EXHIBIT 10(a)
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment") is made and
entered into as of July 25, 2003 by and among TITAN DISTRIBUTION, INC., TITAN
INTERNATIONAL, INC., TITAN INVESTMENT CORPORATION, TITAN TIRE CORPORATION, TITAN
TIRE CORPORATION OF NATCHEZ, TITAN TIRE CORPORATION OF TEXAS, TITAN WHEEL
CORPORATION OF ILLINOIS, TITAN WHEEL CORPORATION OF IOWA, TITAN WHEEL
CORPORATION OF SOUTH CAROLINA, and TITAN WHEEL CORPORATION OF VIRGINIA, (the
"Borrowers") and the Requisite Lenders.
RECITALS
A. Borrowers, Credit Parties, General Electric Capital
Corporation, as Agent and Lender and the other Lenders are parties to that
certain Credit Agreement, dated as of December 21, 2001 (as amended from time to
time, the "Credit Agreement"). All capitalized terms used herein and not
otherwise defined shall have the meaning assigned to them in the Credit
Agreement.
B. Investment has entered into an agreement to sell the Polymer
Stock for $4,636,000 and the execution and delivery by Borrowers (or certain of
them) and Polymer Enterprises, Inc. ("Polymer") of a supply agreement in which
Polymer agrees to supply bladders to the Borrowers at a discount (such
transactions are sometimes herein referred to as the "Polymer Stock Sale", and
such agreement to supply bladders is sometimes herein referred to as the
"Polymer Supply Agreement").
C. Borrowers request that the Lenders amend the Credit Agreement
as specifically set forth herein.
D. Lenders executing this Amendment constitute Requisite Lenders.
AGREEMENT
In consideration of the Recitals and of the mutual promises and
covenants contained herein, Lenders and Borrowers agree as follows:
1. Consent and Acknowledgment.
(a) Polymer Stock. Requisite Lenders consent and
acknowledge that the Polymer Stock Sale is permitted under Section 6.8(c)
of the Credit Agreement, and direct Agent, in connection with the Polymer
Stock Sale, to release all Liens held by Agent which have attached or
otherwise encumber the Polymer Stock.
(b) Consent to Revolving Credit Facility Amendment.
Requisite Lenders hereby authorize the Agent to consent to the Revolving
Credit Facility Amendment.
2. Amendment of Credit Agreement. Subject to the satisfaction
of the conditions precedent set forth in Section 3 below, the Credit
Agreement is hereby amended as follows:
(a) Term Loan Payments. Section 1.1(b)(ii) of the Credit
Agreement is deleted and replaced with the following:
"(ii) Borrowers shall pay the principal amount of the
Term Notes in thirteen (13) consecutive installments as
follows:
Payment Date Installment Amount
------------ ------------------
April 1, 2002 $ 825,000*
July 1, 2002 $ 825,000*
October 1, 2002 $ 825,000*
January 1, 2003 $ 825,000*
April 1, 2003 $1,650,000*
July 1, 2003 $1,650,000*
October 1, 2003 $1,650,000
January 1, 2004 $1,650,000
April 1, 2004 $2,475,000
July 1, 2004 $2,475,000
October 1, 2004 $2,475,000
January 1, 2005 $2,475,000
January 14, 2005 $79,200,000
* The Requisite Lenders acknowledge that these principal payments have been
paid."
(b) Mandatory Prepayments-- Asset Disposition. Section
1.3(b)(ii) of the Credit Agreement is deleted and replaced with the
following:
"(ii) Except as set forth in clauses (b)(v) and (vi)
below, immediately upon receipt by any Credit Party of
proceeds of any asset disposition (including condemnation
proceeds, but excluding proceeds of asset dispositions
permitted by Section 6.8(a) and (b)) or any sale of Stock of
any Subsidiary of any Credit Party, Borrowers shall prepay the
Loans in an amount equal to all such proceeds, net of (A)
commissions and other
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reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable
by Borrowers in connection therewith (in each case, paid to
non-Affiliates), (B) transfer taxes, (C) amounts payable to
holders of senior Liens (to the extent such Liens constitute
Permitted Encumbrances hereunder), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP
in connection therewith (the "Net Proceeds). The Credit
Parties are not required to make any mandatory prepayment of
the Loans with respect to an asset disposition authorized by
Section 6.8(a). Any such prepayment shall be applied in
accordance with clause (c) below."
