

                      "SECTION 6.10.  Total Debt Ratio.  Permit the ratio of (i)
               Total Debt as of any date set forth below,  to (ii)  Consolidated
               EBITDA for the period of four consecutive  fiscal quarters ending
               on such  date,  to be in excess  of the  ratio  set  forth  below
               opposite such date:



<PAGE>


                Date                                      Ratio
     December 31, 1996                                  5.75 to 1
     March 31, 1997                                     5.75 to 1
     June 30, 1997                                      5.75 to 1
     September 30, 1997                                 5.75 to 1
     December 31, 1997                                  5.00 to 1
     March 31, 1998                                     5.00 to 1
     June 30, 1998                                      3.00 to 1
     September 30, 1998                                 3.00 to 1
     December 31, 1998                                  3.00 to 1
     March 31, 1999 and thereafter                      2.50 to 1"

               SECTION 2.  Amendment  to Section  6.11 of the Credit  Agreement.
Section  6.11 of the Credit  Agreement  is hereby  amended  and  restated in its
entirety as follows:

                    SECTION 6.11.  Interest Coverage Ratio. Permit the ratio of
               (i) Consolidated EBITDA minus Consolidated  Capital  Expenditures
               to (ii)  Consolidated  Interest  Expense  for any  period of four
               consecutive fiscal quarters ending on any date set forth below to
               be less than the ratio set forth below opposite such date:


                Date                                      Ratio
     December 31, 1996                                  1.30 to 1
     March 31, 1997                                     1.30 to 1
     June 30, 1997                                      1.30 to 1
     September 30, 1997                                 1.30 to 1
     December 31, 1997                                  1.50 to 1
     March 31, 1998                                     2.50 to 1
     June 30, 1998                                      2.50 to 1
     September 30, 1998                                 2.50 to 1
     December 31, 1998                                  2.50 to 1
     March 31, 1999 and thereafter                      3.00 to 1"



<PAGE>




               SECTION 3.  Amendment  to Section  6.12 of the Credit  Agreement.
Section  6.12 of the Credit  Agreement  is hereby  amended  and  restated in its
entirely as follows:

                      "SECTION 6.12. Net Worth. Permit Consolidated Net Worth on
               (a) December 31, 1996, to be less than $57,500,000, or (b) on the
               last day of any fiscal quarter ending after December 31, 1996, to
               be less  than  the sum of (i)  $57,500,000  plus  (ii) 50% of the
               cumulative  amount of positive  Consolidated  Net Income for each
               fiscal quarter after December 31, 1996."

               SECTION  4.   Representations   and   Warranties.   The  Borrower
represents and warrants to each other party hereto that,  after giving effect to
this Amendment,  (a) the  representations  and warranties set forth in Atrticle
III of the Credit Agreement are true and correct in all material respects on and
as of the date  hereof with the same effect as though made on and as of the date
hereof,  except to the extent  such  representations  and  warranties  expressly
relate to an earlier  date and (b) no Default or Event of Default  has  occurred
and is continuing.

               SECTION 5.  Conditions to  Effectiveness.  This  Amendment  shall
become  effective  as of the date  hereof  on the date that the  Administrative
Agent shall have  received  counterparts  of this  Amendment  which,  when taken
together, bear the signatures of the Borrower and the Required Lenders.

               SECTION 6. Effect of  Amendment.  Except as  expressly  set forth
herein,  this Amendment  shall not be implication  or otherwise  limit,  impair,
constitute  a waiver of, or  otherwise  affect the  rights and  remedies  of the
Lenders,  the Swingline  Lender,  the Issuing Bank, the Collateral  Agent or the
Administrative Agent under the Credit Agreement or any other Loan Document,  and
shall  not  alter,  modify,  amend  or in any  way  affect  any  of  the  terms,
conditions,  obligations,  covenants  or  agreements  contained  in  the  Credit
Agreement or any other Loan Document,  all of which are ratified and affirmed in
all respects and shall  cintinue in full force and effect.  Nothing herein shall
be deemed to  entitle  the  Borrower  to a consent  to, or a waiver,  amendment,
modification  or other  change of, any of the  terms,  conditions,  obligations,
covenants  or  agreements  contained  in the Credit  Agreement or any other Loan
Document in similar or different circumstances. The Amendment shall apply and be
effective   only  with  respect  to  the  provsions  fo  the  Credit   Agreement
specifically referred to herein.

               SECTION 7.  Counterparts.  This  Amendment may be executed in any
number of counterparts and by different parties hereto in separte  counterparts,
each of which when so executed and  delivered  shall be deemed an origianl,  but
all such counterparts together shall constitute but one and the same instrument.
Delivery of any executed  counterpart  of a signature  page of this Amendment by
facsimile  transmission shall be as effective as delivery of a manually executed
counterpart hereof.




<PAGE>



               SECTION 8.  Applicable Law. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

               SECTION 9.  Headings.  The  headings  of this  Amendment  are for
purposes of reference  only and shall not limit or otherwise  affect the meaning
hereof.


               IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their  respective  authorized  officers as of the day and
year first above written.


