Document:

Letter of Waiver, dated December 29, 2004, by General Electric Capital Corp.

  
 Exhibit 10.26 
  
 December 29, 2004 
  
 Johnstown America Corporation 
 17 Johns Street 
 Johnstown, PA 15907 
 Attention: Glen T. Karan 
  

	 	Re:	Credit Agreement (the “Credit Agreement”; capitalized terms not otherwise defined herein shall have the meaning set forth under the Credit Agreement) dated as of
October 17, 2003 between JOHNSTOWN AMERICA CORPORATION, a Delaware corporation (“JAC”), FREIGHT CAR SERVICES, INC., a Delaware corporation (“FCS”), JAC OPERATIONS, INC., a Delaware corporation (“JAC
Operations”), and JAIX LEASING COMPANY, a Delaware corporation (“JAIX”) (JAC, FCS, JAC Operations and JAIX are sometimes collectively referred to herein as the “Borrowers” and each individually as a
“Borrower”), the Credit Parties signatory thereto and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, “GE Capital”), for itself, as Lender, and as Agent.

  
 Ladies and Gentlemen, 
  
 Based upon a restatement of Borrowers’ financial statements as required
by Borrowers’ accountants, Borrowers have informed GE Capital they have failed to (i) achieve minimum EBITDA for the Covenant Computation Date ending March 31, 2004 of at least $8,500,000 or less; and (ii) maintain the Leverage Ratio for the
Covenant Computation Dates ending June 30, 2004 of not more than 2.75 to 1.00; and these failures constitute Events of Default under the Credit Agreement (the “Designated Defaults”). 
  
 Borrowers have requested Agent and the Lenders waive the Designated Defaults.
Agent and the Lenders, by their signatures below hereby waive the Designated Defaults. 
  
 Agent shall not, by execution of this letter, be deemed to have waived its rights under any circumstances in connection with any Default or Event of Default now or hereafter existing to the extent the same arises out
of the cross default provisions set forth in Sections 8.1(e) or (o) of the Credit Agreement. 
  
 Borrowers agree, by their signatures below that all terms and provisions set forth in that certain letter dated December 21, 2004 (the “First
Waiver Letter”) shall remain in full force and effect and this letter is deemed to be a part of and incorporated in the First Waiver Letter. For purposes of interpretation this letter shall constitute a Loan Document as such term is defined
in the Credit Agreement. 
  

 Johnstown America Corporation 
 December 29, 2004 
 Page 2 
  

 The waivers set forth in this letter shall be effective only with respect to the specific
circumstances referenced above in connection with the Designated Defaults. In no event shall these waivers be construed to be a waiver of (a) enforcement of the Agent’s rights with respect to any Event(s) of Default now existing or hereafter
arising (except as specifically set forth herein) or (b) Borrower’s compliance (except as specifically set forth herein) with the (i) covenants or other provisions of the Credit Agreement referenced above or (ii) any other covenants or
provisions thereof or of any other Loan Document. 
  
 Nothing
contained in this letter nor any communications between Agent and Borrowers shall be a waiver of any rights or remedies the Agent or any of the Lenders have or may have against the Borrowers or the Guarantors, except as specifically provided herein.
The Agent and the Lenders hereby preserve and reserve all of their rights and remedies against Borrowers and Guarantors under the Credit Agreement, the Loan Documents and applicable law except as specifically set forth herein. 
  

			
	 Very truly yours,

	
	GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and Lender
		
	By:	 	/s/ T.J. Williams
	 	 	 T.J. Williams

	 	 	        Authorized Signatory

  

 2 

 Johnstown America Corporation 
 December 29, 2004 
 Page 3 
  

			
	ACKNOWLEDGED AND AGREED:
	
	BORROWERS:
	
	JOHNSTOWN AMERICA CORPORATION
		
	By:	 	 /s/ Kevin P. Bagby

	 Name:
	 	 Kevin P. Bagby

	 Title:
	 	 
	
	FREIGHT CAR SERVICES, INC.
		
	By:	 	 /s/ Kevin P. Bagby

	 Name:
	 	 Kevin P. Bagby

	 Title:
	 	 
	
	JAIX LEASING COMPANY
		
	By:	 	 /s/ Kevin P. Bagby

	 Name:
	 	 Kevin P. Bagby

	 Title:
	 	 
	
	JAC OPERATIONS, INC.
		
	By:	 	 /s/ Kevin P. Bagby

	 Name:
	 	 Kevin P. Bagby

	 Title:
	 	 
	
	CREDIT PARTIES AND GUARANTORS:
	
	 FREIGHTCAR AMERICA, INC., formerly known as
  
 JAC HOLDINGS INTERNATIONAL, INC.

		
	By:	 	 /s/ Kevin P. Bagby

	 Name:
	 	 Kevin P. Bagby

	 Title:
	 	 

  

 Johnstown America Corporation 
 December 29, 2004 
 Page 4 
  

			
	JAC INTERMEDCO, INC.
		
	By:	 	 /s/ Kevin P. Bagby

	 Name:
	 	 Kevin P. Bagby

	 Title:
	 	 
	
	JAC PATENT COMPANY
		
	By:	 	 /s/ Kevin P. Bagby

	 Name:
	 	 Kevin P. Bagby

	 Title:
	 	 

  

 42004/2005 Executive Officer Bonus Plan

 Exhibit 10.46 
  
 2004/2005 Executive Officer Bonus Plan 
  
 Objective: 
  

	 	•	 	Align the interests of employees and shareholders in the future growth and success of ArthroCare Corporation (the “Company”) by rewarding employee performance.

