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Exhibit 10.3
AMENDMENT NO. 2 TO
FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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This Amendment No. 2 (this "Amendment") to that certain Fourth
Amended and Restated Loan and Security Agreement (as hereinafter defined), is
dated as of this 29th day of May 1997 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, as amended by that certain Amendment No. 1 to Fourth
Amended and Restated Loan and Security agreement dated as of July 31, 1996 (as
so amended and as otherwise amended, restated, supplemented or otherwise
modified from time to time, the "Fourth Amended and Restated Loan and Security
Agreement" or the "Loan and Security Agreement");
WHEREAS, the parties hereto wish to modify the Loan and
Security Agreement in order to waive and/or reset certain financial covenants
and in certain other respects described herein;
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 Amendment; and
WHEREAS, each of the Borrowers and WQD acknowledges that it
will also receive substantial direct and indirect benefits by reason of this
Amendment, 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 or 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. WAIVER. Agent and Lenders hereby waive the Event of Default
arising solely as a result of Borrower's failure to comply with the provisions
contained in Section 7.9(e)(ii) of the Credit Agreement for the quarter ended
December 31, 1996 PROVIDED THAT Interest Expense Coverage for such quarter shall
have equaled at least 1.75.
3. AMENDMENT TO LOAN AND SECURITY AGREEMENT. The parties
hereto agree to amend the Loan and Security Agreement as set forth in this
SECTION 3.
3.1 AMENDMENT TO NET WORTH COVENANT. SECTION 7.9(b) of the
Loan and Security Agreement is hereby deleted in its entirety and the following
substituted in its stead:
(b) NET WORTH. The Company, the Borrowers and WQD on
a consolidated basis shall, at all times during the periods
indicated below, maintain a Net Worth of not less than the
amount set forth below opposite such period:
PERIOD NET WORTH
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3/31/97 - 6/29/97 $14,000,000
6/30/97 - 9/29/97 14,460,000
9/30/97 - 12/30/97 14,920,000
12/31/97 - 3/30/98 15,380,000
3/31/98 - 6/29/98 15,840,000
6/30/98 - 9/29/98 16,850,000
9/30/98 - 12/30/98 17,860,000
12/31/98 - remaining term 18,870,000
of Agreement
3.2 AMENDMENT TO LIABILITIES TO NET WORTH COVENANT. SECTION
7.9(c) of the Loan and Security Agreement is hereby deleted in its entirety and
the following substituted in its stead:
(c) LIABILITIES TO NET WORTH. The Company, the
Borrower and WQD on a consolidated basis shall, at all times
during the periods indicated 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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3/31/97 - 9/29/97 5.00
9/30/97 - 3/30/98 4.50
3/31/98 - 6/29/98 4.00
6/30/98 - 9/29/98 2.50
9/30/98 - 12/30/98 2.25
12/31/98 - remaining term 2.25
of Agreement
3.3 AMENDMENT OF INTEREST EXPENSE COVERAGE COVENANT. SECTION
7.9(e) of the Loan and Security Agreement is hereby deleted in its entirety and
the following 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 until 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.
(iv) As of the end of each quarter from
4/1/98 until the termination 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 1.0.
3.4 AMENDMENT OF FIXED CHARGE COVERAGE COVENANT. SECTION
7.9(f) of the Loan and Security Agreement is hereby deleted in its entirety and
the following substituted in its stead:
(f) FIXED COVERAGE RATIO. 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
fourth below opposite such quarter:
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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 1.00
4. REPRESENTATIONS AND WARRANTIES.
4.1 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, WQD
and each of 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 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
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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.
5. 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) AMENDMENT TO SUBORDINATED NOTES AGREEMENTS. An
execution copy of an amendment to the Banc One Capital Partners
Corporation Loan Agreement among Banc One Capital Partners, L.P., an
Ohio limited partnership and the successor by merger to Banc One
Capital Partners Corporation, the Company and WQMC, and an amendment to
the Banc One Capital Partners II, Limited Partnership Loan Agreement
among BOCP II, Limited Liability Company, an Ohio limited liability
company and the successor by merger to Banc One Capital Partners II,
the Company and WQMC, each providing a waiver consistent with that set
forth in Section 2 hereof (if any such waiver is required) and
amendments to the financial covenants identified in Section 3 hereof,
all on terms satisfactory to the Agent and each certified as true and
correct by an officer of the Company.
(3) OTHER DOCUMENTS. Such other documents as the
Agent may reasonably request.
6. REFERENCE TO AND EFFECT ON LOAN AND SECURITY AGREEMENT.
6.1 REFERENCES. Upon the effectiveness of this Amendment each
reference in (a) the Loan and Security Agreement to "this Agreement,"
"hereunder," "hereof," or words of similar import and (b) any other Loan
Document to "the Agreement" or "the Loan and Security Agreement," shall, in each
case and except as otherwise specifically stated therein, mean and be a
reference to the Loan and Security Agreement as amended hereby.
6.2 EFFECTIVENESS. Except as specifically amended hereby, each
Loan Document shall remain in full force and effect and is hereby ratified and
confirmed. The execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of Lenders or agent under any
Loan Document, or, except as specifically provided in Section 2 hereof,
constitute a waiver of any provision of any Loan Document.
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7. 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.
8. 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 (a) receipt by
SBCC of counterparts hereof duly executed by the Company, each Borrower, the
Required Lenders and SBCC and (b) satisfaction of the other conditions precedent
set forth in Section 5 hereof.
9. HEADINGS. Headings used in this Amendment are for convenience of
reference only and shall not affect the construction of this Amendment.
10. 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, together
with the liens granted pursuant thereto, 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.
11. 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 AND DECISIONS (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 as a Lender
and as Agent
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------- By: /s/ Xxxx X. Xxxxxxx
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Its: Chief Financial Officer
------------------------------- Its: 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: Assistant Vice President
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WQD, INC.
KEY CORPORATE CAPITAL INC.
By: /s/ Xxxxxxx X. Xxxxxx (f/k/a Society National Bank),
--------------------------------- as a Lender
Its: Treasurer
--------------------------------
By: /s/ Xxxxxxx X. Xxxxxx
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WASTEQUIP MANUFACTURING Its: Assistant Vice President
COMPANY -----------------------------------
By: /s/ Xxxxxxx X. Xxxxxx
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Its: Chief Financial Officer
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