THIRD AMENDMENT TO CREDIT AGREEMENT
Exhibit 10
THIRD
AMENDMENT TO CREDIT AGREEMENT
This
Third Amendment to Credit Agreement (“Third Amendment”) dated as of June 28,
2006, is entered into among Titan International, Inc. (the “Company”), the
financial institutions that are or may from time to time become parties to
the
Credit Agreement hereinafter described and LaSalle Bank National Association
(“LaSalle”), both individually as a Lender and as Administrative Agent
(collectively, the “Lenders”). Capitalized terms used herein without definition
shall have the same meanings herein as ascribed to such terms in the Credit
Agreement.
WITNESSETH:
WHEREAS,
the Company and LaSalle were among the parties to that certain Credit Agreement
dated as of July 23, 2004 (together with all amendments, exhibits, schedules,
attachments and appendices thereto, the “Credit Agreement”); and
WHEREAS, all
of the parties to the Credit Agreement entered into a First Amendment to
Credit
Agreement dated as of February 16, 2005, whereby certain terms and conditions
of
the Credit Agreement were modified and revised (the “First Amendment”); and
WHEREAS,
the Company and the Lenders entered into a Second Amendment to Credit Agreement
dated as of October 21, 2005 whereby certain other changes in the terms and
conditions of the Credit Agreement were agreed upon and made (the “Second
Amendment”) (as used herein, Credit Agreement shall mean the Credit Agreement as
modified and amended by the First Amendment and the Second Amendment);
and
WHEREAS,
the Company has requested that the Credit Agreement again be amended,
inter
alia,
to (i)
increase the amount of the Revolving Commitment from $200,000,000 to
$250,000,000; (ii) add Titan Tire Corporation of Xxxxx, an Ohio corporation
(“Titan Bryan”), as a Domestic Subsidiary of the Company thereunder; (iii)
obtain the Lenders’ consent to the terms of the Continental Acquisition; and
(iv) add new Lenders to fund a portion of the increased Revolving
Commitment;
WHEREAS,
the Lenders are willing to so amend the Credit Agreement pursuant to the
terms
and conditions of this Third Amendment, subject to and effective upon the
closing of the Continental Acquisition (defined hereinbelow) and compliance
with
the other conditions set forth hereinbelow (the “Amendment Effective Date”).
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, Company and Lenders hereby agree to the
following, as of the Amendment Effective Date:
1. The
following definitions set forth in Section 1.1 of the Credit Agreement are
hereby amended in their entirety to be and to read as follows:
“Base
Rate Margin”
means
one and one-quarter percent (1.25%).
“Capital
Expenditures”
means
all expenditures which, in accordance with GAAP, would be required to be
capitalized and shown on the consolidated balance sheet of the Company,
including expenditures in respect of Capital Leases, but excluding expenditures
made in connection with (a) the Goodyear Acquisition; (b) the Continental
Acquisition; (c) the purchase of the Brownsville Facility for a purchase
price
not in excess of $18,000,000; and (d) the replacement, substitution or
restoration of assets to the extent financed (i) from insurance proceeds
(or
other similar recoveries) paid on account of the loss of or damage to the
assets
being replaced or restored or (ii) with awards of compensation arising of
the
taking by eminent domain or condemnation of the assets being
replaced.
“Domestic
Subsidiaries”
means
collectively, Titan Tire Corporation, an Illinois corporation, Titan Tire
Corporation of Freeport, an Illinois corporation, Titan Tire Corporation
of
Bryan, an Ohio corporation, Titan Wheel Corporation of Illinois, an Illinois
corporation and Titan Wheel Corporation of Virginia, a Virginia corporation
and
any Subsidiary formed in compliance with this Agreement after the Closing
Date.
