Form of Amended And Restated Loan And Security Agreement

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT


AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of January __, 2006, 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 (together with each of their respective direct and indirect successors and assigns, each, a "Lender," and collectively, the "Lenders"), and NORTH FORK BUSINESS CAPITAL CORPORATION, a New York corporation ("NFBC"), as agent for the Lenders (the "Agent").


W I T N E S S E T H :


WHEREAS, the Borrower, the Agent and certain of the Lenders are parties to a Loan and Security Agreement, dated as of March 10, 2005 (as amended, the "Original Loan Agreement");


WHEREAS, the Borrower wishes to amend and restate the Original Loan Agreement to increase the amount of the revolving credit facility available to it and to create a subfacility for the borrowing of loans for capital expenditures; and


WHEREAS, upon the terms and subject to the conditions set forth herein, the Lenders are willing to make revolving loans and term loans to the Borrower in an aggregate amount not to exceed $75,000,000, of which no more than $15,000,000 may be term loans;


NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as follows:


ARTICLE I.
DEFINITIONS


SECTION 1.1 General Definitions. As used herein, the following terms shall have the meanings herein specified (to be equally applicable to both the singular and plural forms of the terms defined):


"Advance" means a Base Rate Advance or a LIBOR Rate Advance.


"Affiliate" means, as to any Person, any other Person who directly or indirectly controls, is under common control with, is controlled by or is a director, officer, manager or general partner of such Person. As used in this definition, "control" (including its correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of voting securities or partnership or other ownership interests, by contract or otherwise), provided that any public company that does not conduct business in any material respect in or with the railcar industry shall not be an Affiliate hereunder except for purposes of Section 6.1(cc). For the avoidance of doubt, a Subsidiary of the Borrower shall be deemed to be an Affiliate of the Borrower.


"Agent" has the meaning specified in the introductory paragraph.


"Agent Loan" has the meaning specified in Section 2.3(h).


"Agent's Payment Account" means the account of the Agent at North Fork Bank in Melville, New York, account number 3124059415, or such other account of the Agent or any of its Affiliates in the United States as the Agent may from time to time designate in writing to the Borrower and the Lenders.


"Agreement" means this Loan and Security Agreement, as amended, supplemented or otherwise modified from time to time.


"Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and its assignee, and accepted by the Agent, and substantially in the form of Exhibit C.


"Auditors" means Grant Thornton LLP or another nationally recognized firm of independent public accountants selected by the Borrower and reasonably satisfactory to the Agent.


"Availability Event" means that the difference between (i) the lesser of (A) the Borrowing Base and (B) the Maximum Amount of the Facility less the aggregate outstanding principal amount of the CapEx Loans and (ii) the aggregate outstanding amount of the Revolving Loans and the Agent Loans, is less than $5,000,000.


"Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy," as that title may be amended from time to time, or any successor statute.


"Base Rate" means the higher of (i) the highest prime, base or equivalent rate of interest publicly announced from time to time by Citibank, N.A., Bank of America, N.A. and North Fork Bank, or any successor thereto (which may not be the lowest rate of interest charged by any such bank) and (ii) the published annualized rate for ninety-day dealer commercial paper that appears in the "Money Rates" section of The Wall Street Journal.


"Base Rate Advance" means an Advance that bears interest as provided in Section 4.1(a).


"Blocked Account" has the meaning specified in Section 2.7.


"Blocked Account Agreement" has the meaning specified in Section 2.7.


"Blocked Account Bank" means Citibank, N.A., Bank of America, N.A. or U.S. Bank National Association or any successor or any other bank acceptable to the Agent to act as such.


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"Borrower" has the meaning specified in the introductory paragraph.


"Borrower's Account" means the account maintained by the Borrower at North Fork Bank in Melville, New York or such other account as the Borrower may from time to time designate in writing to the Agent.


"Borrowing" has the meaning specified in Section 2.3(a).


"Borrowing Base" has the meaning specified in Section 2.1(a).


"Borrowing Base Certificate" has the meaning specified in Section 7.1(k)(iv).


"Borrowing Date" means the date on which a Borrowing is obtained.


