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EXHIBIT 10.26
THIRD AMENDMENT TO LOAN AGREEMENT
This THIRD AMENDMENT TO LOAN AGREEMENT ("Third Amendment") is made this
___ day of December 1996 by and between WABASH NATIONAL CORPORATION, a Delaware
corporation with its principal place of business at 0000 Xxxxxxxx Xxxxxxx
Xxxxx, Xxxxxxxxx, Xxxxxxx 00000 ("Borrower") and NBD Bank, N.A., (the "Bank"),
a national banking association with its principal banking offices at Xxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000.
WHEREAS, the Borrower and the Bank entered into that certain Loan
Agreement dated April 28, 1995 as amended by an Amendment dated November 9,
1995 as further amended by a Second Amendment dated September 30, 1996
(collectively, the "Agreement"); and
WHEREAS, the Borrower has requested that the Bank extend the Loan Maturity
Date and amend certain covenants in the Agreement to permit the Borrower to
enter into certain indebtedness and make loans to its Subsidiary, Wabash
National Finance Corporation; and
WHEREAS, the Bank is willing to amend such covenants, on the terms and
conditions set forth in the Agreement, as hereinafter amended:
NOW THEREFORE, in consideration of the Bank's agreement to extend the Loan
Maturity Date and amend certain covenants, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
Section 1. Definitions. All defined terms used herein shall be used with
the meanings ascribed to them in the Agreement, unless otherwise specifically
defined herein. The following definitions are hereby amended to read in their
entirety as follows:
"Applicable Commitment Fee" means that percentage of the unused portion
of the Commitment, as reduced from time to time in accordance with Section
2.1(A), to be paid to the Bank pursuant to Section 2.7 hereunder, determined by
reference to both the Borrower's Ratio of Funded Debt to Total Capitalization
and the Fixed Charge Coverage Ratio, in accordance with the following table:(1)
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Fixed Charge Coverage Ratio
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Funded Debt 2.25 to 2.00 to 1.75 to 1.50 to 1.25 to
to Capitalization 2.50 2.49 2.24 1.99 1.74 1.49
------------------------------ --------------------------------------------------------------------------
.15 .10% .125% .15% .175% .225% .275%
.16 to .30 .125% .15% .175% .225% .275% .30%
.31 to .40 .15% .175% .225% .275% .30% .325%
.41 to .50 .175% .225% .275% .30% .325% .35%
.51 to .55 .225% .275% .30% .325% .35% .40%
.56 to .60 .275% .30% .325% .35% .40% .45%
The Applicable Commitment Fee shall be determined and adjusted, if
appropriate, quarterly on the basis of the financial statements of the Borrower
for the fiscal quarter immediately preceding the date of determination of the
Applicable Commitment Fee.
"Applicable Margin" means that percentage to be added to each of the LIBOR
Rate or Federal Funds Rate at which interest will accrue on the Advances or
Loans determined by reference to both the Borrower's Ratio of Funded Debt to
Total Capitalization and the Fixed Charge Coverage Ratio. The Applicable
Margin for LIBOR Advances or Loans or standby letters of credit under Section
2.1(F) shall be determined as set forth in the following table and the
Applicable Margin for Federal Funds Advances or Loans shall be the applicable
percentage set forth in the following table plus 10 Basis Points:
Fixed Charge Coverage Ratio
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Funded Debt 2.25 to 2.00 to 1.75 to 1.50 to 1.25 to
to Capitalization 2.50 2.49 2.24 1.99 1.74 1.49
------------------------------ --------------------------------------------------------------------------
.15 .25% .30% .40% .50% .625% .75%
.16 to .30 .30% .40% .50% .625% .75% .80%
.31 to .40 .40% .50% .625% .75% .80% .90%
.41 to .50 .50% .625% .75% .80% .90% 1.00%
.51 to .55 .625% .75% .80% .90% .1.00% 1.125%
.56 to .60 .75% .80% .90% 1.00% 1.125% 1.25%
Each Applicable Margin shall be determined and adjusted, if appropriate,
quarterly on the basis of the financial statements of the Borrower for the
fiscal quarter of the Borrower immediately preceding the date of determination,
furnished to the Bank pursuant to the requirements of Section 5.3, with
prospective effect for the following fiscal quarter. Interest will
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accrue and be payable in any fiscal quarter on the basis of the Applicable
Margin in effect during the preceding fiscal quarter until the Borrower's
financial statements for the preceding fiscal quarter are delivered to the
Bank. On the first interest payment date which follows delivery of such
financial statements in any fiscal quarter, an appropriate adjustment shall be
made for interest accrued and paid on prior interest payment dates in that
quarter, any overpayment being credited against the interest payment then due
from the Borrower to the Bank and any deficiency being then due and payable by
the Borrower to the Bank. In the event the Borrower fails to provide the
quarterly financial statements pursuant to the requirements of Section 5.3, the
Applicable Margin will be presumed to be the highest percentage set forth in
the above table.
