Wabash National Annual Report 2002

Plain-text annual report

================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER: 1-10883 WABASH NATIONAL CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 52-1375208 (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 1000 SAGAMORE PARKWAY SOUTH, 47905 LAFAYETTE, INDIANA (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (765) 771-5300Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- ------------------- Common Stock, $.01 Par Value New York Stock ExchangeSeries A Preferred Share Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes X . No___. Indicate by check mark if disclosure of delinquent filers pursuant to Item405 of Regulation S-K is not contained herein, and will not be contained, to thebest of registrant's knowledge, in definitive proxy orbest of registrant's knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is an accelerated filer (asdefined in Rule 12b-2 of the Act). Yes X No____. The aggregate market value of voting stock held by non-affiliates of theregistrant as of June 30, 2002 was $230,188,920 based upon the closing price ofthe Company's common stock as quoted on the New York Stock Exchange compositetape on such date. The number of shares outstanding of the registrant's Common Stock as ofApril 4, 2003 was 25,661,565. Part III of this Form 10-K incorporates by reference certain portions ofthe Registrant's Proxy Statement for its Annual Meeting of Stockholders to befiled within 120 days after December 31, 2002.================================================================================ 2 TABLE OF CONTENTS WABASH NATIONAL CORPORATION FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 PAGES PART I.Item 1. Business.............................................................................. 4Item 2. Properties............................................................................ 11Item 3. Legal Proceedings..................................................................... 11Item 4 Submission of Matters to Vote of Security Holders..................................... 13PART II.Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters.............. 13Item 6. Selected Financial Data............................................................... 14Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................................................... 15Item 7A. Quantitative and Qualitative Disclosures about Market Risk............................ 32Item 8. Financial Statements and Supplementary Data........................................... 33Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......................................................................... 68PART III.Item 10. Directors and Executive Officers of the Registrant.................................... 68Item 11. Executive Compensation................................................................ 68Item 12. Security Ownership of Certain Beneficial Owners and Management........................ 68Item 13. Certain Relationships and Related Transactions........................................ 69Item 14. Controls and Procedures............................................................... 69PART IV.Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K....................... 69SIGNATURES ...................................................................................... 72 3PART IDisclosure Regarding Forward-Looking Statements. This report, includingdocuments incorporated herein by reference, contains forward-looking statements.Additional written or oral forward-looking statements may be made by the Companyfrom time to time in filings with the Securities and Exchange Commission (SEC) or otherwise. The words "believe," "expect," "anticipate," and "project" andsimilar expressions identify forward-looking statements, which speak only as ofthe date the statement is made. Such forward-looking statements are within themeaning of that term in Section 27A of the Securities Act of 1933, as amended,and Section 21E of the Securities Exchange Act of 1934, as amended. Suchstatements may include, but are not limited to, information regarding revenues,income or loss, capital expenditures, acquisitions, number of retail branchopenings, plans for future operations, financing needs or plans, liquidity, theimpact of inflation and plans relating to services of the Company, as well asassumptions relating to the foregoing. Forward-looking statements are inherentlysubject to risks and uncertainties, some of which cannot be predicted orquantified. Future events and actual results could differ materially from thoseset forth in, contemplated by or underlying the forward-looking statements.Statements in this report, including those set forth in "Business" and"Management's Discussion and Analysis of Financial Condition and Results ofOperations", describe factors, among others, that could contribute to or causesuch differences.ITEM 1 -- BUSINESS Wabash National Corporation ("Wabash" or "Company") designs, manufacturesand markets standard and customized truck trailers and intermodal equipmentunder the Wabash(R), Fruehauf(R) and RoadRailer(R) trademarks. TheCompany's wholly-owned subsidiary Wabash National Trailer Centers (WNTC),formerly known as North American Trailer Centers(TM), sells new and usedtrailers through its retail network, provides maintenance service for its ownand competitors' trailers and related equipment, and offers rental and leasingprograms to its customers for new and used trailers. Wabash also purchases andproduces aftermarket parts which its sells through its Wabash National Partsdivision as well as WNTC. Wabash seeks to identify and produce proprietary products in the trucking,intermodal and rail industries that offer added value to customers and,therefore, have the potential to generate higher profit margins than thoseassociated with standardized products. Wabash has developed and/or acquiredseveral proprietary products and processes that, it believes, are recognizedwithin its markets as providing additional value to users as compared toconventional product offerings. While the Company believes it is a competitiveproducer of standardized products, it emphasizes the development and manufactureof distinctive and more customized products and believes that it has theengineering and manufacturing capability to produce these products efficiently.The Company expects to continue a program of product development and selectiveacquisitions of quality proprietary products that distinguish the Company fromits competitors and provide opportunities for enhanced profit margins. The Company's factory-owned retail distribution network providesopportunities to effectively distribute its products and also offers nationalservice and support capabilities for customers. The retail sale of new and usedtrailers, aftermarket parts and maintenance service generally provides enhancedmargin opportunities. The retail distribution network also offers long and shortterm leasing for new and used trailers. Wabash was incorporated in Delaware in 1991 and is the successor bymerger to a Maryland corporation organized in 1985. Wabash operates in twosegments: (1) manufacturing and (2) retail and distribution. Financial resultsby segment and financial information regarding geographic areas and export salesare discussed in detail within Footnote 19, Segment Reporting, of theaccompanying Consolidated Financial Statements. Additional informationconcerning the Company can be found on the Company's website atwww.wabashnational.com. The Company makes its electronic filings with the SEC,including its annual reports on Form 10-K, quarterly reports on Form 10-Q,current reports on Form 8-K and amendments to these reports, available on itswebsite free of charge as soon as practicable after it files or furnishes themwith the SEC. Information on the website is not part of this Form 10-K. 4Manufacturing The Company believes that it is one of the largest manufacturers of trucktrailers. Wabash markets its products directly, and through independent dealersand company-owned retail locations to truckload and less-than-truckload (LTL)common carriers, private fleet operators, leasing companies, package carriersand intermodal carriers including railroads. The Company has establishedsignificant relationships as a supplier to many large customers in thetransportation industry, including, but not limited to, the following: - Truckload Carriers: Schneider National, Inc.; Werner Enterprises, Inc.; Swift Transportation Corporation; J.B. Hunt Transport Services, Inc.; Heartland Express, Inc.; Crete Carrier Corporation; Knight Transportation, Inc.; USXpress Enterprises, Inc.; Frozen Food Express Industries (FFE); Interstate Distributor Co. - Leasing Companies: Transport International Pool (TIP); Penske Truck Leasing; Transport Services, Inc. - Private Fleets: Safeway; Home Depot; The Kroger Company; Sysco Corporation. - Less-Than-Truckload Carriers: Roadway Express, Inc.; Old Dominion Freight Line, Inc.; GLS Leasco; Yellow Services, Inc.; SAIA Motor Freightlines Inc.; Vitran Express. - North American Intermodal Carriers and Railroads: Triple Crown Services (Norfolk Southern); National Rail Passenger Corp. (Amtrak); Burlington Northern Santa Fe Railroad; Canadian National