(c) Mandatory Prepayments -- Polymer Stock Sale. The
Credit Agreement is amended by adding a new Section 1.3(b)(vi) as follow:
"(vi) If the Polymer Stock Sale closes on or prior to
October 1, 2003, Borrowers shall prepay the Term Loan on the
date of such closing in a principal amount equal to $5,775,000
(which is equal to the principal installments due on the Term
Loan, pursuant to Section 1.1(b)(ii) above, on October 1,
2003, January 1, 2004 and April 1, 2004). Any such prepayment
shall be applied in accordance with clause (c) below."
(d) Mandatory Prepayments. Section 1.3(c) of the Credit
Agreement is deleted and replaced with the following:
"(c) Application of Certain Mandatory
Prepayments. Any prepayments made by any Credit Party pursuant
to clauses (b)(ii), (b)(iii), (b)(iv) or (b)(v) above shall be
applied as follows: first, to Prepayment Fees, other Fees and
reimbursable expenses of Agent then due and payable pursuant
to any of the Loan Documents; second, to interest then due and
payable on the Term Loan; and last, to prepay the scheduled
installments of the Term Loan in inverse order of maturity
until such Loan shall have been prepaid in full.
Notwithstanding anything herein to the contrary, any
prepayment made by any Credit Party pursuant to clause (b)(vi)
above shall be applied to fully pay the quarterly principal
installments due October 1, 2003, January 1, 2004 and April 1,
2004 as set forth in Section 1.1(b)(ii) above."
(e) Limitations on the Revolving Credit Facility. Section
5.11 of the Credit Agreement is amended by adding the following sentence
to the end of such Section:
"Notwithstanding the foregoing, Borrowers are
authorized to execute and deliver the Revolving Credit
Facility Amendment."
(f) Indebtedness -- Prepayment/Redemption. Section 6.3(b)
of the Credit Agreement is deleted and replaced with the following:
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"(b) No Credit Party shall, directly or indirectly,
voluntarily purchase, redeem, defease or prepay any principal
of, premium, if any, interest or other amount payable in
respect of any Indebtedness, other than (i) the Obligations,
(ii) Indebtedness secured by a Permitted Encumbrance if the
asset securing such Indebtedness has been sold or otherwise
disposed of in accordance with Sections 6.8(b) or (c), (iii)
Permitted Subordinated Bond Payments provided that no Default
or Event of Default shall have occurred and be continuing or
would result after giving effect to any such Permitted
Subordinated Bond Payment, and (iv) other Indebtedness
(excluding Subordinated Debt) not in excess of $500,000."
(g) Restricted Payments. Section 6.14 of the Credit
Agreement is deleted and replaced with the following:
"6.14 Restricted Payments. No Credit Party shall make
any Restricted Payment, except (a) intercompany loans and
advances between Borrowers to the extent permitted by Section
6.3 above, (b) dividends and distributions by Subsidiaries of
any Borrower paid to such Borrower, (c) employee loans
permitted under Section 6.4(b) above, (d) scheduled payments
of interest with respect to the Subordinated Debt; (e) payment
of directors' fees and reimbursable expenses of directors
consistent with past practices; (f) payment of a cash dividend
in any calendar quarter of not more than $500,000 in the
aggregate with respect to International's common stock; (g)
Permitted Company Redemption on or after January 1, 2001, and
(h) Permitted Subordinated Bond Payments; provided that no
Default or Event of Default shall have occurred and be
continuing or would result after giving effect to any payment
pursuant to clause (d), (f), (g) or (h) above."