"Basis Point" means one-one hundredths of one percent (.01%).
"Borrowing Base" means the amount equal to the sum of i) 80% of the
Borrower's eligible accounts receivable, plus ii) 50% of eligible raw
materials, plus iii) 25% of eligible work in progress, plus iv) 80% of finished
goods inventory, plus v) 60% of eligible used trailer inventory, plus vi) 65%
of the Borrower's eligible lease portfolio. For purposes of the preceding
sentence, "eligible accounts receivable" means the Borrower's accounts
receivable less any accounts which are 90 days or more past the invoice date;
or which are due from any account debtor if 50% or more of the aggregate amount
of the accounts receivable from such debtor are 90 days or more past the
invoice date; are accounts receivable from Persons outside the United States
which are not secured by a letter of credit or guaranty acceptable to the Bank;
or are accounts owed by a Subsidiary to the Borrower; and provided that any
account receivable otherwise included in the Borrowing Base shall be reduced,
but not below zero, by the amount of any accounts payable to the account debtor
from whom such account is due; "eligible raw materials" means raw materials
less consignment inventory; "eligible work in process" means all work in
process less the amount of progress xxxxxxxx; "eligible used trailer inventory"
means such inventory less any obsolescence reserve; and "eligible lease
portfolio" means the Borrower's total lease portfolio less equipment with
rental payments over 90 days past due, less equipment which has been off-lease
for more than 90 days, and less any finance contracts over 90 days past due.
The following definitions are hereby deleted from the Agreement: "CD
Advance", "CD Base Rate", "CD Loan", "CD Rate", and "CD Reserve Percentage".
Section 2. Amendments to Section 2 of the Agreement. The following
amendments are made to Section 2 of the Agreement
A. Section 2.1(A) of the Agreement is hereby amended to change the maximum
dollar amount of the Commitment to "Eighty-Five Million and no/100 Dollars
($85,000,000"), and to change the "Loan Maturity Date" to July 1, 1998.
Further, the reference to "CD Advances" is hereby deleted. The following
additional language is added to the end of that paragraph:
"Borrowings hereunder shall be limited to the lesser
of the Commitment, as reduced from time to time, or
the Borrowing Base in the event that the Borrower's
pro forma ratio of Funded Debt to
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Total Capitalization exceeds 45% (.45 to 1.0). If the
principal balance of the Loan exceeds the Borrowing
Base, as determined on the basis of the most recent
Borrowing Base Certificate furnished by the Borrower
or as determined by the Bank upon an inspection of the
books and records of the Borrower, the Borrower shall
immediately repay that portion of the principal
balance of the Loan which is in excess of the
Borrowing Base. Such repayment shall be due without
demand. At the Borrower's option, the Borrower may
repay and permanently reduce the amount of the
Commitment, in increments of $5,000,000, at the end of
each fiscal quarter".
B. Sections 2.1(B), (C) and (D) are hereby amended to delete any reference
to "CD Advances" or "CD Rate".
C. Section 2.1(E) is hereby amended to change the "Loan Maturity Date" to
July 1, 1998.