“Eligible
Inventory”
means
Inventory of the Company or any Domestic Subsidiary which meets each of the
following requirements:
(a) it
(i) is
subject to a perfected, first priority Lien in favor of the Agent and (ii)
is
not subject to any other assignment, claim or Lien;
(b) it
is
salable and not obsolete or discontinued;
(c) it
is not
Inventory produced in violation of the Fair Labor Standards Act and subject
to
the “hot goods” provisions contained in Title 29 U.S.C. §215;
(d) it
is not
subject to any agreement or license which would restrict the Agent’s ability to
sell or otherwise dispose of such Inventory;
(e) it
is
located in the United States or in any territory or possession of the United
States that has adopted Article 9 of the Uniform Commercial Code;
(f) it
does
not materially breach any of the representations, warranties or covenants
pertaining to Inventory set forth in the Loan Documents; and
(g) it
has a
value not in excess of $30,000,000 in the aggregate if it is stored outside
of
the Mortgaged Real Property, the Freeport Facility, the Xxxxx Facility, the
Brownsville Facility and that facility currently occupied by Titan Wheel
Corporation of Virginia as its principal place of business; provided, however,
that Inventory at the Brownsville Facility shall be excluded from such cap
only
in the event Administrative Agent has received with respect thereto a Landlord’s
Waiver in a form acceptable to Administrative Agent or, in the event the
Brownsville Facility is acquired by Borrower and encumbered by a mortgage,
Administrative Agent has received a Mortgagee’s Waiver in a form acceptable to
it.
Inventory
which is at any time Eligible Inventory but which subsequently fails to meet
any
of the foregoing requirements shall forthwith cease to be Eligible
Inventory.
“L/C
Fee Rate”
shall
mean 1.25% for standby letters of credit, and 2.75% for commercial letters
of
credit.
“LIBOR
Margin”
means
two and three-fourths percent (2.75%).
“Mortgage”
means
a
mortgage, deed of trust or similar instrument granting the Administrative
Agent
a Lien on real property owned by the Company in Quincy, Illinois, by Titan
Tire
Corporation in Des Moines, Iowa, and, if purchased by a Loan Party who finances
said purchase by a Loan made pursuant hereto, on the Brownsville Facility,
but
excluding the Freeport Facility, the Xxxxx Facility and all other real estate
owned by any Loan Party.
“Revolving
Commitment”
means
$250,000,000, as reduced from time to time pursuant to Section
6.1.
“Revolving
Loan Availability”
means
that the lesser of (i) the Revolving Commitment, and (ii) the Borrowing
Base.
2. Section
1.1 of the Credit Agreement is hereby amended by inserting the following
definitions in their proper alphabetical order:
“Bryan
Facility”
means
the real estate, building and improvements in Bryan, Ohio owned by Continental
and to be acquired by Titan Bryan as part of the Continental
Acquisition.
“Continental
Acquisition”
means
the acquisition by Titan Xxxxx of certain assets of Continental including,
but
not limited to, the Xxxxx Facility upon the terms and conditions set forth
in an
Asset Purchase Agreement between Titan Xxxxx, the Company and Continental
to be
entered into prior to the Amendment Effective Date (the “Continental Asset
Purchase Agreement”).
“Continental”
means
Continental Tire North America, Inc., an Ohio corporation.
“Effective
Date”
means
October 21, 2005.
3. Section
2.1.3(a) of the Credit Agreement is hereby amended in its entirety to be
and
read as follows:
“(a)
the
aggregate Stated Amount of all Letters of Credit shall not at any time exceed
$50,000,000.00.”
4. Section
10.1.5(a) of the Credit Agreement is hereby amended in its entirety to be
and
read as follows:
(a)
the
Company shall deliver a Borrowing Base Certificate within twenty-five (25)
days
after the end of each calendar month if during such month the average daily
balance of the Revolving Outstandings exceeded $225,000,000.00;
5. Section
10.6 of the Credit Agreement is hereby amended in its entirety to be and
read as
follows:
10.6 Use
of
Proceeds.
Use the
proceeds of the Loans, and the Letters of Credit, solely to refinance existing
debt of the Company; to fund and pay for the Continental Acquisition or other
acquisitions approved by the Required Lenders, for working capital purposes,
for
Capital Expenditures and for other general business purposes; and not use
or
permit any proceeds of any Loan to be used, either directly or indirectly,
for
the purpose, whether immediate, incidental or ultimate, of “purchasing or
carrying” any Margin Stock.
6. Section
11.2 of the Credit Agreement is hereby amended by amending the introductory
paragraph of said Section 11.2 in its entirety to be and read as
follows:
“11.2 Liens.