(h) Definitions - Changes. The definitions of
"Commitment Termination Date" and "Tangible Net Worth" in Annex A of the
Credit Agreement are deleted and replaced with the following:
"Commitment Termination Date" shall mean the earliest
of (a) January 14, 2005, (b) the date of termination of
Lenders' obligations to permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of
indefeasible prepayment in full by Borrowers of the Loans.
"Adjusted Tangible Net Worth" shall mean with respect
to any Person at any date, the Net Worth of such Person at
such date, (a) excluding, however, from the determination of
the total assets at such date, (i) all capitalized
organizational expenses, capitalized research and development
expenses, trademarks, trade names, copyrights, patents, patent
applications, licenses and rights in any thereof, and other
intangible items (with the exception that goodwill shall not
be excluded), (ii) all unamortized debt discount and expense,
and (iii) any write-up in the book
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value of any asset resulting from a revaluation
thereof, (b) if such Person is International, adding back to
total assets at such date, an amount equal to the write-off
taken by International in the third quarter of 2002 to the
value of International's investment in Fabrica Uruguaya de
Neumaticos S.A., (c) excluding, however, from the
determination of total liabilities at such date that portion
of pension liabilities which such Person is required to
recognize as result of GAAP, (d) adding back to total assets
at such date an amount not to exceed $50,000,000 equal to the
sum of (i) the aggregate cumulative net loss incurred since
the Closing Date of TTC of Natchez, TTC of Texas and
Distribution, and (ii) the loss recognized in connection with
the Polymer Stock Sale, and (e) any cumulative translation
adjustment required by GAAP as a result of currency
fluctuations shall not be included in the calculation of
Adjusted Tangible Net Worth.
(i) Definitions - New. Annex A of the Credit Agreement
is amended by adding to such Annex in alphabetical order the following
terms:
"Amendment" shall mean that certain First Amendment
to Credit Agreement, dated as of July 25, 2003 by and between
Borrowers and Requisite Lenders.
"Intercreditor Agreement" shall mean that certain
Intercreditor Agreement, dated as of December 21, 2001 by and
between Agent and LaSalle Bank National Association as the
lender under the Revolving Credit Facility, as the same is
amended, modified, restated or renewed from time to time.
"Permitted Subordinated Bond Payments" shall mean
payments or redemptions by International of the Subordinated
Bonds which (i) do not exceed $1,500,000 in the aggregate,
(ii) are made on or prior to December 31, 2003, and (iii)
retire (or redeem) such Subordinated Bonds at a discount of no
less than 45%. Permitted Subordinated Bond Payments may be
made with proceeds from the Revolving Credit Facility."
"Polymer Stock Sale" shall have the meaning set forth
in the recitals to the Amendment.
"Polymer Supply Agreement" shall have the meaning set
forth in the recitals to the Amendment.
"Revolving Credit Facility Amendment" shall mean that
certain amendment to the loan agreement which evidences the
Revolving Credit Facility, dated as of July 25, 2003 and which
is substantially in the form attached to the Amendment as
Exhibit A.
(j) Financial Covenants. Clause (a) of Annex G of the
Credit Agreement is deleted and replaced with the following:
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"(a) Minimum Adjusted Tangible Net Worth. Borrowers
and their Subsidiaries on a consolidated basis shall maintain
at all times Adjusted Tangible Net Worth equal to or greater
than $150,000,000.00."
3. Conditions Precedent to Effectiveness of Amendment. Sections
1 and 2 of this Amendment shall not be effective unless and until each of the
following conditions shall have been satisfied in Agent's discretion (unless
Agent has received written notice of a determination by Requisite Lenders of
satisfaction or non-satisfaction of such conditions, in which case such
determination shall control):
(a) Execution of Amendment. Borrowers and the Requisite
Lenders shall each have executed and delivered this Amendment.