D. Section 2.1(F) is hereby amended to decrease the Maximum Available
Credit for letters of credit to Twelve Million Five Hundred Thousand Dollars
($12,500,000). Further, the per annum commitment fee for standby letters of
credit shall be calculated based upon the Applicable Margin in effect on the
date of determination and shall be payable quarterly in arrears.
Section 3. Amendments to Section 5.1. The preamble to Section 5.1 of the
Agreement is hereby amended to read in its entirety as follows:
"Section 5.1. Affirmative Covenants of Borrower Other
Than Reporting Requirements. From the date hereof and
thereafter for as long as the Loan is outstanding or
Borrower is indebted to the Bank under any of the
Financing Documents, Borrower shall and shall cause
each Subsidiary to do the following, unless the Bank
shall otherwise consent in writing:".
Section 4. Amendments to Section 5.2. The following amendments are
hereby made to Section 5.2 of the Agreement:
A. Preamble to Section 5.2. The preamble to Section 5.2 is hereby amended
to read in its entirety as follows:
"Section 5.2. Negative Covenants of Borrower. From
the date hereof and thereafter so long as any portion
of the Loan is outstanding or Borrower is indebted to
the Bank under any of the Financing Documents,
Borrower shall not, and shall not permit any
Subsidiary to do any of the following, without the
prior written consent of the Bank:".
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B. Amendments to Section 5.2(A). The following subsections of Section
5.2(A) Liens. are hereby amended to read in their entirety as follows:
"(i) that secure Indebtedness existing on the date of
execution of this Agreement and properly reflected on
the Borrower's financial statements or Liens securing
additional debt of the Borrower and its Subsidiary
incurred solely for the construction or purchase of
new fixed assets (excluding trailers or other
inventory, except as hereinafter provided) with such
purchase money Liens limited to the specific assets
purchased, and not to exceed, in the aggregate 20% of
the Borrower's consolidated Tangible Net Worth at any
time outstanding, and provided that any default under
such debt shall constitute a default under this
Agreement. Provided that the Borrower does not
violate a financial covenant in Section 5.2(L), and
subject to the Tangible Net Worth limitation set forth
above, the Borrower or a Subsidiary may incur Liens on
Indebtedness of up to $10 million at any one time
outstanding for the purchase of new equipment for
lease to third parties.
(x) Liens on assets of Wabash National Finance
Corporation, or Subsidiary, which exist on the date
hereof as set forth on Schedule 5.2.(A) attached
hereto."
C. Amendment to Section 5.2(H). Section 5.2(H) of the Agreement is hereby
amended in its entirety as follows:
"(H) Indebtedness. Incur, create, become or be
liable directly or indirectly in any manner with
respect to or permit to exist any Indebtedness if the
incurrence or existence of such Indebtedness will
result in a violation of a financial covenant in
Section 5.2(L) of this Agreement, and provided that
Wabash National Finance Corporation, a Subsidiary
shall not incur any Indebtedness other than the
secured debt permitted under Section 5.2(A)(i) and (x)
and Indebtedness owed to the Borrower in accordance
with Section 5.2(M).
D. Amendments to Section 5.2(L). Section 5.2(L) of the Agreement is
hereby amended to read in its entirety as follows:
"(L) Financial Covenants.
(i) Tangible Net Worth. The Borrower, on a consolidated
basis, will at all times from the date hereof maintain a
Tangible Net Worth of not less than $135,000,000, increasing
quarterly commencing January 1, 1997 by an amount equal to
the sum of fifty percent (50%) of the Borrower's
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consolidated net income (with no downward adjustment for net
losses in any quarter) and eighty percent (80%) of net
proceeds received by the Borrower from equity offerings.
(ii) Funded Debt to Total Capitalization. The Borrower, on
a consolidated basis, will maintain a ratio of Funded Debt
to Total Capitalization not to exceed 60% (.60 to 1.0) at
all times, calculated on a quarterly basis.
