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Exhibit 10.4
AMENDMENT NO. 3 TO
FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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This Amendment No. 3 (this "Amendment") to that certain Fourth
Amended and Restated Loan and Security Agreement (as hereinafter defined), is
dated as of this 21st day of April, 1998 by and among Wastequip, Inc., an Ohio
corporation with its principal place of business and chief executive office at
00000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxx 00000, (the "Company"),
WQD, Inc., an Ohio corporation (f/k/a Xxxxxxxx, Inc., "WQD"), Cusco Fabricators,
Inc., an Ohio corporation ("Cusco"), Wastequip Manufacturing Company, an Ohio
corporation (f/k/a Accurate Industries, Inc., "WQMC"), the financial
institutions party hereto (the "Lenders"), and Sanwa Business Credit
Corporation, a Delaware corporation with an office at Xxx Xxxxx Xxxxxx Xxxxx,
00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 ("SBCC"), in its individual capacity as a
Lender hereunder and as Agent and Collateral Agent for the Lenders (the
"Agent").
W I T N E S S E T H:
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WHEREAS, the Company, WQD, Cusco, WQMC, the Lenders and Agent
are parties to that certain Fourth Amended and Restated Loan Agreement dated as
of February 16, 1996 (the "Loan and Security Agreement");
WHEREAS, the parties hereto wish to amend the Loan and
Security Agreement in order (i) to extend the term of the Revolving Loans, (ii)
to modify certain covenants, and (iii) to reduce the interest rate on the
Revolving Loans, the Series A Term Loans and the WQMC Series B Term Loan;
WHEREAS, the Company acknowledges that, as the parent
corporation of each of the Borrowers and WQD, it will receive substantial direct
and indirect benefits by reason of this Agreement;
WHEREAS, each of the Borrowers and WQD acknowledges that it
will also receive substantial direct and indirect benefits by reason of this
Agreement, including, without limitation, by virtue of the various
interrelationships among the Borrowers and WQD.
NOW THEREFORE, in consideration of the premises and the terms
and conditions contained herein, and of any loans or extensions of credit
heretofore, now or hereafter made to or for the benefit of the Borrowers by the
Agent and any Lender, the parties hereto hereby agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Loan and Security
Agreement.
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2. AMENDMENT TO LOAN AND SECURITY AGREEMENT. The parties
hereto agree to amend the Loan and Security Agreement as set forth in this
SECTION 2.
2.1 DEFINITION OF "APPLICABLE BORROWING MARGIN" The definition
of "Applicable Borrowing Margin" in SUBSECTION 1.1 of the Loan and Security
Agreement is hereby deleted in its entirety and the following substituted in its
stead:
"APPLICABLE BORROWING MARGIN" with respect to each Loan (i)
prior to March 31, 1998 (effective as of December 1, 1997) shall be as
set forth in the table below, per annum based on the type of such Loan:
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REVOLVER AND SERIES A TERM LOANS WQMC SERIES B TERM LOAN
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PRIME LIBOR PRIME LIBOR
----- ----- ----- -----
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1.25% 3.25% 1.75% 3.75%
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and (ii) on and after March 31, 1998 shall be the applicable percentage
amount set forth in the table below, per annum, based upon the type of
such Loan and the Most Recent Senior Leverage Ratio on such date:
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MOST RECENT SENIOR REVOLVER AND SERIES A WQMC SERIES B TERM
LEVERAGE RATIO TERM LOAN LOAN
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PRIME LIBOR PRIME LIBOR
----- ----- ----- -----
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>3.5 to 1 1.50% 3.50% 2.00% 4.00%
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>3.0 <=3.5 to 1 1.25% 3.25% 1.75% 3.75%
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>2.5 <=3.0 to 1 1.00% 3.00% 1.50% 3.50%
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>2.0 <=2.5 to 1 0.75% 2.75% 1.25% 3.25%
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>1.5 <=2.0 to 1 0.50% 2.50% 1.00% 3.00%
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<=1.5 to 1 0.25% 2.25% 0.75% 2.75%
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; PROVIDED, HOWEVER, any change which has the effect of reducing the
Applicable Borrowing Margin then in effect for any Loan may only be
made if at the time of such reduction there exists no Default or Event
of Default.