(b) Acknowledgment of Guarantors. The Acknowledgment
and Agreement of each of the Guarantors set forth at the end of this
Amendment, shall be duly executed by each Guarantor.
(c) Amendment of Revolving Credit Facility. Borrowers
shall have delivered to Agent and each of the Lenders a fully executed copy
of the Revolving Credit Facility Amendment, and all of the conditions
precedent set forth therein shall have been satisfied.
(d) Fee. Borrowers shall have paid to Agent an
amendment fee in the amount of $200,000 payable to those Lenders signatory
to this Amendment in an amount, with respect to each such Lender, equal to
such Lender's Pro Rata Share, which fee shall be fully earned and payable
in cash on the date hereof. Any portion of the fee which is not distributed
to the Lenders pursuant to the Section 3(d) shall be returned to the
Borrower Representative.
(e) Polymer Supply Agreement. Borrowers shall have
delivered to Agent and each of the Lenders a fully executed copy of the
Polymer Supply Agreement.
(f) Proceeds of the Polymer Stock Sale. Borrowers shall
have delivered to Agent the mandatory prepayment required by Section
1.3(b)(ii) of the Credit Agreement as a result of the Polymer Stock Sale.
4. Representations and Warranties. Borrowers hereby, jointly and
severally, represent and warrant to Agent and the Lenders as follows:
(a) Recitals. The Recitals in this Amendment are true
and correct in all respects.
(b) Incorporation of Representations. All
representations and warranties of the Borrowers in the Credit Agreement are
incorporated herein in full by this reference and, except with respect to
representations and warranties that were made as of and limited to a
specific date, are true and correct as of the date hereof.
(c) Corporate Power; Authorization. Borrowers have the
corporate or organizational power, and have been duly authorized by all
requisite action (corporate or otherwise), to execute and deliver this
Amendment and to perform their obligations hereunder
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and thereunder. This Amendment has been duly executed and delivered by
each of the Borrowers.
(d) Enforceability. This Amendment is the legal, valid
and binding obligation of Borrowers, enforceable against each Borrower in
accordance with its terms.
(e) No Violation. The execution, delivery and
performance of this Amendment by each of the Borrowers does not and will
not (i) violate any law, rule, regulation or court order to which any
Borrower is subject; (ii) conflict with or result in a breach of any
Borrower's Articles of Incorporation, Bylaws, or other organizational
documents or any agreement or instrument to which any Borrower is party or
by which it or its properties are bound, or (iii) result in the creation or
imposition of any lien, security interest or encumbrance on any property of
any Borrower, whether now owned or hereafter acquired, other than liens in
favor of Agent.
(f) Obligations Absolute. The obligation of Borrowers
to repay the Loans, together with all interest accrued thereon, is absolute
and unconditional, and there exists no right of set off or recoupment,
counterclaim or defense of any nature whatsoever to payment of the Loans.
(g) Default. No Default or Event of Default exists under
the Credit Agreement or the Loan Documents other than the Existing
Defaults.
5. Effect and Construction of Amendment. Except as expressly
provided herein, the Loan Documents shall remain in full force and effect in
accordance with their respective terms, and this Amendment shall not be
construed to:
(a) impair the validity, perfection or priority of any
lien or security interest securing the Notes;
(b) waive or impair any rights, powers or remedies of
Agent under the Loan Documents;
(c) constitute an election of remedies to the exclusion
of any other remedies;
(d) constitute an agreement by Agent or require Agent to
waive any Defaults or extend the term of the Credit Agreement or the time
for payment of any of the Loans; or
(e) evidence the obligations of any Lender to make any
further Loans or other extensions of credit to Borrowers.