Railroad; Transportacion Martima Mexicana (TMM); Alliance Shippers.Retail and Distribution As of December 31, 2002 the Company had 39 factory-owned retail outletsmostly in major, metropolitan markets as well as two rental locations. TheCompany believes it has the largest North American company-owned distributionsystem in the industry that sells used trailers, aftermarket parts andmaintenance service. The Company believes that the retail sale of new and used trailers,aftermarket parts and maintenance service will generally produce higher grossmargins and tend to be more stable in demand than the manufacturing segment. TheCompany also provides or makes available rental and leasing programs primarilyto retail customers for used trailers, through its subsidiary, Apex TrailerLeasing and Rentals, L.P. Leasing can be less volatile than the sale ofequipment while at the same time providing the Company with an additionalchannel of distribution for used trailers taken in trade on the sale of newtrailers.THE TRUCK TRAILER INDUSTRY The United States market for truck trailers and related products hashistorically been cyclical and has been affected by overall economic conditionsin the transportation industry as well as regulatory changes. The first half of2002 reflected the residual effect of the decline in demand in 2001. The secondhalf of 2002 reflected a stabilization of capacity and a slight up swing indemand. It is believed that the decline in shipments from 2000 to 2001represents the largest decline in recent history. Management believes that customers historically have replaced trailers incycles that run from approximately five to 12 years, depending on warranty,service and trailer type. Changes in both State and Federal regulation of thesize, safety features and configuration of truck trailers have led tofluctuations in demand for trailers from time to time. However, the Company doesnot expect any significant market effects from changes in government regulationin the near term. A large percentage of the new trailer market has historically been servedby the ten largest truck trailer manufacturers, including the Company. Price,flexibility in design and engineering, product quality and durability, warranty,dealer service and parts availability are competitive factors in the marketsserved. Historically, there has been manufacturing over-capacity in the trucktrailer industry. 5 The following table sets forth new trailer production for the Company, itsnine largest competitors and for the trailer industry as a whole within NorthAmerica: 2002 2001 2000 1999 1998 1997 ------- ------- ------- ------- ------- ------- WABASH ....... 27,149(4) 31,682 66,283 69,772 61,061 48,346(1)Great Dane ... 26,000 21,650 46,698 58,454 50,513 37,237Utility ...... 17,574 16,334 28,780 30,989 26,862 23,084Stoughton .... 10,300 6,250 15,050 14,673 11,750 11,700Manac ........ 6,900 5,865 8,052 8,200 * *Strick ....... 5,200 5,500 10,500 11,000 10,959 10,488Hyundai ...... 4,763 5,413 6,261 5,716 5,200 3,445Trailmobile .. 4,664(2) 13,858 28,089 31,329 23,918 18,239Transcraft(3) 3,703 3,018 4,005 5,311 5,317 4,509Fontaine(3) .. 3,050 3,100 6,000 6,500 5,894 5,063Total Industry 139,658 140,084 270,817 317,388 278,821 222,550(1) Includes production of 1,467 units by Fruehauf in 1997 prior to the acquisition by Wabash of certain assets of Fruehauf.(2) Includes Trailmobile Canada only. Trailmobile U.S. filed for bankruptcy in 2001 and was subsequently liquidated.(3) Transcraft and Fontaine both build primarily platform types of trailers.(4) Does not include approximately 6,000 intermodal containers.* Data not available Sources: Individual manufacturer information, some of which is estimated,provided by Southern Motor Cargo Magazine (C)1999 (for 1997-1998 data) andTrailer Body Builders Magazine (C)2002 (for 1999-2002 data). Industry totalsprovided by Southern Motor Cargo Magazine (C)1999 (for 1997-1998 data) andA.C.T. Research Company, L.L.C. (for 1999-2002 data).REGULATION Truck trailer length, height, width, maximum weight capacity and otherspecifications are regulated by individual states. The Federal Government alsoregulates certain safety features incorporated in the design of truck trailers,including regulations that require anti-lock braking systems (ABS) and thatdefine rear impact guard standards. Manufacturing operations are subject toenvironmental laws enforced by federal, state and local agencies (See"Environmental Matters").PRODUCT LINES Manufacturing Segment Since its inception, the Company has expanded its product offerings from asingle product into a broad line of transportation equipment and relatedproducts and services. As a result of its long-term relationships, the Companyhas been able to work closely with customers to create competitive advantagesthrough development and production of productivity-enhancing transportationequipment. The sale of new trailers through the manufacturing segmentrepresented approximately 59.2%, 59.2% and 76.0% of net sales during 2002, 2001and 2000, respectively. The Company's current transportation equipment productlines include the following: - DuraPlate(R) trailers. In late 1995, the Company introduced its DuraPlate(R) composite plate wall dry van trailer. Features of the composite plate trailer include increased durability and greater strength than the aluminum plate trailer that it replaces. The composite material is a high-density polyethylene core with a steel skin. DuraPlate(R) trailers are purchased by all segments of the dry van customer base. The Company holds a number of patents regarding its composite trailer and believes this proprietary trailer will continue to become a greater source of business. - Smooth aluminum vans and doubles. Smooth aluminum vans and doubles, also known as sheet and post trailers are the standard trailer product purchased by customers in most segments of the trucking industry. These products represent the most common trailer sold throughout the Company's retail distribution network. 6 - Refrigerated trailers. The Company's proprietary process for building these trailers involves injecting insulating foam in the sidewalls and roof in a single process prior to assembly, which improves both the insulation capabilities and durability of the trailers. These trailers are used by refrigerated carriers specializing in the movement of commodities that require controlled temperatures such as perishable food products. They are also used by private fleets such as those operated by large grocery companies. - DuraPlate(R) domestic containers. During 2001 the Company entered the domestic container market through the introduction of a stackable 53 foot domestic container with DuraPlate(R) sidewalls. Domestic containers are utilized by intermodal carriers and are carried either on flat cars or stacked two-high in special "Double-Stack" railcars. The use of the proprietary DuraPlate(R) material provides significant advantages in customer appeal, cargo carrying capacity and damage resistance when compared to conventional domestic containers. The Company believes it is the only supplier offering a complete line of intermodal equipment, including the domestic container, piggyback trailers and the RoadRailer(R) intermodal system. - Plate trailers. Aluminum plate trailers utilize thicker and more durable sidewalls than standard sheet and post or fiberglass reinforced plywood ("FRP") construction and avoid the use of interior liners, the life of the trailer is extended and maintenance costs are significantly reduced. In addition, the post used in constructing the sidewalls of the aluminum plate trailer is much thinner and therefore provides greater interior volume than a standard sheet and post trailer. Plate trailers are used primarily by truckload carriers. - RoadRailer(R) equipment. The RoadRailer(R) intermodal system is a patented bimodal technology consisting of a truck trailer and detachable rail "bogie" which permits a trailer to run both over the highway and directly on railroad lines. - Other. The Company's other transportation equipment includes container chassis, rollerbed trailers, soft-sided trailers and converter dollies. These items are either manufactured or are acquired, either on a private label or wholesale basis for distribution through our retail network or direct to customers. Retail and Distribution Segment The Company believes it has the largest, company-owned retail anddistribution network serving the truck trailer industry. Through its retail anddistribution segment, the Company sells the following products: - Transportation Equipment - New. The Company sells new transportation equipment offered by the manufacturing segment. The Company also sells specialty trailers including tank trailers, dump trailers and platform trailers produced by third parties for Wabash. Customers for this equipment typically purchase in smaller quantities for local or regional transportation needs. The sale of new transportation equipment through the retail branch network represented approximately 9.6%, 11.9% and 6.3% of net sales during 2002, 2001 and 2000, respectively. - Aftermarket Parts and Service. The Company offers replacement parts and accessories and provides maintenance service both for its own and competitors' trailers and related equipment. The