2.2 AMENDMENT TO THE REVOLVING LOAN INITIAL TERM. The first
sentence of SUBSECTION 2.12 of the Loan and Security Agreement is hereby deleted
in its entirety and the following substituted in its stead:
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With respect to the Revolving Loan Obligations, this
Agreement shall be effective until March 1, 2001 (the "Revolving Loan
Initial Term"), subject to annual renewals thereafter as herein
provided (each renewal being referred to as a "Revolving Loan Renewal
Term"); PROVIDED, HOWEVER, that all of the rights and remedies of the
Agent and the Lenders under this Agreement shall survive such
termination until all of the Obligations under this Agreement and the
other Financing Agreements have been finally paid in full.
2.3 AMENDMENT TO RATIO OF CURRENT ASSETS. SUBSECTION 7.9(a) of
the Loan and Security Agreement is hereby deleted in its entirety and the
following substituted in its stead:
(a) RATIO OF CURRENT ASSETS. The Company shall, at all times
during the periods indicated below, maintain a Current Ratio of not
less than the amount set forth below opposite such period:
PERIOD CURRENT RATIO
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Closing Date - 6/29/96 0.95
6/30/96 - 3/30/97 0.95
3/31/97 - 6/29/97 1.00
6/30/97 - 6/29/99 1.10
6/30/99 - remaining term of Agreement 1.20
2.4 AMENDMENT TO LIABILITIES TO NET WORTH. SUBSECTION 7.9(C)
of the Loan and Security Agreement is hereby deleted in its entirety and the
following is substituted in its stead:
(c) LIABILITIES TO NET WORTH. The Company, the
Borrowers and WQD on a consolidated basis shall, at all times
during the periods set forth below, maintain a ratio of
Liabilities to Net Worth not in excess of the ratio set forth
below opposite such period:
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PERIOD LIABILITIES TO NET WORTH
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Closing - 06/29/96 6.00
06/30/96 - 09/29/96 6.00
09/30/96 - 12/30/96 5.50
12/31/96 - 03/30/97 5.00
03/31/97 - 09/29/97 5.00
09/30/97 - 03/30/98 4.50
03/31/98 - 06/29/98 4.00
06/30/98 - 09/29/98 3.50
09/30/98 - 12/30/98 3.50
12/31/98 - 03/30/99 3.00
03/31/99 - 06/29/99 3.00
06/30/99 - 09/29/99 2.50
09/30/99 - remaining term of Agreement 2.25
; PROVIDED, HOWEVER, until the Company has obtained the New Equity Contribution
contemplated by subsection 4.2(c), Liabilities to Net Worth shall be calculated
by increasing "Liabilities" in such calculation by $6.48 million and reducing
"Net Worth" in such calculation by $6.48 million.
2.5 AMENDMENT TO INTEREST EXPENSE COVERAGE. SUBSECTION 7.9(e)
of the Loan and Security Agreement is hereby deleted in its entirety and the
following is substituted in its stead:
(e) INTEREST EXPENSE COVERAGE. The Company shall maintain
Interest Expense Coverage of not less than the following amounts for
the following periods of time:
(i) As of the end of the quarter ending 3/31/97, on a
cumulative basis for the period commencing 4/1/96 and ending
as of 3/31/97, not less than 1.50 to 1.0.
(ii) As of the end of each quarter from 4/1/97 to
12/31/97, on a rolling twelve month basis ending as of the
last day of each such quarter during such period, not less
than 1.50 to 1.0.
(iii) As of the end of the quarter ending 3/31/98 on
a twelve month basis ending as of 3/31/98, not less than 1.70
to 1.0.
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(iv) As of the end of the quarter commencing 4/1/98
and ending 6/30/98 on a twelve month basis ending as of the
last day of such quarter, not less than 1.75 to 1.00.