  
 Bonus Pool: 
  

	 	•	 	Up to 100% of the Total Bonus Potential of all Eligible Participants during the period of January 1, 2004 through March 31, 2005 (the “Bonus Period”). The Total Bonus
Potential for an Eligible Participant will be (a) (1) the Eligible Participant’s Bonus Potential, plus (2) 15% of such Eligible Participant’s Bonus Potential, minus (b) 25% of the Eligible Participant’s Bonus Potential. For example,
the Total Bonus Potential for an Eligible Participant who is a Section 16 Vice President as of prior to December 31, 2004 with a base salary of $100,000 shall be $45,000 (($50,000 + $7,500) — $12,500). The Total Bonus Potential of an Eligible
Participant, other than the Chief Executive Officer, may be increased or decreased at the sole discretion of the Chief Executive Officer of the Company. The Total Bonus Potential of the Chief Executive Officer may be increased or decreased at the
sole discretion of the Company’s Board of Directors. 

  
 Eligible Participants: 
  

	 	•	 	All executive officers of the Company from the period of January 1, 2004 through the payment date of a bonus (the “Bonus Payment Date”) who began employment with the
Company on or before December 31, 2004 and are not ineligible due to performance issues, as approved by the Compensation Committee of the Company’s Board of Directors. Pro rata eligibility for executive officers who started after January
1, 2004 and remained employed by the Company through the Bonus Payment Date. 

  
 Bonus Potential: 
  

	 	•	 	25% of base salary for fiscal year end December 31, 2004 for non-Section 16 Vice Presidents as of December 2, 2004 

  

	 	•	 	50% of base salary for fiscal year end December 31, 2004 for Section 16 Vice Presidents as of prior to December 2, 2004 

  

	 	•	 	60% of base salary for fiscal year end December 31, 2004 for Chief Executive Officer 

  
 Bonus Factors: 
  

	 	•	 	In the event the Company achieves at least 85% (the “Minimum Achievement Level”) of the Sales Goal, Profit Goal and Return on Net Working Capital Goal, a bonus will be due
to each Eligible Participant. The Sales Goal, Profit Goal and Return on Net Working Capital Goal shall be as set forth in the Company’s operating budget for the period of January 1, 2004 through March 31, 2005, as approved by the Company’s
Board of Directors. 

	 	•	 	Each of the Sales Goal, Profit Goal and Return on Net Working Capital Goal shall be ascribed a percentage weight totaling 100% in the aggregate, as follows:

  
 Sales Goal – 60%

  
 Profit Goal – 20% 
  
 Return on Net Working Capital Goal – 20% 
  

	 	•	 	The Minimum Achievement Level is determined by adding the weighted average of the Sales Goal (i.e., Sales Goal Achieved (as defined below) multiplied by 60%), plus the weighted
average of the Profit Goal (same formula), plus the weighted average of the Return on Net Working Capital Goal (same formula). If the sum of these percentages is equal to or greater than 85%, a bonus is payable. 

  

	 	•	 	If the Bonus Achievement Level is between 85% and 100%, then Eligible Participants are eligible for the percentage of their Total Bonus Potential actually achieved. For example, if
the Bonus Achievement Level is 90%, then Eligible Participants are eligible for 90% of their Total Bonus Potential. 

  
 Bonus Multiplier: 
  

	 	•	 	If the Bonus Achievement Level is in excess of 100%, then Eligible Participants are eligible for 100% of their Total Bonus Potential, plus a percentage of their Total Bonus
Potential equal to three times the portion in excess of 100%. For example, if the Bonus Achievement Level is 110%, then Eligible Participants are eligible for 100% of their Total Bonus Potential, plus 30% of the Total Bonus Potential.

  
 Defined Terms: 
  
 Sales shall mean the amount of ArthroCare products
sold from the period of January 1, 2004 through March 31, 2005. 
  
 Profits shall mean (1) EPS as published in GAAP financial statements for the first three quarters of 2004; plus (2) EPS as published in the GAAP financial statements for the fourth quarter of 2004 and the first quarter of 2005
excluding the impact of the Opus acquisition and any other unplanned accounting changes (e.g., early expensing of stock options). 
  
 Net Working Capital shall mean (a) the sum of Accounts Receivable, Total Inventory, Net Property, Plant and Equipment (including Net Installed
Controller Base), minus (b) Accounts Payable.  

 Return on Net Working Capital shall mean Net Working Capital divided by Net Income, excluding the
impact of the Opus acquisition and any other unplanned accounting changes. 
  
 Sales Goal Achieved shall mean the percentage determined by dividing Sales by the Sales Goal. 
  
 Profit Goal Achieved shall mean the percentage determined by dividing Profits by the Profit Goal. 
  
 Return on Net Working Capital Goal Achieved shall mean the percentage
determined by dividing the Return on Net Working Capital by the Return on Net Working Capital Goal. 
  
 Bonus Achievement Level shall mean the actual level of bonus achieved. 
  
 Any bonuses payable under this 2004/2005 Bonus Plan are subject to the approval of the Company’s Board of Directors. The Company has
the right to make changes in plan participation, the bonus pool or any other aspect of this plan at any time and without prior notice.

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