aftermarket parts business is less cyclical than trailer sales and generally has higher gross profit margins. The Company markets its aftermarket parts and service through its division, Wabash National Parts and WNTC. Management expects that the manufacture and sale of aftermarket parts and maintenance service will be a growing part of its product mix as the number and age of trailers in service increases. Sales of these products and service represented approximately 14.4%, 14.8% and 9.6% of net sales during 2002, 2001 and 2000, respectively. - Rental, Leasing and Finance. In 1991, the Company began to build its in-house capability to provide leasing programs to its customers through Wabash National Finance. In 1998, the Company began offering a rental program for used trailers, primarily on a short-term basis, through its retail branch network. During 1999, the Company began a used trailer financing program through its subsidiary, National Trailer Funding. Through this program, the Company originated finance contracts primarily with small owner-operators with contracts which typically ranged from three to five years in duration. Beginning April 2002, Wabash National 7 Finance and National Trailer Funding discontinued originating new finance contracts and is unwinding existing financial contracts, which as of December 31, 2002, amounted to a $28.1 million portfolio with an average yield of approximately 11%. Leasing revenues represented approximately 4.7%, 4.9% and 2.5% of the Company's net sales during 2002, 2001 and 2000, respectively. - Transportation Equipment - Used. The Company sells used transportation equipment primarily taken in trade from its customers upon the sale of new trailers. The ability to remarket used equipment promotes new sales by permitting trade-in allowances and offering customers an outlet for the disposal of used equipment. During 2001 and 2002, the Company aggressively sold down its used trailer excess inventory. The sale of used trailers represented approximately 11.3%, 8.5% and 5.6% of net sales during 2002, 2001 and 2000, respectively.CUSTOMERS The Company's customer base includes many of the nation's largesttruckload common carriers, leasing companies, LTL common carriers, private fleetcarriers, package carriers and domestic and international intermodal carriers,including railroads. The Company believes it is the sole supplier of dry van andrefrigerated trailers to approximately 15 customers. Sales to these 15 customersaccounted for approximately 52.1%, 57.7% and 41.8% of the Company's new trailersales in 2002, 2001 and 2000, respectively. The retail and distribution businessprimarily services small and mid-sized fleets and individual owner operators inwhich the credit risk varies significantly from customer to customer. International sales, primarily to Canadian customers, accounted forapproximately 9.1%, 9.2% and 3.1% of net sales during 2002, 2001 and 2000,respectively. The Company had one customer, JB Hunt Transport Services, Inc., thatrepresented approximately 10.9%, 19.0% and 11.4% of net sales in 2002, 2001 and2000, respectively. The Company's net sales in the aggregate to its five largestcustomers were 30.3%, 34.4% and 30.5% of its net sales in 2002, 2001 and 2000,respectively. Truckload common carriers include large national lines as well as regionalcarriers. The large national truckload carriers, who continue to gain marketshare at the expense of both regional carriers and private fleets, typicallypurchase trailers in large quantities with highly individualized specifications.Such sales represented approximately 51.0%, 55.2% and 59.7% of the Company's newtrailer sales in 2002, 2001 and 2000, respectively. LTL carriers have experienced consolidation in recent years and theindustry is increasingly dominated by a few large national and several regionalcarriers. Since the Highway Reauthorization Act of 1983 mandated that all statespermit the use of 28-foot double trailers, there has been a conversion of nearlyall LTL carriers to doubles operations. Order sizes for LTL carriers tend to bein high volume and with standard specifications. Such sales representedapproximately 6.0%, 5.3% and 10.5% of new trailer sales in 2002, 2001 and 2000,respectively. Private fleet carriers represent the largest segment of the truck trailerindustry in terms of total units, but are dominated by small fleets of one to100 trailers. Among the larger private fleets, such as those of the large retailchain stores, automotive manufacturers and paper product manufacturers, trucktrailers are often ordered with customized features designed to transportspecialized commodities or goods. Such sales represented approximately 8.0%,8.4% and 6.7% of new trailer sales in 2002, 2001 and 2000, respectively. Leasing companies include large national companies as well as regional andlocal companies. Such sales represented 4.6%, 3.2% and 4.2% of new trailer salesin 2002, 2001 and 2000, respectively. Retail sales of new trailers to independent operators through theCompany's factory-owned distribution network provide the Company with access tosmaller unit volume sales. Such sales represented approximately 14.0%, 16.8% and7.4% of total new trailer sales in 2002, 2001 and 2000, respectively. 8MARKETING AND DISTRIBUTION The Company markets and distributes its products through the followingchannels: - factory direct accounts; - the factory-owned distribution network; and - independent dealerships. Factory direct accounts include larger full truckload, LTL, package andhousehold moving carriers and certain private fleets and leasing companies.These are high volume purchasers. Historically, the Company has focused itsresources on the factory direct market, where customers are highly aware of thelife-cycle costs of trailer equipment and therefore are best equipped toappreciate the design and value-added features of the Company's product. The Company's factory-owned distribution network generates retail sales oftrailers as well as leasing arrangements to smaller fleets and independentoperators. This branch network enables the Company to provide maintenance andother services to customers and provides an outlet for used trailers taken intrade upon the sale of new trailers, which is a common practice with fleetcustomers. In addition to the 39 factory-owned retail outlets and two rentallocations, the Company also sells its products through a nationwide network ofapproximately 40 full-line and 180 parts only independent dealerships, whichgenerally serve the trucking and transportation industry. The dealers primarilyserve intermediate and smaller sized carriers and private fleets in thegeographic region where the dealer is located and on occasion may sell to largefleets. The dealers may also perform service work for many of their customers.RAW MATERIALS The Company utilizes a variety of raw materials and components includingsteel, polyethylene, aluminum, lumber, tires and suspensions, which it purchasesfrom a limited number of suppliers. Significant price fluctuations or shortagesin raw materials or finished components may adversely affect the Company'sresults of operations. In 2002 and for the foreseeable future, the Companyexpects raw materials used in the greatest quantity will be the steel andpolyethylene used in the DuraPlate(R) trailers. Currently both components are inready supply. During 1998, the Company acquired Cloud Corporation and Cloud OakFlooring Company, Inc. (Wabash Wood Products), which were manufacturers oflaminated hardwood floors for the truck body and trailer industry. During thecourse of 2000, the Company increased its hardwood flooring production capacityat its Harrison, Arkansas facility in order to accommodate 100% of the Company'strailer flooring needs. The central U.S. location of the Company's plants givesWabash a competitive advantage in the transportation cost of inbound rawmaterials as well as the cost of delivery of finished product as customers oftenuse trailers coming off the assembly line to deliver freight outbound from theMidwest.BACKLOG The Company's backlog of orders was approximately $208.0 million and$142.1 million at December 31, 2002 and 2001, respectively. The Company'sbacklog of orders for DuraPlate(R) trailers was approximately 78% and 40% oftotal backlog at December 31, 2002 and 2001, respectively. Orders that comprisethe backlog may be subject to changes in quantities, delivery, specificationsand terms. The Company's criteria for determining backlog includes: (1) onlyorders that have been confirmed by the customer in writing, and (2) orders thatwill be included in the Company's production schedule during the next 18 months.The Company expects to fill a majority of its existing backlog of orders by theend of 2003.PATENTS AND INTELLECTUAL PROPERTY The Company holds or has applied for 73 patents in the United States onvarious components and techniques utilized in its manufacture of truck trailers.In addition, the Company holds or has applied for 101 patents in 13 foreigncountries including the European patent community. The Company's patents includeits proprietary DuraPlate(R) product, which the Company believes offers theCompany a significant competitive advantage. The Company also holds or has applied for 42 trademarks in the UnitedStates as