(v) As of the end of the quarter commencing 7/1/98
and ending 9/30/98 on a twelve month basis ending as of the
last day of such quarter, not less than 1.80 to 1.00.
(vi) As of the end of the quarter commencing 10/1/98
and ending 12/31/98 on a twelve month basis ending as of the
last day of such quarter, not less than 2.00 to 1.00
(vii) As of the end of each quarter from 1/1/99 until
the remaining term of this Agreement on a rolling twelve month
basis ending as of the last day of each such quarter during
such period, not less than 2.25 to 1.00.
2.6 AMENDMENT TO FIXED CHARGE COVERAGE. Subsection 7.9(f) of
the Loan and Security Agreement is hereby deleted in its entirety and the
following attached hereto is substituted in its stead:
(f) FIXED CHARGE COVERAGE. The Company shall maintain
a ratio of Adjusted EBITDA to Fixed Charges as of the end of each
quarter on a rolling twelve month basis ending on the last day of each
such quarter of not less than the ratio set forth below opposite such
quarter:
QUARTER ENDING ADJUSTED EBITDA TO FIXED CHARGES
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3/31/97 .85
6/30/97 .90
9/30/97 .80
12/31/97 .90
3/31/98 and each fiscal quarter 1.00
from 4/1/98 until the remaining
term of this Agreement
3. REPRESENTATIONS AND WARRANTIES.
3.1 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES. In
order to induce SBCC and the Lenders to enter into this Amendment and to amend
the Loan and Security Agreement in the manner provided herein, the Company and
the Borrowers represent and warrant to SBCC and the Lenders that: (i) all of the
representations and warranties contained in the Loan and Security Agreement are
true and correct in all material respects as of the date hereof except
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to the extent such representations and warranties relate to an earlier date, in
which case they are true as of such date, (ii) after giving effect to this
Amendment, no Default or Event of Default exists, (iii) the Company and each
Borrower has all requisite corporate power and authority to enter into this
Amendment and the Loan and Security Agreement as amended hereby and to perform
its obligations thereunder, (iv) the execution, delivery and performance of this
Amendment and the Loan and Security Agreement as amended hereby have been duly
and effectively authorized by all necessary corporate action on the part of the
Company and each Borrower, (v) the execution, delivery and performance of this
Amendment and the Loan and Security Agreement as amended hereby will not violate
any charter, by-law or contract provision, or any license, franchise or permit,
law, statute, regulation order or decree, (vi) the execution, delivery and
performance of this Amendment and the Loan and Security Agreement as amended
hereby will not conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any of the Financing Agreements
or Obligations of the Company or any of the Borrowers, result in or require the
creation of or imposition of any lien, charge, security interest or encumbrance
upon any of the properties or assets of any Loan Party under any existing
indenture, mortgage, deed of trust, loan or credit agreement or other material
agreement or instrument to which such Loan Party is a party or by which such
Loan Party or any of its property may be bound or affected (other than liens
created pursuant to the Financing Agreements), (vii) no order, decree or
judgment of or in any court of competent jurisdiction makes the execution,
delivery or performance of this Amendment or the Loan and Security Agreement as
amended hereby illegal and no action, suit, or proceeding shall be pending or
threatened or any investigation by any governmental or regulatory authority
shall have been commenced which could result in any such order, decree or
judgment, and (viii) no authorization, consent, or approval of, or filing with,
any public body or authority of the United States or any State thereof which has
not already been made or obtained is required for the execution, delivery or
performance of this Amendment or the Loan and Security Agreement as amended
hereby and no authorization, consent or approval of any third party, which has
not been obtained, is required with respect thereto.
4. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT. As
conditions precedent to the effectiveness of this Amendment, the Agent shall
have received the following documents, in form and substance satisfactory to the
Agent, and all of the transactions contemplated by each such document shall have
been consummated or each condition contemplated by each such documents shall
have been satisfied:
(1) AGREEMENT. Six copies of this Agreement, duly
executed by the Company and each Borrower.
(2) SECURITY DOCUMENTS. The Loan Parties shall
deliver such amendments and/or reaffirmation of the Loan Documents as
Agent may request.