"Business Day" means any day other than a Saturday, a Sunday or any other day on which commercial banks in New York, New York are required or permitted by law to close. When used in connection with any LIBOR Rate Advance, a Business Day shall also exclude any day on which commercial banks are not open for dealings in Dollar deposits in the London interbank market.


"Business Plan" means a business plan of the Borrower and its Subsidiaries, consisting of consolidated and consolidating projected balance sheets, related cash flow statements and related profit and loss statements, and availability forecasts, together with appropriate supporting details and a statement of the underlying assumptions, which covers a one-year period and which is prepared on a monthly basis in a manner consistent with GAAP and with the Financial Statements.


"CapEx Loans" has the meaning specified in Section 2.2(a).


"CapEx Note" has the meaning specified in Section 2.2(b).


"Capital Expenditures" means expenditures for any fixed assets or improvements, replacements, substitutions or additions thereto or therefor which have a useful life of more than one year, and shall include all commitments, payments in respect of Capitalized Lease Obligations and leasehold improvements.


"Capitalized Lease Obligations" means any rental obligation which, under GAAP, is or will be required to be capitalized on the books of the lessee, taken at the amount thereof accounted for as Indebtedness (net of Interest Expense) in accordance with GAAP.


"Cash Equivalents" means (i) securities issued, guaranteed or insured by the United States or any of its agencies with maturities of not more than one year from the date acquired; (ii) securities issued, guaranteed or insured by any state of the United States or any public instrumentality thereof with maturities of not more than one year from the date acquired and, at the time of acquisition, having one of the three highest ratings obtainable from either Standard & Poor's Ratings Services or Moody's Investors Service, Inc.; (iii) time deposits, term deposits and certificates of deposit with maturities of not more than one year from the date acquired, issued by (A) the Agent or any Lender or any of their respective Affiliates, (B) any


-3- U.S. federal or state chartered commercial bank of recognized standing which has capital and unimpaired surplus in excess of $500,000,000 or (C) any bank or its holding company that has a short-term commercial paper rating of at least A-1 or the equivalent by Standard & Poor's Ratings Services or at least P-1 or the equivalent by Moody's Investors Service, Inc.; (iv) repurchase agreements and reverse repurchase agreements with terms of not more than thirty days from the date acquired, for securities of the type described in clause (i) or (ii) above and entered into only with commercial banks having the qualifications described in clause (iii) above or such other financial institutions with a short-term commercial paper rating of at least A-1 or the equivalent by Standard & Poor's Ratings Services or at least P-1 or the equivalent by Moody's Investors Service, Inc.; (v) commercial paper issued by any Person incorporated under the laws of the United States or any state thereof and rated at least A-1 or the equivalent thereof by Standard & Poor's Ratings Services or at least P-1 or the equivalent thereof by Moody's Investors Service, Inc., in each case with maturities of not more than one year from the date acquired; and (vi) investments in money market funds registered under the Investment Company Act of 1940, which have net assets of at least $500,000,000 and at least eighty-five percent (85%) of whose assets consist of securities and other obligations of the type described in clauses (i) through (v) above.


"Closing Date" means the date of execution and delivery of this Agreement.


"Code" has the meaning specified in Section 1.3.


"Collateral" means all Receivables of the Borrower (other than Excluded Receivables), all Inventory of the Borrower, the Pledged Deposit Accounts of the Borrower and all Equipment purchased with the proceeds of CapEx Loans.


"Collateral Access Agreements" means a landlord waiver, mortgagee waiver, bailee letter or similar acknowledgment of any lessor, warehouseman or processor in possession of any Collateral or on whose property any Collateral is located, substantially in the form of Exhibit J.


"Collections" means all cash, funds, checks, notes, instruments, any other form of remittance tendered by account debtors in respect of payment of Receivables of the Borrower and any other payments received by the Borrower with respect to any Collateral.


"Commitment" means, with respect to any Lender, its commitment to make Loans up to the amount set forth opposite its name on Schedule 1.


"Compliance Certificate" has the meaning specified in Section 7.1(k)(iii).


"Contingent Obligation" means any direct, indirect, contingent or non-contingent guaranty or obligation for the Indebtedness of another Person, except endorsements in the ordinary course of business.


"Continuation" has the meaning specified in Section 2.3(b).