well as 35 trademarks in foreign countries. These trademarks includethe Wabash(R) and Fruehauf(R) brand names as 9well as trademarks associated with the Company's proprietary products such asthe DuraPlate(R) trailer and the RoadRailer(R) trailer.RESEARCH AND DEVELOPMENT Research and development expenses are charged to earnings as incurred andwere approximately $2.0 million in each of 2002, 2001 and 2000.ENVIRONMENTAL MATTERS The Company is aware of soil and ground water contamination at some of itsfacilities. Accordingly, the Company has a reserve of approximately $0.9 millionas of December 31, 2002 associated with environmental remediation at thesesites. This reserve was determined based upon currently available informationand management does not believe the outcome of these matters will be material tothe consolidated annual results of operations or financial condition of theCompany. In the second quarter of 2000, the Company received a grand jury subpoenarequesting certain documents relating to the discharge of wastewaters into theenvironment at a Wabash facility in Huntsville, Tennessee, which was closed inthe fourth quarter of 2001 as part of the 2001 restructuring. The subpoenasought the production of documents and related records concerning the design ofthe facility's discharge system and the particular discharge in question. On May16, 2001, the Company received a second grand jury subpoena that sought theproduction of additional documents relating to the discharge in question. TheCompany is fully cooperating with federal officials with respect to theirinvestigation into the matter. The Company received an oral communication fromthe government's lawyer in the matter that he intends to seek charges under thefederal Clean Water Act. Subsequent to that oral communication, in December 2002the Company and its outside counsel met with the government's lawyer to discusspotential resolutions to this matter, and the government's lawyer is nowconsidering the information provided by the Company at that meeting. At thistime, the Company is unable to predict the outcome of the federal grand juryinquiry into this matter, but does not believe it will result in a materialadverse effect on its financial position, liquidity or future results ofoperations; however, at this stage of the proceedings, no assurance can be givenas to the ultimate outcome of the case. On April 17, 2000, the Company received a Notice of Violation/Request forIncident Report from the Tennessee Department of Environmental Conservation(TDEC) with respect to the same matter. The Company and TDEC negotiated asettlement agreement to resolve this matter, under which the Company paid$100,000. An accrual for this fine was recorded in 2001 and paid in October2002. Future information and developments will require the Company tocontinually reassess the expected impact of these environmental matters.However, the Company has evaluated its total environmental exposure based oncurrently available data and believes that compliance with all applicable lawsand regulations will not have a materially adverse effect on its consolidatedfinancial position and annual results of operations.EMPLOYEES As of December 31, 2002, the Company had approximately 3,600 full-timeassociates, compared to approximately 3,500 full-time associates as of December31, 2001. The Company had no full-time associates under a labor union contractas of December 31, 2002. The Company places a strong emphasis on employeerelations through educational programs and quality control teams. The Companybelieves its employee relations are good. 10ITEM 2 -- PROPERTIESMANUFACTURING FACILITIES The Company owns its main facility of 1.2 million sq. ft. in Lafayette,Indiana, which consists of truck trailer and composite material production, tooland die operations, research laboratories, management offices and headquarters.The Company also owns another trailer manufacturing facility in Lafayette,Indiana (572,000 sq. ft.) and a trailer flooring manufacturing facility inHarrison, Arkansas (456,000 sq. ft.). During 2001, the Company closed trailer manufacturing plants located inFt. Madison, Iowa (255,000 sq. ft.) and Huntsville, Tennessee (287,000 sq. ft.)and a flooring operation in Sheridan, Arkansas (117,000 sq. ft.). At December31, 2002, these properties are being held for sale and, accordingly, areclassified in Prepaid Expenses and Other in the accompanying ConsolidatedBalance Sheets.RETAIL AND DISTRIBUTION FACILITIES Retail and distribution facilities include 24 sales and service branches(two of which are leased), 15 locations that sell new and used trailers (12 ofwhich are leased) and two used trailer rental centers. These facilities arelocated throughout North America. Each branch facility consists of an office,parts warehouse and service space and each facility generally ranges in sizefrom 20,000 to 50,000 square feet per facility. Included in the amounts aboveare 10 branch locations in seven Canadian provinces acquired in January 2001. Inaddition, the Company owns an aftermarket parts distribution center inLafayette, Indiana (300,000 sq. ft.). The Company closed two retail branches in 2001 and eight in 2002. AtDecember 31, 2002, five of these branches remained and are being held for sale.Accordingly, these branches are classified in Prepaid Expenses and Other in theaccompanying Consolidated Balance Sheets. In 2002, the Company closed its retail and distribution segment office inSt. Louis, Missouri and transferred the administrative functions to Lafayette,Indiana. The transition was completed during the fourth quarter of 2002 and theCompany is currently searching for a sub-tenant. Company owned properties are subject to security interests held by theCompany's bank and senior note lenders.ITEM 3 -- LEGAL PROCEEDINGS There are certain lawsuits and claims pending against the Company thatarose in the normal course of business. None of these claims are expected tohave a material adverse effect on the Company's financial position or itsresults of operations. Brazil Joint Venture In March 2001, Bernard Krone Industria e Comercio de Maquinas AgricolasLtda. ("BK") filed suit against the Company in the Fourth Civil Court ofCuritiba in the State of Parana, Brazil. This action seeks recovery of damagesplus pain and suffering. Because of the bankruptcy of BK, this proceeding is nowpending before the Second Civil Court of Bankruptcies and CreditorsReorganization of Curitiba, State of Parana (No.232/99). This case grows out of a joint venture agreement between BK and theCompany, which was generally intended to permit BK and the Company to market theRoadRailer(R) trailer in Brazil and other areas of South America. When BK wasplaced into the Brazilian equivalent of bankruptcy late in 2000, the jointventure was dissolved. BK subsequently filed its lawsuit against the Companyalleging that it was forced to terminate business with other companies becauseof the exclusivity and non-compete clauses purportedly found in the jointventure agreement. The lawsuit further alleges that Wabash did not properlydisclose technology to BK and that Wabash purportedly failed to comply with itscontractual obligations in terminating the joint venture agreement. In itscomplaint, BK asserts that it has been damaged by these alleged wrongs by theCompany in the approximate amount of $8.4 million. The Company answered the complaint in May 2001, denying any wrongdoing andpointing out that, contrary to the allegation found in the complaint, a mergerof the Company and BK, or the acquisition of BK 11by the Company, was never the purpose or intent of the joint venture agreementbetween the parties; the only purpose was the business and marketing arrangementas set out in the agreement. The Company believes that the claims asserted against it by BK are withoutmerit and intends to defend itself vigorously against those claims. The Companybelieves that the resolution of this lawsuit will not have a material adverseeffect on its financial position, liquidity or future results of operations;however, at this early stage of the proceeding, no assurance can be given as tothe ultimate outcome of the case. E-Coat System On September 17, 2001 the Company commenced an action against PPGIndustries, Inc. ("PPG") in the United States District Court, Northern Districtof Indiana, Hammond Division at Lafayette, Indiana, Civil Action No. 4:01 CV 55.In the lawsuit, the Company alleges that it has sustained substantial damagesstemming from the failure of the PPG electrocoating system (the "E-coat system")and related products that PPG provided for the Company's Huntsville, Tennesseeplant. The Company alleges that PPG is responsible for defects in the design ofthe E-coat system and defects in PPG products that have resulted in malfunctionsof the E-coat system and poor quality coatings on numerous trailers. PPG filed a Counterclaim in that action on or about November 8, 2001,seeking damages in excess of approximately $1.35 million based upon certainprovisions of the November 3, 1998 Investment Agreement between it and theCompany. The Company filed a Reply to the Counterclaim denying liability for theclaims asserted. The Company subsequently amended its complaint to include twoadditional defendants, U.S. Filter and Wheelabrator Abrasives