(3) LEGAL OPINION(S). The legal opinion of Xxxxxx
Halter & Xxxxxxxx counsel to the Company and each Borrower in form and
substance satisfactory to the
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Agent and its counsel and such opinions of local counsel as Agent may
request in form and substance satisfactory to the Agent and its
counsel.
(4) BOARD RESOLUTIONS. Certified copies of
resolutions of the board of directors (or, where authorized, an
executive committee thereof) of each Loan Party authorizing the
execution and delivery of and the consummation of the transactions
contemplated by this Agreement, the other Financing Agreements, and all
other documents or instruments to be executed and delivered in
conjunction herewith and therewith.
(5) INCUMBENCY CERTIFICATES. Incumbency certificates
with respect to the officers of each Loan Party executing the documents
referred to in this Section 4.
(6) OTHER DOCUMENTS. Such other documents as the
Agent may reasonably request.
5. EFFECT OF AMENDMENT; NO WAIVER OF DEFAULTS. Execution of this
Amendment by SBCC shall not operate as a waiver of (i) any other right, power or
remedy of SBCC under the Loan and Security Agreement or any Financing Agreement
or (ii) any Default or Event of Default under such agreements whether existing
prior to or after the effectiveness hereof.
6. COSTS, EXPENSES AND TAXES; INDEMNITY. The provisions of subsection
2.16 of the Loan and Security Agreement are hereby incorporated by reference as
if fully set forth herein mutatis mutandis and made applicable to this
Amendment.
7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. This Amendment
shall become effective as of the date first above written upon receipt by SBCC
of counterparts hereof duly executed by the Company, each Borrower and SBCC.
8. HEADINGS. Headings used in this Amendment are for convenience of
reference only and shall not affect the construction of this Amendment.
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9. REAFFIRMATION OF LOAN DOCUMENTS AND GUARANTEE.
(a) The parties hereto agree and acknowledge that nothing
contained in this Amendment in any manner or respect limits or terminates any of
the provisions of the Loan and Security Agreement or the Financing Agreements
other than as expressly set forth herein and further agree and acknowledge that
the Loan and Security Agreement and each of the Financing Agreements remain and
continue in full force and effect and are hereby ratified and reaffirmed in all
respects. No delay on the part of SBCC in exercising any of its respective
rights, remedies, powers and privileges under the Loan and Security Agreement or
any of the Financing Agreements or partial or single exercise thereof, shall
constitute a waiver thereof. None of the terms and conditions of this Amendment
may be changed, waived, modified or varied in any manner, whatsoever, except in
accordance with the Loan and Security Agreement.
(b) Without limiting the generality of the foregoing, the
Company and each Borrower acknowledges, ratifies and affirms that the Guarantee
set forth in Section 11 of the Loan and Security Agreement remains in full force
and effect notwithstanding the amendments contemplated hereby.
10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH ALL OF THE PROVISIONS OF THE ILLINOIS UNIFORM COMMERCIAL CODE
AND BY THE OTHER INTERNAL LAWS (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF ILLINOIS.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first above written.
WASTEQUIP, INC. SANWA BUSINESS CREDIT
CORPORATION, individually and as Agent
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------- By: /s/ Xxxxxxxx X. Xxxxxx
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Its: Chief Financial Officer
-------------------------------- Its: Xxxxxxxx X. Xxxxxx, Vice President
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CUSCO FABRICATORS, INC.
XXXXXX FINANCIAL, INC.,
as Lender
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------- By: /s/ Xxxxx X. Xxxxxxxxxx
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Its: Treasurer
-------------------------------- Its: Assist. Vice President
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WQD, INC.
KEYBANK CORPORATE
By: /s/ Xxxxxxx X. Xxxxxx CAPITAL INC.,
--------------------------------- as Lender
Its: Vice President & Treasurer
--------------------------------
By: /s/ Xxxx X. Xxxxxx
------------------------------------
WASTEQUIP MANUFACTURING Its: Assistant Vice President
COMPANY -----------------------------------
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Its: Chief Financial Officer
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