Not,
and not permit any other Loan Party to, create or permit to exist any Lien
on
any of its real or personal properties, assets or rights of whatsoever nature
(whether now owned or hereafter acquired) including without limitation the
Freeport Facility and the Xxxxx Facility, except:”
7. Section
11.5 of the Credit Agreement is hereby amended in its entirety to be and
read as
follows:
“11.5 Mergers,
Consolidations, Sales.
Not,
and not permit any other Loan Party to, (a) create any Subsidiary; (b) without
the Required Lenders’ prior written consent, not to be unreasonably withheld, to
consummate any merger or consolidation, or purchase or otherwise acquire
all or
substantially all of the assets or any Capital Securities of any class of,
or
any partnership or joint venture interest in, any other Person, (c) sell,
transfer, convey or lease all or any substantial part of its assets or Capital
Securities (including the sale of Capital Securities of any Subsidiary) except
for sales of Inventory in the ordinary course of business or as otherwise
allowed in this Agreement, or (d) sell or assign with or without recourse
any
receivables. Notwithstanding the foregoing, the following shall be permitted:
(i) with Required Lenders’ prior written consent (such consent not to be
unreasonably withheld) the sale, transfer, conveyance or other disposition
by a
Loan Party of machinery and equipment during the term of this Agreement having
an Orderly Liquidation Value not exceeding $50,000,000 in the aggregate,
provided however, no disposition may occur if and to the extent that any
such
contemplated disposition is for a cash amount which is less than the Orderly
Liquidation Value of any such asset; (ii) transfers between Obligors provided
that the Agent maintains a first priority perfected security interest in
the
asset transferred; (iii) sales of the Capital Securities of any Foreign
Subsidiary; and (iv) the sale, transfer, conveyance or other disposition
by a
Loan Party of equipment or fixtures that are obsolete or no longer used or
useful in such Loan Party’s business and having a value not exceeding $3,000,000
in the aggregate in any Fiscal Year, provided such equipment or fixtures
is
replaced by equipment or fixtures of comparable value or worth and provided
further that Agent maintains a first priority perfected security interest
in the
replacement equipment or fixtures. With respect to any disposition of assets
or
other properties permitted pursuant to clause
(i)
above,
Agent agrees, upon reasonable prior written notice, to release the Lien on
such
assets or other properties in order to permit the applicable Loan Party to
effect such disposition and shall execute and deliver to Company at Company’s
expense, appropriate UCC-3 termination statements and other releases as
reasonably requested by Company. The
Goodyear Acquisition and the Continental Acquisition are expressly consented
to
by the Lenders but only in accordance with the terms and conditions of the
Asset
Purchase Agreement and the Continental Asset Purchase Agreement.”
8. Section
11.14.1 of the Credit Agreement is hereby amended in its entirety to be and
read
as follows:
“11.14.1 Minimum
Book Value.
Not
permit the aggregate book value of Eligible Accounts and Eligible Inventory
to:
(a) be less than $75,000,000.00 at any time; or (b) be less than $100,000,000.00
at any time during any 30 day period in which the average daily balance of
the
Revolving Outstandings for such period exceeds $110,000,000.00”
9. Section
11.14.2 of the Credit Agreement is hereby amended in its entirety to be and
read
as follows:
“11.14.2
Fixed
Charge Coverage Ratio.
In the
event the average daily balance of the Revolving Outstandings exceeds
$225,000,000.00 during any 30 day period ending during any Fiscal Quarter,
not
permit the Fixed Charge Coverage Ratio for the Computation Period ending
on the
last day of such Fiscal Quarter to be less than 1.0 to 1.0.”
10. Section
11.14.3 of the Credit Agreement is hereby amended in its entirety to be and
read
as follows:
“11.14.3 Collateral
Coverage.
Not
permit (a) the sum of the Borrowing Base; plus
the
unrestricted cash of all Obligors; divided
by
(b) the
Revolving Outstandings, to be less than one and one-fifth (1.20).”
11. Section
11.17 of the Credit Agreement is hereby amended in its entirety to be and
to
read as follows:
“11.17 Inventory.