Inc., whodesigned, manufactured, or provided equipment for the E-coat system. The Company denies and is vigorously defending PPG's counterclaim. It alsobelieves that the claims asserted in its complaint are valid and meritorious andit intends to fully prosecute those claims. The Company believes that theresolution of this lawsuit will not have a material adverse effect on itsfinancial position, liquidity or future results of operations; however, at thisearly stage of the proceeding, no assurance can be given as to the ultimateoutcome of the case. Environmental In the second quarter of 2000, the Company received a grand jury subpoenarequesting certain documents relating to the discharge of wastewaters into theenvironment at a Wabash facility in Huntsville, Tennessee. The subpoena soughtthe production of documents and related records concerning the design of thefacility's discharge system and the particular discharge in question. On May 16,2001, the Company received a second grand jury subpoena that sought theproduction of additional documents relating to the discharge in question. TheCompany is fully cooperating with federal officials with respect to theirinvestigation into the matter. The Company received an oral communication fromthe government's lawyer in the matter that he intends to seek charges under thefederal Clean Water Act. Subsequent to that oral communication, in December 2002the Company and its outside counsel met with the government's lawyer to discusspotential resolutions to this matter, and the government's lawyer is nowconsidering the information provided by the Company at that meeting. At thistime, the Company is unable to predict the outcome of the federal grand juryinquiry into this matter, but does not believe it will result in a materialadverse effect on its financial position, liquidity or future results ofoperations; however, at this stage of the proceedings, no assurance can be givenas to the ultimate outcome of the case. On April 17, 2000, the Company received a Notice of Violation/Request forIncident Report from the Tennessee Department of Environmental Conservation(TDEC) with respect to the same matter. The Company and TDEC negotiated asettlement agreement to resolve this matter, under which the Company paid$100,000. An accrual for this fine was recorded in 2001 and paid in October2002. 12ITEM 4 -- SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS None to report.PART IIITEM 5 -- MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDERMATTERS The Company's Common Stock is traded on the New York Stock Exchange(ticker symbol: WNC). The number of record holders of the Company's common stockat April 4, 2003 was 1,197. High and low stock prices and dividends for the last two years were: DIVIDENDS DECLARED PER HIGH LOW COMMON SHARE -------- -------- ------------ 2002 Fourth Quarter ...................... $ 8.50 $ 3.55 $ -- Third Quarter ....................... $ 9.94 $ 4.18 $ -- Second Quarter ...................... $ 11.19 $ 7.55 $ -- First Quarter ....................... $ 12.15 $ 7.16 $ --2001 Fourth Quarter ...................... $ 8.74 $ 6.62 $ -- Third Quarter ....................... $ 12.45 $ 6.32 $ 0.01 Second Quarter ...................... $ 13.33 $ 9.75 $ 0.04 First Quarter ....................... $ 12.00 $ 8.25 $ 0.04On December 28, 2001, the Board of Directors suspended the Company's payment ofcommon stock dividends. There is no assurance that these dividends will be paidin the future as they depend on future earnings, capital availability andfinancial conditions. 13ITEM 6 -- SELECTED FINANCIAL DATA The following selected consolidated financial data with respect to theCompany, for the five years in the period ended December 31, 2002, have beenCompany, for the five years in the period ended December 31, 2002, have beenderived from the Company's consolidated financial statements. The followinginformation should be read in conjunction with Management's Discussion andAnalysis of Financial Condition and Results of Operations and the consolidatedfinancial statements and notes thereto included elsewhere herein. Years Ended December 31, -------------------------------------------------------------------------------- 2002 2001(1) 2000 1999 1998 ----------- ----------- ----------- ----------- ----------- (Dollar amounts in thousands, except per share data) STATEMENT OF OPERATIONS DATA:Net sales ................................... $ 819,568 $ 863,392 $ 1,332,172 $ 1,454,570 $ 1,292,259Cost of sales ............................... 779,117(4) 982,605(2) 1,216,205(3) 1,322,852 1,192,968 ----------- ----------- ----------- ----------- ----------- Gross profit (loss) ....................... 40,451 (119,213) 115,967 131,718 99,291Selling, general and administrative expenses. 77,398 82,325 55,874 50,796 38,626Restructuring charge ........................ 1,813 37,864 36,338 -- -- ----------- ----------- ----------- ----------- ----------- Income (loss) from operations ............. (38,760) (239,402) 23,755 80,922 60,665Interest expense ............................ (30,873) (21,292) (19,740) (12,695) (14,843)Accounts receivable securitization costs .... (4,072) (2,228) (7,060) (5,804) (3,966)Foreign exchange gains (losses), net ........ 5 (1,706) -- -- --Equity in losses of unconsolidated affiliate -- (7,668) (3,050) (4,000) (3,100)Restructuring charges, net .................. -- (1,590) (5,832) -- --Other income (expense), net ................. 2,232 (1,139) 877 6,310 (259) ----------- ----------- ----------- ----------- ----------- Income (loss) before income taxes ......... (71,468) (275,025) (11,050) 64,733 38,497Provision (benefit) for income taxes ........ (15,278) (42,857) (4,314) 25,891 15,226 ----------- ----------- ----------- ----------- ----------- Net income (loss) ......................... (56,190) $ (232,168) $ (6,736) $ 38,842 $ 23,271 =========== =========== =========== =========== ===========Basic earnings (loss) per common share ...... $ (2.43) $ (10.17) $ (0.38) $ 1.60 $ 1.00 =========== =========== =========== =========== ===========Diluted earnings (loss) per common share .... $ (2.43) $ (10.17) $ (0.38) $ 1.59 $ 0.99 =========== =========== =========== =========== ===========Cash dividends declared per common share .... -- $ 0.09 $ 0.16 $ 0.1525 $ 0.1425 =========== =========== =========== =========== =========== (1) The 2001 amounts reflect the results of operations for the 10 branches acquired from Breadner on January 5, 2001. (2) Includes used trailer inventory valuation charges of $62.1 million, a restructuring related charge of $3.7 million, and loss contingencies and impairment charges related to the Company's leasing operations of $37.9 million. (3) Includes a $4.5 million charge related to the Company's restructuring activities. (4) Includes used trailer valuation charges of $5.4 million and $4.8 million for loss contingencies and equipment impairment charges. Years Ended December 31, ------------------------------------------------------------ 2002 2001 2000 1999 1998 -------- -------- -------- -------- -------- (Dollar amounts in thousands) BALANCE SHEET DATA:Working capital .................................... $ 55,052 $111,299 $270,722 $228,751 $271,256Total equipment leased to others & finance contracts 132,853 160,098 108,451 130,626 117,038Total assets ....................................... 565,569 692,504 781,614 791,291 704,486Total debt ......................................... 282,004 334,703 238,260 167,881 168,304Capital lease obligations .......................... 64,853 77,314 -- -- --Stockholders' equity ............................... 73,984 130,985 367,233 379,365 345,776 14ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of Wabash's historical results of operations andof its liquidity and capital resources should be read in conjunction with theconsolidated financial statements and related notes thereto. Wabash designs, manufactures and markets standard and customized trucktrailers under the Wabash(R), Fruehauf(R) and RoadRailer(R) trademarks. TheCompany produces and sells aftermarket parts through Wabash National Parts andWNTC. In addition to its aftermarket parts sales and service, WNTC sells new andused trailers through its retail network as well as providing rental and leasingprograms to its customers for new and used trailers. The Company has two reportable segments: manufacturing and retail anddistribution. The manufacturing segment produces trailers which are sold tocustomers who purchase trailers direct or through independent dealers and to theretail and distribution segment. The retail and distribution segment includesthe sale and leasing of new and used trailers, as well as the sale ofaftermarket parts and service through its retail branch network. In addition,the retail and distribution segment includes the sale of aftermarket partsthrough Wabash National Parts.RISK FACTORS Investing in our securities involves a high degree of risk. In addition tothe other information contained in this Form 10-K, including the reportsincorporated by reference, you should consider the following factors beforeinvesting in our securities: We have limited capital resources. Our ability to access the capital markets is dependent on perceivedcurrent and future business prospects, as well as the Company's currentfinancial