"Convert," "Conversion" and "Converted" each refers to conversion of Advances of one Type into Advances of another Type pursuant to Section 2.3(c).


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"Default" means any of the events specified in Section 9.1, whether or not any of the requirements for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.


"Defaulting Lender" has the meaning specified in Section 2.10(a).


"Dollars" and the sign "$" means freely transferable lawful currency of the United States.


"EBITDA" means, for any period, with respect to the Borrower (i) net income (as that term is determined in accordance with GAAP) for such period, plus (ii) the amount of depreciation and amortization of fixed and intangible assets deducted in determining such net income for such period, plus (iii) all Interest Expense and all fees for the use of money or the availability of money, including commitment, facility and like fees and charges upon Indebtedness (including Indebtedness to the Lenders) paid or payable during such period, plus (iv) all tax liabilities paid or accrued during such period, less (v) the amount of all extraordinary gains (or plus the amount of all extraordinary losses) realized during such period including, without limitation, gains (or losses) realized upon the sale or other disposition of property or assets that are sold or otherwise disposed of outside the ordinary course of business, plus (vi) the amount of any non-cash compensation accrued during such period including, without limitation, in connection with (A) stock options or other equity awards and incentives granted under the 2005 Equity Incentive Plan described in the Registration Statement and (B) the award of common stock to be granted to James Unger in connection with the IPO as described in the Registration Statement, plus (vii) any expenses accrued by the Borrower in connection with the allocation of the assets and liabilities of the pension and other post-retirement employee benefit plans sponsored by ACF Industries LLC between the Borrower and ACF Industries LLC in accordance with the Employee Benefit Agreement, effective as of December 1, 2005, between the Borrower and ACF Industries LLC including, without limitation, any liabilities assumed or payments made by the Borrower in connection therewith, less (viii) any non-cash compensation that subsequently becomes payable in cash during such period, in each case, to the extent that the amount specified in clause (ii), (iii), (iv), (v), (vi), (vii) or (viii) hereof is included in the calculation of net income for such period.


"Eligible Assignee" means (i) a Lender or any Affiliate thereof; (ii) a commercial bank organized or licensed under the laws of the United States or a state thereof having total assets in excess of $500,000,000; (iii) a finance company, insurance company or other financial institution or fund, which is regularly engaged in making, purchasing or investing in loans and having total assets in excess of $500,000,000; or (iv) a savings and loan association or savings bank organized under the laws of the United States or a state thereof which has a net worth, determined in accordance with GAAP, in excess of $500,000,000; provided, however, that (A) each Eligible Assignee under clauses (ii) through (iv) hereof shall be reasonably acceptable to the Agent and, so long as no Event of Default is continuing, the Borrower and (B) nothing herein shall restrict or require the consent of any Person to the pledge by any Lender of all or any portion of its rights and interests under this Agreement, its Notes or any other Loan Document to any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System or U.S. Treasury Regulation 31 CFR 203.14, and such Federal Reserve Bank may enforce such pledge in any manner permitted by applicable law.


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"Eligible Inventory" means only such Inventory of the Borrower located in the United States consisting of raw materials or finished goods, which is free from any claim of title or Lien in favor of any Person (other than Liens in favor of the Agent) and with respect to which no event has occurred and no condition exists which could reasonably be expected to impair substantially the Borrower's ability to use or sell such Inventory in the ordinary course of its business. No Inventory of the Borrower shall be Eligible Inventory unless the Agent has a perfected first priority Lien thereon. The value of Eligible Inventory shall be computed at the lower of cost (computed on a "first in, first out" basis) or market. Any Inventory of the Borrower that is not in the control or possession of the Borrower and is covered by a warehouse receipt, a bill of lading or other document of title shall in no event be Eligible Inventory unless such warehouse receipt, bill of lading or document of title is in the name of or held by the Agent. No Inventory of the Borrower shall be Eligible Inventory unless (i) it is located on property owned by the Borrower; or (ii) it is located on property leased by the Borrower or in a contract warehouse (A) which is subject to a Collateral Access Agreement executed by the mortgagee, lessor or contract warehouseman, as the case may be, or (B) with respect to which the Agent has established a reserve from the Borrowing Base in an amount equal to the rent or fees payable to the applicable lessor or warehouseman for a three-month period and, in either case such Inventory is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises. No Inventory of the Borrower shall be Eligible Inventory if it is in transit or it is consigned to or from the Borrower. In addition, and without limitation of the foregoing, the Agent may treat any Inventory as ineligible if:


(a) it is not owned solely by the Borrower or the Borrower does not have sole and good, valid and marketable title thereto; or


(b) it is packing or shipping materials or maintenance supplies; or


(c) it is goods returned or rejected by the Borrower's customer; or


(d) it (i) is excess (as so reserved by the Borrower from time to time), (ii) is obsolete, defective, damaged, unmerchantable or consists of an amount of Inventory in excess of a two-year supply, (iii) is samples or inventory on hand which is used for promotional and other sales activities, or (iv) does not otherwise conform to the representations and warranties contained in the Loan Documents; or


(e) it is repossessed, attached, seized, made subject to a writ or distress warrant, levied upon or brought within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors; or


(f) it is Inventory acquired by the Borrower in or as part of (i) a "bulk" transfer or sale of assets and such acquisition is not consummated in the ordinary course of business unless the Borrower has complied with all applicable bulk sales or bulk transfer laws in connection with such acquisition or (ii) any acquisition of assets from another Person other than in the ordinary course of business and such Inventory is not satisfactory to the Agent or has not been inspected by the Agent in a collateral audit examination.


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"Eligible Receivables" means and includes only those unpaid Receivables of the Borrower, without duplication, which (i) arise out of a bona fide sale of goods or rendition of services of the kind ordinarily sold or rendered by the Borrower in the ordinary course of its business, (ii) are owed by a Person competent to contract for such goods or services that is not an Affiliate or an employee of the Borrower and is not controlled by an Affiliate of the Borrower, (iii) are not subject to renegotiation or redating, (iv) are free and clear of any Lien in favor of any Person other than Liens in favor of the Agent and (v) mature as stated in the invoice or other supporting data covering such sale or services. No Receivable of the Borrower shall be an Eligible Receivable (i) unless the Agent has a perfected first priority Lien thereon, (ii) if it is more than ninety days past the date of the original invoice therefor or more than sixty days past its due date or (iii) unless the delivery of the goods or the rendition of the services giving rise to such Receivable has been completed. The Agent may treat any Receivable as ineligible if:


(a) any warranty contained in this Agreement or in any other Loan Document with respect to such Receivable or in any assignment or statement of warranties or representations relating to such Receivable delivered by the Borrower to the Agent has been breached or is untrue in any material respect or the Borrower is not in compliance with all applicable laws with respect to such Receivable; or


(b) the account debtor has disputed liability, has asserted a right of setoff or has made any claim with respect to any other Receivable due from such account debtor to the Borrower, to the extent of the amount of such dispute or claim, or the amount of such actual or asserted right of setoff, as the case may be; or


(c) the account debtor or any of its assets is the subject of an Insolvency Event or is reasonably likely to become the subject of an Insolvency Event; or


(d) the account debtor has called a meeting of its creditors to obtain any general financial accommodation; or


(e) the account debtor is also a supplier to the Borrower, to the extent of the aggregate amount owed by the Borrower to the account debtor; or


(f) the sale or rendition of services is to an account debtor outside the United States of America or Canada, unless it is on letter of credit, acceptance or other terms reasonably acceptable to the Required Lenders; or


(g) twenty-five percent (25%) or more of the accounts of any account debtor to the Borrower are unpaid more than ninety days past the date of the original invoices therefor; or


(h) except for Receivables due from American Railcar Leasing, LLC (if it is not an Affiliate of the Borrower at such time), General Electric Capital Corp., CIT Group, Inc., Union Pacific Corporation, Greenbrier Equity Group, LLC and Union Tank Car Company and any of their respective Affiliates, and except as determined by the Agent in its sole discretion, 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


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(i) the account debtor is the United States of America or any department, agency or instrumentality thereof, unless the Borrower assigns its right to payment under such Receivable to the Agent as collateral hereunder in full compliance with (including, without limitation, the filing of a written notice of the assignment and a copy of the assignment with, and receipt of acknowledgment thereof by, the appropriate contracting and disbursing offices pursuant to) the Assignment of Claims Act of 1940, as amended (U.S.C. Section 3727; 41 U.S.C. Section 15); or


(j) it was acquired by the Borrower in or as part of an acquisition of assets from another Person and such Receivable is not satisfactory to the Agent or has not been reviewed by the Agent in a collateral examination audit.