Not
permit Inventory having an aggregate book value exceeding Sixty Million and
No/100 Dollars ($60,000,000.00) at any time to be in a location or locations
other than the Mortgaged Real Property, the Brownsville Facility, the Freeport
Facility, the Xxxxx Facility, and that facility currently occupied by Titan
Wheel Corporation of Virginia as its principal place of business; provided,
however, that Inventory at the Brownsville Facility shall be excluded from
such
cap only in the event Administrative Agent has received with respect thereto
a
Landlord’s Waiver in a form acceptable to Administrative Agent or, in the event
the Brownsville Facility is acquired by Borrower and encumbered by a mortgage,
Administrative Agent has received a Mortgagee’s Waiver in a form acceptable to
it.”
12. Section
15.1(a) of the Credit Agreement is hereby amended in its entirety to be and
read
as follows:
“(a) extend
or
increase the Commitment or Pro Rata Share of any Lender without the written
consent of such Lender,”
13. Amended
Schedules 9.8, 9.16, 9.17, 9.21, 9.24, 11.1 and 11.2 each in the form attached
to this Third Amendment as Schedules 9.8, 9.16, 9.17, 9.21, 9.24, 11.1 and
11.2,
respectively, are hereby made a part of the Credit Agreement in substitution
of
their counterparts which were originally attached hereto.
14. Amended
Annex “A”, Annex “B”, Exhibit “B” and Exhibit “C” each in the form attached to
this Second Amendment as Annex “A”, Annex “B”, Exhibit “B” and Exhibit “C”,
respectively, are hereby made a part of the Credit Agreement in substitution
and
replacement of their counterparts which were originally attached hereto.
15. The
effectiveness of this Third Amendment is subject to the satisfaction of all
of
the following conditions precedent:
(a) Lenders
shall have accepted this Third Amendment in the spaces provided for that
purpose
below.
(b) The
Guaranty and Collateral Agreement shall have been (i) amended by the parties
thereto to add Titan Xxxxx as a Grantor and Guarantor; and (ii) reaffirmed
by
the existing Guarantors and Grantors, and the stock of Titan Xxxxx together
with
a signed, undated stock assignment shall be delivered to Attorneys’ Title
Guaranty Fund, Inc. as escrow agent.
(c) The
Company shall pay to the Administrative Agent on the Amendment Effective
Date a
fee for and in consideration of the approval and issuance of this Third
Amendment as set forth in the certain fee letter from Administrative Agent
to
the Company dated May 25, 2006 and shall pay all reasonable expenses of
Administrative Agent relating to this Third Amendment.
(d) The
Lenders shall have received from the Company new Notes in the amount of
$250,000,000.00 executed in connection with this Third Amendment.
(e) The
closing of the Continental Acquisition shall have occurred (subject only
to the
delivery of the cash consideration by Titan Xxxxx or the Company) in accordance
with the terms of the Continental Asset Purchase Agreement and Administrative
Agent shall have received true and complete copies of the executed Continental
Asset Purchase Agreement and all such closing documents relating to the
Continental Acquisition as it shall request, and all of which documents,
including the Continental Asset Purchase Agreement, shall contain terms and
conditions that are reasonably satisfactory to Lenders.
(f) The
Obligors shall be in full compliance with the terms of the Loan Documents
and no
Event of Default or Default shall have occurred or be continuing before or
after
giving effect to this Third Amendment and the Continental
Acquisition.
(g) The
Administrative Agent has received (i) audited consolidated financial statements
for the Company and its Domestic Subsidiaries for the fiscal year ending
December 31, 2005 and (ii) unaudited interim consolidated financial statements
for the Company and its Domestic Subsidiaries for the fiscal quarterly period
ended after the latest fiscal year referred to in clause (i) above.
(h) The
Administrative Agent shall have received the results of recent tax, judgment
and
UCC lien searches in each relevant jurisdiction with respect to the Obligors
(and Continental), and such searches shall reveal no liens on any of the
assets
of the Obligors (including those to be acquired in the Continental Acquisition)
except for the Permitted Liens.
(i) If
requested, the Administrative Agent shall have received a solvency certificate
from the chief executive officer of the Company which shall document the
solvency of the Company and its Domestic Subsidiaries after giving effect
to
this Third Amendment and the Continental Acquisition.