condition. The Company has experienced liquidity problems in the pastand was in technical violation of its financial covenants with its lenders onFebruary 28, 2003 for the reporting period ended January 31, 2003. The Companyreceived a waiver of the violation from its lenders and subsequently amendedcertain of its debt agreements in April 2003. This amendment changed debtmaturities and principal payment schedules; increased the cost of funds;required the Company to meet certain financial conditions and contains asubjective acceleration clause, which provides for an event of default upon theoccurrence of a material adverse change, as defined in the agreements. Inaddition, there can be no assurance that the Company will have sufficientresources to meet its debt service requirements, working capital needs andcapital resource requirements. This amendment also contained provisionsrequiring the Company to have a commitment letter to refinance, amend orrestructure its debt and capital lease obligations prior to January 31, 2004 inorder to avoid an event of default. Additionally, $267.3 million of debt andcapital lease obligations are scheduled to be due and payable during the firstquarter of 2004. Based upon the Company's forecasted operating results for 2003,it is unlikely that the Company will be able to repay all of the debt andcapital lease obligations due in 2004 from operations. If the Company is unableto comply with the terms of its new debt agreements or refinance existingobligations, it could be forced to further modify its operations or it may beunable to continue as a going concern, as the Company's lenders could forecloseon its assets. The ability to continue as a going concern is also dependent onthe Company's ability to manage the business to meet lender's financialrequirements. Accordingly, the Company has limited the availability and accessto capital to fund future operations and expansions which could adversely affectthe continuing operations of the Company. We face intense competition. The truck trailer manufacturing industry is highly competitive. We competewith other truck trailer manufacturers of varying sizes, some of which may havegreater financial resources than we do. Barriers to entry in the truck trailermanufacturing industry are low; and therefore, it is possible that additionalcompetitors could enter the market at any time. Certain participants in theindustry in which we compete may have manufacturing over-capacity and highleverage, and the industry has experienced a number of bankruptcies andfinancial stresses, all of which have resulted in significant pricing pressures.Our inability to compete effectively with existing or potential competitorswould have a material adverse effect on our business, financial condition andresults of operations. 15 Our business is cyclical and has been adversely affected by an economicdownturn. The truck trailer manufacturing industry historically has been and isexpected to continue to be cyclical as well as affected by overall economicconditions. New trailer production for the trailer industry as a whole decreasedto 139,658 in 2002 as compared to 140,084 units in 2001 and 270,817 units in2000 and the current forecast for industry shipments in 2003 is approximately182,000 units. Customers have historically replaced trailers in cycles that runfrom five to twelve years depending on service and trailer type. Poor economicconditions can adversely affect demand for new trailers and in the past have ledto an overall aging of trailer fleets beyond this typical replacement cycle. Ourbusiness is likely to continue to be adversely affected unless economicconditions improve. Our technology and products may not achieve market acceptance. We continue to introduce new products such as the DuraPlate(R) HD, and theFreight-Pro commodity trailer. There can be no assurance that these or other newproducts or technologies will achieve sustained market acceptance. There canalso be no assurance that new technologies or products introduced by competitorswill not render our products obsolete or uncompetitive. We have taken steps toprotect our proprietary rights in these new products. However, the steps we havetaken to protect them may not be sufficient or may not be enforced by a court oflaw. If we are unable to protect our proprietary rights, other parties mayattempt to copy or otherwise obtain and use our products or technology. Ifcompetitors are able to use our technology, our ability to compete effectivelycould be harmed. We rely on the strength of our corporate partnerships and the success ofour customers. We have corporate partnering relationships with a number of customerswhere we supply the requirements of these customers. To a significant extent,our success is dependent upon the continued strength of their relationships withus and the growth of our corporate partners. Our customers are often adverselyaffected by the same economic conditions that adversely affect us. Further, weoften are unable to predict the level of demand for our products from thesepartners, or their timing of orders. The loss of a significant customer orunexpected delays in product purchases could have a significant impact effect onour business, financial condition and results of operations. Some of our customers may be financially unstable. Some of our customers are highly leveraged and have limited access tocapital. Therefore, their continued existence may be uncertain. Our financialcondition may be affected by the financial stability of these customers. We have a limited number of suppliers of raw materials and no guarantee ofcontinued availability of raw materials. We currently rely on a limited number of suppliers for certain keycomponents in the manufacturing of truck trailers. The loss of our suppliers orthe inability of the suppliers to meet our price, quality, quantity and deliveryrequirements could have a significant impact on our business, financialcondition and results of operations. We have a single manufacturing location. Our primary manufacturing operations are located in Lafayette, Indiana. Ifthe production in these facilities were unexpectedly disrupted for any length oftime, it would have a material adverse effect on our business, financialcondition and results of operations. Used trailer values may decline. Used trailer values at any point in time are influenced by economic andindustry conditions, as well as supply. The Company maintains inventories ofused trailers, equipment held for lease, finance contracts secured by usedtrailers and has entered into residual guarantees and purchase commitments forused trailers as part of its normal business practices. Declines in the marketvalue for used trailers or the need to dispose of excess inventories has had,and could in the future have, a material adverse effect on our business,financial condition and results of operations. 16 We are subject to government regulations that may adversely affect ourprofitability. The length, height, width, maximum weight capacity and otherspecifications of truck trailers are regulated by individual states. The FederalGovernment also regulates certain safety features incorporated in the design oftruck trailers. Changes or anticipation of changes in these regulations can havea material impact on our customers, may defer customer purchasing decisions, mayresult in reengineering and may affect our financial results. In addition, weare subject to various environmental laws and regulations dealing with thetransportation, storage, presence, use, disposal and handling of hazardousmaterials, discharge of stormwater and underground fuel storage tanks and may besubject to liability associated with operations of prior owners of acquiredproperty. If we are found to be in violation of applicable laws or regulations,it could have a material adverse effect on our business, financial condition andresults of operations. We may not be successful in integrating businesses that we acquire intoour business. We have made and expect to make acquisitions of technology, businesses andproduct lines in the future. Our ability to expand successfully throughacquisitions depends on many factors, including the successful identificationand acquisition of products, technologies or businesses and management's abilityto effectively integrate and operate the acquired products, technologies orbusinesses. We may compete for acquisition opportunities with other companiesthat have significantly greater financial and management resources. There can beno assurance that the Company will be successful in acquiring or integrating anysuch products, technologies or businesses.OVERVIEW After a 14.7% decline in demand during 2000 and a further decline of 48.3%during 2001, the trailer industry in the United States saw a third consecutiveyear of declines in demand during 2002 with overall new production of 139,658units down slightly from 140,084 units in 2001. During this three year industryretrenchment, the Company's market share of new trailers declined from 24.5% in2000 and 22.6% in 2001 to 19.4% during 2002. As a result of these conditions, the Company implemented a comprehensiveplan to scale its operations to meet demand and to survive, including: o Hiring of new management; o Rationalizing manufacturing