"Environmental Laws" means all federal, state and local statutes, laws (including common or case law), regulations or orders applicable to the business or property of a Person relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata) including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any Hazardous Materials.


"Equipment" means all machinery, equipment, furniture, fixtures, leasehold improvements, conveyors, tools, materials, storage and handling equipment, hydraulic presses, cutting equipment, computer equipment and hardware, including central processing units, terminals, drives, memory units, embedded computer programs and supporting information, printers, keyboards, screens, peripherals and input or output devices, molds, dies, stamps, and other equipment of every kind and nature and wherever situated now or hereafter owned by a Person or in which a Person may have any interest as lessee or otherwise (to the extent of such interest), together with all additions and accessions thereto, all replacements and all accessories and parts therefor, all manuals, blueprints, know-how, warranties and records in connection therewith and all rights against suppliers, warrantors, manufacturers, and sellers or others in connection therewith, together with all substitutes for any of the foregoing.


"ERISA" means the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sections 1000 et seq., amendments thereto, successor statutes, and regulations or guidelines promulgated thereunder.


"ERISA Affiliate" means any entity required to be aggregated with the Borrower under Section 414(b), (c), (m) or (o) of the Internal Revenue Code.


"Event of Default" means the occurrence of any of the events specified in Section 9.1.


"Excluded Receivables" means Receivables (i) with respect to which the account debtors are Affiliates of the Borrower and (ii) that do not arise from the sale of Inventory.


"Expiration Date" means the earlier of (i) January __, 2009 and (ii) the date of termination of the Commitments.


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"Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal, for each day during such period, to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal Funds brokers of recognized standing selected by it.


"Federal Reserve Board" means the Board of Governors of the Federal Reserve System or any Person succeeding to the functions thereof.


"Fee Letter" means the letter agreement as to the payment by the Borrower of certain fees to the Agent, both for its own account and for the ratable benefit of the Lenders.


"Financial Covenants" means the covenants set forth in Article VIII.


"Financial Statements" means, with respect to the Borrower and its Subsidiaries, the balance sheets, profit and loss statements, statements of cash flow, and statements of changes in intercompany accounts, if any, for the period specified, prepared in accordance with GAAP and consistent with prior practices applied to the Borrower's financial statements.


"Fixed Charge Coverage Ratio" means (without duplication), for any period, with respect to the Borrower, as of the date of determination thereof, the ratio of (X) (i) EBITDA for such period, less (ii) all Capital Expenditures (other than (A) Capital Expenditures financed by Persons other than the Lenders or by Loans and (B) Capital Expenditures, not to exceed $10,000,000 in the aggregate for the Borrower's 2005 fiscal year, relating to the construction of a "paint line" at the Borrower's facility in Paragould, Arkansas and for which the Borrower shall thereafter seek financing from Persons other than the Lenders) paid or payable during such period (other than from proceeds of Loans), less (iii) all tax liabilities paid during such period to (Y) (i) all scheduled principal amounts of Indebtedness paid or scheduled to be paid during such period, plus (ii) all Interest Expense and all fees for the use of money or the availability of money, including commitment, facility and like fees and charges upon Indebtedness (including Indebtedness to the Lenders) paid or payable during such period, plus (iii) without limitation of Section 7.2(d) or 9.2, all loans and Investments to any Person (including, without limitation, any Affiliate of the Borrower) made during such period plus (iv) without limitation of Section 9.2, all dividends, stock repurchases or other distributions paid or payable in cash on account of the Borrower's capital stock or other equity interests during such period less (v) any proceeds of the IPO used to repay any Indebtedness or redeem preferred stock of the Borrower or to fund or pay any of the items specified in clauses (Y)(ii), (iii) or (iv) during such period.


"GAAP" means generally accepted accounting ...