(j) If
requested, the Administrative Agent shall have received an environmental
audit
with respect to the Xxxxx Facility.
(k) The
Administrative Agent shall have received such legal opinions as Administrative
Agent may reasonably request.
(l) The
Administrative Agent shall be satisfied that, since December 31, 2005 there
has
been no material adverse change in the business, assets, liabilities,
properties, condition (financial or otherwise), results of operations or
prospects of the Obligors, or the assets to be acquired in the Continental
Acquisition.
(m) The
Administrative Agent shall be satisfied with the results of its legal and
business due diligence regarding the Continental Acquisition and shall receive
from the Company at or before closing evidence that the EBITDA of Continental’s
Xxxxx Facility for the most recently ended fiscal year was
positive.
(n) All
governmental and third party approvals necessary in connection with the
Continental Acquisition, the financing contemplated hereby and the continuing
operations of the Obligors shall have been obtained on terms reasonably
satisfactory to the Administrative Agent and shall be in full force and effect,
and all applicable waiting periods shall have expired without any action
being
taken or threatened by any competent authority which would restrain, prevent
or
otherwise impose adverse conditions on the Continental Acquisition or the
financing thereof contemplated herein, except for such governmental and third
party approvals the failure to obtain which could not, individually or in
the
aggregate, reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business, assets, liabilities, properties,
results of operations or prospects of the Obligors taken as a
whole.
(o) The
Administrative Agent shall have received a third party appraisal of the fixed
assets (equipment) to be acquired in the Continental Acquisition, in form
and
with results acceptable to Administrative Agent in its sole and absolute
discretion.
(p) All
other
legal matters incident to the execution and delivery hereof or contemplated
hereby or incident to the Continental Acquisition, and including the delivery
of
all additional or ancillary documentation reasonably requested by Agent,
and the
completion of the matters and documents necessary to perfect the Lenders’
first-priority security interest in the assets being acquired in the Continental
Acquisition, shall be completed and satisfactory to the Lenders and their
respective counsel.
Upon
the
Amendment Effective Date, the Lenders shall cancel and return to the Company
the
Notes which were originally delivered to them by the Company at the closing
of
the Second Amendment to the Credit Agreement. If the Amendment Effective
Date
shall not have occurred on or before July 31, 2006 this Third Amendment shall
be
null and void and of no further effect.
16. In
order
to induce the Lenders to execute and deliver this Third Amendment, the Company
hereby represents to the Lenders that immediately after giving effect to
this
Third Amendment and the Continental Acquisition, each of the representations
and
warranties by Company set forth in Section 9 of the Credit Agreement as amended
hereby (except those representations that relate expressly to an earlier
date)
are and shall be true and correct (except that the representations contained
in
Section 9.4 shall be deemed to refer to the most recent financial statements
of
the Company delivered to Lenders pursuant to Section 10.1 of the Credit
Agreement) and that Company and the Subsidiaries are and shall be in full
compliance with the terms of the Credit Agreement as so amended and the Loan
Documents and that no Event of Default or Default shall be continuing or
shall
result after giving effect to this Third Amendment.
17. This
Third Amendment may be executed in any number of counterparts and by different
parties hereto on separate counterparts, each of which when so executed shall
be
an original but all of which shall constitute one and the same instrument.
Except as specifically waived or amended hereby, all of the terms and conditions
of the Credit Agreement shall stand and remain unchanged and in full force
and
effect. The Credit Agreement, as amended hereby and all rights and powers
created thereby and thereunder or under such other documents are in all respects
ratified and confirmed. No reference to this Third Amendment need be made
in any
note, instrument or other document making reference to the Credit Agreement,
any
reference to the Credit Agreement in any such note, instrument or other document
(including, without limitation, the Loan Documents) to be deemed to be a
reference to the Credit Agreement as amended hereby.
This
Third Amendment shall be binding upon and enure to the benefit of the Lenders
and the Company and their successors and assigns.
This
Third Amendment shall be construed and governed by and in accordance with
the
laws of the State of Illinois (without regard to principles of conflicts
of
laws).