capacity; o Reducing its cost structure through continuous improvement initiatives; o Reducing used trailer inventories; o Divesting international operations; o Rationalizing retail and distribution capacity; and o Improving working capital management. Beginning in 2001 and continuing into 2002, the Company closed two of itsthree trailer assembly facilities, conducted an employee layoff for the firsttime in the Company's history, liquidated approximately $110 million of usedtrailers under an aggressive liquidation plan, completed its divestiture of itsEuropean operations, closed approximately 10 of its 49 factory-owned branchlocations, closed one of its two wood flooring facilities and closed one of twoparts distribution centers. As a result of these dramatic steps, the Companyincreased its liquidity position (cash on hand and available borrowings underexisting credit facilities) from approximately $19 million as of September 30,2001 to approximately $78 million at the end of 2002. These actions also beganto improve the results from operations during 2002. The net loss in 2002 of$56.2 million represented a 76% improvement over the net loss reported in 2001of $232.2 million, despite a 5% decline in net sales during 2002 compared to2001. The net losses incurred in both 2001 and 2002 resulted in the Companybeing in technical violation of financial covenants with certain of its lenderson December 31, 2001 and on February 28, 2003. The company received a waiver ofthe violation from its lenders and subsequently amended its debt agreements inApril 2002 and 2003, respectively. While the Company believes that industry conditions are likely to rebound,the Company believes it has significantly restructured its operations and, basedon its projections, the Company anticipates generating positive earnings beforeinterest, taxes, depreciation and amortization (EBITDA) in 2003. Although theCompany believes that the assumptions underlying the 2003 projections arereasonable, there are risks related 17to market demand and sales in the U.S. and Canada, adverse interest rate orcurrency movements, realization of anticipated cost reductions and levels ofused trailer trade-ins that could cause actual results to differ from theprojections. Should results continue to decline, the Company is prepared to takeadditional cost cutting actions. While there can be no assurance that theCompany will achieve these results, the Company believes it has adequatelymodified its operations to be in compliance with its financial covenantsthroughout 2003 and believes that its existing sources of liquidity combinedwith its operating results will generate sufficient liquidity such that theCompany has the ability to meet its obligations as they become due throughout2003. However, based upon debt maturities and the Company's forecasted operatingresults for 2003, it is unlikely that the Company will be able to repay debt andcapital lease obligations due in 2004 from operations. Therefore, the Companywill be required to refinance, amend or restructure existing obligations duringthe first quarter of 2004 in order to continue as a going concern. During 2002, 2001 and 2000, the Company incurred losses related to thewrite-down and sale of used trailers of $5.4 million, $73.4 million and $13.1million, respectively. The high level of losses in 2001 was the result ofdecreased demand for used equipment and the Company's excess supply of usedtrailer inventory which combined to decrease market values for equipment during2001. The Company's supply of used trailers grew significantly during 2000 and2001 as a result of large fleet trade deals with certain customers. During 2002,2001 and 2000, the Company accepted approximately $40.5 million, $135.5 millionand $177.0 million, respectively, in trade-ins of used trailers. During thethird quarter of 2001, the Company, to reduce working capital in order toaddress liquidity concerns, changed its strategy to focus on the wholesaleliquidation of used trailer inventory. This change in strategy enabled theCompany to reduce working capital needs and generate cash, but resulted infurther pressures in used trailer market values which resulted in lossesincluded in the amounts above. The lower level of losses in 2002 is the resultof the completion of the Company's wholesale liquidation initiative during thefirst half of 2002 as inventory levels were significantly reduced from $94.7million as of June 30, 2001 to $60.9 million as of December 31, 2001 and furtherreduced to $35.2 million as of June 30, 2002. This dramatic reduction was drivenby increased sales volumes and a significant reduction in trade-in activity. During the third quarter of 2001, the Company recorded restructuring andother related charges totaling $40.5 million primarily related to therationalization of the Company's manufacturing capacity resulting in the closureof the Company's platform trailer manufacturing facility in Huntsville,Tennessee, and its dry van facility in Fort Madison, Iowa. In addition, theCompany closed a parts distribution facility in Montebello, California. During2001 and 2000, the Huntsville, Tennessee and Fort Madison, Iowa facilities hadrevenues of $73.5 million and $184.3 million and operating losses of $4.5million and operating income of $8.1 million, respectively. Included in the$40.5 million restructuring charge is the write-down of certain impaired fixedassets to their fair market value ($33.8 million), accrued severance benefitsfor approximately 600 employees ($0.9 million) and plant closure and other costs($2.1 million). In addition, a $3.7 million charge is included in Cost of Salesrelated to inventory write-downs at the closed facilities in 2001. During thefourth quarter of 2001, the Company reduced its plant closure reserve byapproximately $0.9 million as a result of the Company's ability to effectivelycontrol its closure costs. The Company's 2001 impairment charge reflects the write-down of certainlong-lived assets that became impaired as a result of management's decision toclose its operations at the two manufacturing plants discussed above. Theestimated fair market value of the impaired assets totaled $6.7 million and wasdetermined by management based upon economic conditions, potential alternativeuses and potential markets for the assets which are held for sale and,accordingly, are classified in Prepaid Expenses and Other in the accompanyingConsolidated Balance Sheets. Depreciation has been discontinued on the assetsheld for sale pending their disposal. In December 2000, the Company recorded restructuring and other relatedcharges totaling $46.6 million primarily related to the Company's exit frommanufacturing products for export outside the North American market,international leasing and financing activities and the consolidation of certaindomestic operations. Included in this total is $40.8 million that has beenincluded as a component of income from operations. Specifically, $19.1 millionof this amount represented the impairment of certain equipment subject to leaseswith the Company's international customers, $8.6 million represented lossesrecognized for various financial guarantees related to international financingactivities, and $6.9 million was recorded for the write-down of other assets aswell as charges associated with the consolidation of certain domestic operationsincluding severance benefits of $0.2 million. Also included in the $40.8 millionis a $4.5 million charge for inventory write-downs related to the restructuringactions which is included in Cost of Sales. The Company has recorded $5.8million as a restructuring charge in Other Income (Expense) representing the 18write-off of the Company's remaining equity interest in ETZ for a decline infair value that is deemed to be other than temporary. The total impairment charge recognized by the Company as a result of itsrestructuring activities was $20.8 million in 2002. The estimated fair value ofthe impaired assets totaled $3.4 million and was determined by management basedupon economic conditions and potential alternative uses and markets for theequipment.RESULTS OF OPERATIONS The following table sets forth certain operating data as a percentage ofnet sales for the periods indicated: Percentage of Net Sales Years Ended December 31, --------------------------------- 2002 2001 2000 ----- ----- ----- Net sales .................................. 100.0% 100.0% 100.0%Cost of sales .............................. 95.1(1) 113.8(2) 91.3(3) ----- ----- ----- Gross profit ......................... 4.9 (13.8) 8.7General and administrative expense ......... 6.6 6.6 2.6Selling expense ............................ 2.8 2.9 1.6Restructuring charge ....................... 0.2 4.4 2.7 ----- ----- ----- Income from operations ............... (4.7) (27.7) 1.8Interest expense ........................... (3.8) (2.5) (1.5)Trade receivables facility costs ........... (0.5) (0.3) (0.5)Foreign exchange losses, net ............... 0.0 (0.2) --Equity in losses of unconsolidated affiliate 0.0 (0.9) (0.2)Restructuring charge ....................... 0.0 (0.2) (0.4)Other income (expense), net ................ 