6. Release of Claims and Waiver. Borrowers, hereby release,
remise, acquit and forever discharge Agent, Lenders, and Agent's and Lenders'
employees, agents, representatives, consultants, attorneys, fiduciaries,
servants, officers, directors, partners, predecessors, successors and assigns,
subsidiary corporations, parent corporations, and related corporate divisions
(all of the foregoing hereinafter called the "Released Parties"), from any and
all actions and causes of action, judgments, executions, suits, debts, claims,
demands, liabilities, obligations, damages and expenses of any and every
character, known or unknown, direct and/or indirect, at law or in equity, of
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whatsoever kind or nature, whether heretofore or hereafter arising, for or
because of any matter or things done, omitted or suffered to be done by any of
the Released Parties prior to and including the date of execution hereof, and in
any way directly or indirectly arising out of or in any way connected to this
Amendment, the Credit Agreement and the Loan Documents, including but not
limited to, claims relating to any settlement negotiations (all of the foregoing
hereinafter called the "Released Matters"). Borrowers acknowledge that the
agreements in this paragraph are intended to be in full satisfaction of all or
any alleged injuries or damages arising in connection with the Released Matters.
Each Borrower represents and warrants to Agent and the Lenders that it has not
purported to transfer, assign or otherwise convey any right, title or interest
of such Borrower in any Released Matter to any other Person and that the
foregoing constitutes a full and complete release of all Released Matters.
7. Costs and Expenses. The Borrowers hereby reaffirm their
agreement under the Credit Agreement to pay or reimburse Agent on demand for all
costs and expenses incurred by Agent in connection with the Credit Agreement,
the Collateral Documents and all other documents contemplated thereby, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrowers specifically
agree to pay all fees and disbursements of counsel to Agent for the services
performed by such counsel in connection with the preparation of this Amendment
and the documents and instruments incidental hereto.
8. Miscellaneous.
(a) Further Assurances. Borrowers agree to execute such
other and further documents and instruments as Agent may reasonably request
to implement the provisions of this Amendment and to perfect and protect
the liens and security interests created by the Credit Agreement.
(b) Benefit of Agreement. This Amendment shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, their respective successors and assigns. No other person or entity
shall be entitled to claim any right or benefit hereunder, including,
without limitation, the status of a third-party beneficiary of this
Amendment.
(c) Entire Agreement. Except as expressly set forth
herein, there are no agreements or understandings, written or oral, between
Borrowers, Lenders or Agent relating to this Amendment, the Credit
Agreement or the other Loan Documents that are not fully and completely set
forth herein or therein.
(d) Severability. The provisions of this Amendment are
intended to be severable. If any provisions of this Amendment shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or enforceability without in any manner affecting the
validity or enforceability of such provision in any other jurisdiction or
the remaining provisions of this Amendment in any jurisdiction.
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(e) Governing Law. This Amendment shall be governed by
and construed in accordance with the internal substantive laws of the
State of Illinois, without regard to the choice of law principles of
such state.
(f) Counterparts; Facsimile Signatures. This Amendment
may be executed in any number of counterparts and by different parties to
this Amendment on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute one
and the same agreement. Any signature delivered by a party by facsimile
transmission shall be deemed to be an original signature hereto.
(g) Notices. Any notices with respect to this Amendment
shall be given in the manner provided for in the Credit Agreement.
(h) Survival. The provisions set forth in Section 6 above
shall survive the Termination Date.
(i) Amendment. No amendment, modification, rescission,
waiver or release of any provision of this Amendment shall be effective
unless the same shall be in writing and signed by the parties hereto.
(j) References. All references in the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby; and any
and all references in the Security Documents to the Credit Agreement shall
be deemed to refer to the Credit Agreement as amended hereby.
(k) No Other Waiver. The execution of this Amendment
and acceptance of any documents related hereto shall not be deemed to be a
waiver of any Default or Event of Default under the Credit Agreement or
breach, default or event of default under any Loan Document or other
document held by Agent, whether or not known to Agent and whether or not
existing on the date of this Amendment.
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