JOHNSTOWN AMERICA INDUSTRIES, INC.,

    by   /s/ David W.Riesmeyer
        -------------------------------
        Name:  David W. Riesmeyer
        Title: Vice President, Treasurer


THE CHASE MANHATTAN BANK,
individually and as Administrative Agent, Collateral
Agent and Swingline Lender,

      by /s/ Julie S. Long
        -------------------------------
        Name:  Julie S. Long
        Title: Vice President


THE FIRST NATIONAL BANK OF BOSTON,
individually and as Co-Agent,

      by /s/ Lindsay W. McSwenney
        -------------------------------
        Name:  Lindsay W. McSwenney
        Title: Vice President



<PAGE>



THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Co-Agent,

     by /s/ Karen F. Kizer
        -------------------------------
        Name:  Karen F. Kizer
        Title: Senior Vice President


THE BANK OF NEW YORK,

     by /s/ John C. Lambert
        -------------------------------
        Name:  John C. Lambert
        Title: Vice President


THE BANK OF NOVA SCOTIA,

     by /s/ F.C.H. Ashby
        -------------------------------
        Name:  F.C.H. Ashby
        Title: Senior Manager Bank Operations


CANADIAN IMPERIAL BANK OF
COMMERCE, ATLANTA AGENCY,

     by  /s/ Brian E. O'Callahan
        -------------------------------
        Name:  Brian E. O'Callahan
        Title: Authorized Signatory


CAISSE NATIONALE DE CREDIT AGRICOLE,

     by /s/ Joan R. Goodman
        -------------------------------
        Name:  Joan R. Goodman
        Title: Vice President





<PAGE>



CREDIT LYONNAIS CHICAGO BRANCH,

     by  /s/ Mary Ann Klemm
        -------------------------------
        Name:  Mary Ann Klemm
        Title: Vice President & Group Head


CREDIT ANSTALT CORPORATE FINANCE,
INC.

     by  /s/ Catherine MacDonald
        -------------------------------
        Name:  Catherine MacDonald
        Title: Senior Associate


FIRST SOURCE FINANCIAL LLP,

     by FIRST SOURCE FINANCIAL, INC.,

        by  /s/ Gary L. Francis
        -------------------------------
        Name:  Gary L. Francis
        Title: Senior Vice President


THE FUJI BANK, LIMITED, CHICAGO
BRANCH,

     by  /s/ Peter L. Chinnici
        -------------------------------
        Name:  Peter L. Chinnici
        Title: Joint General Manager


JOHNSTOWN BANK & TRUST COMPANY,

     by  /s/ Roger D. Landers
        -------------------------------
        Name:  Roger D. Landers
        Title: Vice President





<PAGE>



MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.,

     by /s/ R. Douglas Henderson
        -------------------------------
        Name:  R. Douglas Henderson
        Title: Authorized Signatory


THE MITSUBISHI TRUST AND BANKING
CORPORATION,

     by
        Name:
        Title:


NATIONAL BANK OF CANADA,

     by /s/ C.F. Martin Jr.
        -------------------------------
        Name:  C.F. Martin Jr.
        Title: Vice President REgional Manager


NBD BANK,

     by /s/ Jenny A. Gilpin
        -------------------------------
        Name:  Jenny A. Gilpin
        Title: Vice President


THE NIPPON CREDIT BANK, LTD., NEW
YORK BRANCH,

     by /s/ Cliffort Abramsky
        -------------------------------
        Name:  Clifford Abramsky
        Title:  Senior Manager





<PAGE>



THE NORTHERN TRUST COMPANY,

     by /s/ G. Anthony Coletta
        -------------------------------
        Name:  G. Anthony Coletta
        Title: Vice President


PRIME INCOME TRUST,

     by /s/ Raphael Scolari
        -------------------------------
        Name:  Raphael Scolari
        Title: Vice President


THE SUMITOMO TRUST AND BANKING CO.,
LTD.,

     by /s/ Suraj P. Bhatia
        -------------------------------
        Name:  Suraj P. Bhatia
        Title: Senior Vice President


UNION BANK,

     by /s/ Richard P. DeGrey
        -------------------------------
        Name:  Richard P. DeGrey
        Title: Vice President


VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST

     by /s/ Brian W. Good
        -------------------------------
        Name:  Brian W. Good
        Title: Vice President





<PAGE>



THE YASUDA TRUST & BANKING
COMPANY, LTD., CHICAGO BRANCH,

     by /s/ Joseph Meek
        -------------------------------
        Name:  Joseph Meek
        Title: Deputy General Manager


STRATA FUNDING LTD.,

     by /s/ Darren P. Riley
        -------------------------------
        Name:  Darren P. Riley
        Title: Director


RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS B.V.,

     by ABN TRUSTCOMPANY
(NEDERLAND) B.V., its Managing Director

     by /s/ Gregory L. Smith
        -------------------------------
        Name:  Gregory L. Smith
        Title: Vice President


MERRILL LYNCH PRIME RATE PORTFOLIO,

     by MERRILL LYNCH ASSET
MANAGEMENT, L.P., as Investment Advisor

     by /s/ R. Douglas Henderson
        -------------------------------
        Name:  R. Douglas Henderson
        Title: Authorized Signatory





<PAGE>


CERES FINANCE LTD.,

     by /s/ Darren P. Riley
        -------------------------------
        Name:  Darren P. Riley
        Title: Director


KEYPORT LIFE INSURANCE COMPANY,

     by /s/ Gregory L. Smith
        -------------------------------
        Name:  Gregory L. Smith
        Title: Vice President


AERIES FINANCE LTD.,

     by /s/ Andrew Ian Wignall
        -------------------------------
        Name:  Andrew Ian Wignall
        Title: Director





<PAGE>