(iii) Fixed Charge Coverage Ratio. The Borrower, on a
consolidated basis, will maintain a Fixed Charge Coverage
Ratio, calculated quarterly on a four quarter trailing basis
commencing from the most recent quarter end, at levels not
less than those shown in the following table for the periods
indicated:
PERIOD RATIO
------ -----
from the date of this
Amendment until
December 31, 1997 1.25 to 1.0
At December 31, 1997 until
June 30, 1998, and 1.50 to 1.0
At June 30, 1998 and at
all times thereafter 2.0 to 1.0
E. Amendment to Section 5.2(M). Section 5.2(M) of the Agreement is
hereby amended in its entirety as follows:
"(M) Loans to or Investments in Subsidiaries. Make
loans to, additional equity or other investments in,
or otherwise provide financial accommodations to a
Subsidiary, in excess of $125,000,000 in the aggregate
at any time outstanding (including loans outstanding
on the date hereof under Section 5.2(A)(x) and amounts
incurred by a Subsidiary under Section 5.2(A)(i));
provided, however, that intercompany accounts payable
owed by a Subsidiary to the Borrower shall be
considered loans for purposes of this covenant if such
accounts payable are not paid within 90 days of
origination.
F. Additional Covenants. Section 5.2 is hereby amended to add two (2)
new covenants as set forth in their entirety as follows:
"(N) Restriction on Non-U.S. Assets. Make any direct
or indirect purchase or other acquisition of or
investment in assets, including lease obligations,
from or with any person located outside of the United
States, in the aggregate in excess of 25% of the
Borrower's consolidated Tangible Net Worth.
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(O) Limitation on Concentration of Leased Equipment.
Permit, or allow a Subsidiary to permit the net book
value of equipment or finance contracts from any one
lessee to exceed 10% of the Borrower's consolidated
Tangible Net Worth, except as set forth in Schedule
5.2(O) attached hereto.
Section 5. Amendment to Section 5.3. Section 5.3 of the Agreement is
hereby amended to add new subsection (J) to read in its entirety as follows:
(J) As soon as possible and in any event within 30
days after the end of each calendar month, a Borrowing
Base Certificate (when Funded Debt to Total
Capitalization exceeds 45%), a lease portfolio
listing, lease receivables aging report and a used
trailer inventory report for the Borrower and
Subsidiaries, in form and substance satisfactory to
the Bank.
Section 6. Amendments to Section 6.1. Section 6.1 of the Agreement is
hereby amended to insert the words "or any Subsidiary" after the word
"Borrower", wherever it appears in the following subsections: (B), (C), (D),
(F), (G), or (H). Section 6.1 is also amended to add a new subsection (J) as
follows:
(J) The failure of the Borrower to
complete the private sale of $45,000,000 of its
Senior Notes on or before March 31, 1997, (unless
such date is extended by the Bank in its sole
discretion), pursuant to a Note Purchase
Agreement dated as of December 1, 1996.
Section 7. Conditions Precedent. On or prior to the date of execution of
this Third Amendment, the Borrower shall deliver to the Bank the following
documents or complete the following actions, the receipt, sufficiency and
completion of which are conditions precedent to the Bank's obligation to amend
the Agreement:
(A) An executed original of this Third Amendment;
(B) An executed replacement Revolving Line of Credit
Promissory Note;
(C) A Secretary's Certificate and Borrowing
Resolutions of the Executive Committee of the Board of
Directors of the Borrower;
(D) A Borrower's counsel opinion in form and substance
acceptable to the Bank and its counsel;
(E) A Compliance Certificate in form and substance
acceptable to the Bank;
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(F) A Borrowing Base Certificate;
(G) Payment of an Amendment Fee in the amount of $85,000 which
will be deducted from the Borrower's demand account maintained with
the Bank on the date of closing; and
(H) The closing of the Borrower's private placement of up to
$100,000,000 of Senior Notes of the Borrower pursuant to a Note
Purchase Agreement dated as of December 1, 1996 and the receipt of
$55,000,000 in initial proceeds of the sale.
Section 8. Effect of Third Amendment. Except as specifically amended in
this Third Amendment, the Agreement shall continue in full force and effect as
therein stated and the Borrower certifies that all representations and
warranties contained therein are true and correct as if made as of the date
hereof and that no Event of Default has occurred and is continuing under the
Agreement.
(1)