0.3 (0.1) -- ----- ----- ----- Loss before income taxes ............. (8.7) (31.9) (0.8)Income tax benefit ......................... (1.8) (5.0) (0.3) ----- ----- ----- Net loss ............................. (6.9)% (26.9)% (0.5)% ===== ===== ===== (1) Includes used trailer valuation charges of $5.4 million and $4.8 million for loss contingencies and equipment impairment charges. (2) Includes used trailer inventory valuation charges of $62.1 million (7.2%), a restructuring related charge of $3.7 million (0.4%) and loss contingencies and impairment charges related to the Company's leasing operations of $37.9 million (4.4%). (3) Includes a $4.5 million charge (0.3%) related to the Company's restructuring activities. 192002 COMPARED TO 2001 Net loss for 2002 was $56.2 million compared to $232.2 million in 2001.This improvement reflects a leveling off of new trailer sales and the impact on2001 of restructuring charges and losses related to used trailers.NET SALES The Company finished 2002 with net sales of approximately $819.6 millionon a consolidated basis compared to $863.4 million in 2001. This decrease wasthe result of lower net sales in both the manufacturing and retail anddistribution segments. Years Ended December 31, --------------------------------------- 2002 2001 % Change ---- ---- -------- Net External Sales by Segment: (Dollar amounts in millions) Manufacturing $492.3 $518.2 (5.0%) Retail and Distribution 327.3 345.2 (5.2%) ------ ------ ----- Total Net Sales $819.6 $863.4 (5.1%) ====== ====== ===== The manufacturing segment's net external sales decreased 5.0% (or $25.9million) in 2002 compared to 2001 primarily driven by a 4.8% decrease in theaverage selling price per new trailer sold from approximately $16,700 in 2001 toapproximately $15,900 in 2002. This decrease in selling price per unit wasprimarily due to a product mix that included approximately 6,000 units of lowerrevenue containers. The selling price per unit in 2002 for non-container unitswas approximately $16,900. The number of units sold decreased slightly fromapproximately 31,000 units in 2001 to approximately 30,900 units in 2002. The retail and distribution segment's net external sales decreased by 5.2%(or $17.9 million) in 2002 compared to 2001. This decrease was primarily drivenby a 41.0% decrease in new units sold from approximately 6,100 units in 2001compared to approximately 3,600 in 2002. The decrease in new units sold reflectsmarket conditions and the Company's focus in 2002 on reducing used trailerinventories. This decrease was partially offset by increases in used units sold(approximately 17,600 in 2002 compared to approximately 11,500 in 2001) and theselling price per new unit (approximately $21,900 in 2002 versus $16,800 in2001). The increase in used units sold was driven by the Company's efforts toreduce used trailer inventory, as was previously discussed. These reductionefforts resulted in a 17.5% decrease in revenues per unit from approximately$6,300 in 2001 to $5,200 in 2002. As of December 31, 2002, used trailerinventory was $22.2 million (or approximately 5,300 units) compared to $60.9million (or approximately 12,200 units) at December 31, 2001. The total numberof branch locations as of December 31, 2002 was 39 as compared to 47 as ofDecember 31, 2001.GROSS PROFIT (LOSS) The Company finished 2002 with gross profit (loss) as a percent of salesof 4.9% on a consolidated basis as compared to (13.8%) in 2001. As discussedbelow, both of the Company's segments contributed to this increase. Years Ended December 31, ------------------------------------- 2002 2001 $ Change ---- ---- --------Gross Profit (Loss) by Segment: (Dollar amounts in millions) Manufacturing $ 20.8 $ (73.9) $ 94.7 Retail and Distribution 19.7 (47.6) 67.3 Eliminations 0.0 2.3 (2.3) ------- -------- --------Total Gross Profit (Loss) $ 40.5 $ (119.2) $ 159.7 ======= ======== ======== The manufacturing segment's gross profit (loss) increased primarily as a result of the following factors: - decrease of 19% in material costs per unit resulting from product mix including containers and continuous improvement initiatives introduced in the second half of 2002; 20 - new and used trailer inventory valuation adjustments of $65.1 million in 2001 compared to $2.7 million in 2002; and - the impact of inventory write-downs related to the Company's 2001 restructuring actions of approximately $3.7 million; partially offset by - lower revenues per unit, as discussed previously; and - higher labor costs resulting from temporary labor, time spent on training and continuous improvement initiatives. The retail and distribution segment's gross profit (loss) increased primarily as a result of the following factors: - impairment of equipment held for lease along with certain loss contingencies recognized related to its leasing activities totaling $4.8 million and $37.9 million in 2002 and 2001, respectively; - improved used trailers margins, which were 6.4% in 2002 compared to (15.0%) in 2001; - improved margins from our parts distribution business; and - new trailer and aftermarket parts inventory valuation adjustments of approximately $3.5 million in 2001; partially offset by - declines in new trailer and parts and service gross profit, in part due to fewer locations in 2002; and - used trailer inventory adjustments of $5.4 million in 2002.GENERAL AND ADMINISTRATIVE General and administrative expenses decreased $3.1 million to $53.9million in 2002, compared to $57.0 million in 2001. This decrease was primarilydue to a reduction of $10.3 million in bad debt expense representing improvedcollection efforts and significant write-offs taken in 2001. The decrease in baddebt expense is offset in part by increases of $3.6 million in professional feesand $3.0 million in severance related to branch closings and former corporateemployees.RESTRUCTURING EXPENSE Restructuring expenses decreased $36.1 million to $1.8 million in 2002,compared to $37.9 million in 2001. The 2002 expense represents additional fairmarket value adjustments to closed manufacturing locations which are held forsale related to 2000 and 2001 restructuring actions. The 2001 expense primarilyrelates to asset write-downs for the Scott County, Tennessee and Fort Madison,Iowa manufacturing facilities and Montebello, California parts distributioncenter taken as part of the 2001 restructuring.OTHER INCOME (EXPENSE) Interest expense totaled $30.9 million and $21.3 million for the yearsended December 31, 2002 and 2001, respectively. This increase is primarily dueto higher interest rates on the Company's Senior Notes and Bank debt resultingfrom the debt restructuring in April 2002, interest on capital leases that wereentered into during the fourth quarter of 2001 and significantly higheramortization from deferred debt costs in connection with the debt restructuring,offset in part by reduced overall borrowings in 2002. Trade receivables facility costs related to the Company's accountsreceivable securitization facility, increased to $4.1 million in 2002 from $2.2million in 2001 primarily as a result of $3.3 million in costs incurred withrestructuring the facility in April 2002, offset in part by an absence ofborrowings under the restructured facility from April to December 2002. Foreign currency transaction losses, net totaled $0.0 million and $1.7million for the years ended December 31, 2002 and 2001, respectively. The 2001net losses were primarily the result of a weakening of the Canadian dollar in2001 and the resultant impact on intercompany transactions between the Company and its recently acquired Canadian subsidiary, as well as U.S. denominated transactions between the Canadian subsidiary and unrelated parties. The absence of losses in 2002 was primarily the result of reduced foreign currency exposure and the stability of the Canadian Dollar. Equity in losses of unconsolidated affiliate was $0 million for 2002resulting from the Company completing the divestiture of its ETZ affiliate inJanuary 2002. 21 Other, net was income of $2.2 million in 2002 compared to expense of $1.1million in 2001. The increase primarily includes gains recognized in 2002 onsales of closed branch locations.INCOME TAXES Income tax benefit for 2002 and 2001 was $15.3 million and $42.9 million,respectively. The effective tax rate was 21.4% and 15.6% for 2002 and 2001,respectively. For 2002, the benefit recorded primarily represents an additionalrealizable Federal net operating loss (NOL) carry-back claim filed and receivedunder the provisions of the Job Creation and Worker Assistance Act of 2002,which revised the permitted carry-back period for NOLs generated during 2001from two years to five years. Because of uncertainty related to therealizability of NOLs generated to date in excess of those utilized throughcarry-back claims, a full valuation allowance is recorded against the relateddeferred tax assets at December 31, 2002. In 2002, the effective rate differedfrom the U.S. federal statutory rate of 35% primarily due to the recognition ofa valuation allowance against deferred tax assets that the Company determinedwere more likely than not to be realized before expiration.2001 COMPARED TO 2000 Net income (loss) for 2001 was ($232.2) million as compared to ($6.7)million in 2000. This sharp decrease was primarily driven by decreased newtrailer sales, restructuring and impairment charges and losses related to usedtrailers.NET SALES The Company finished 2001 with net sales of approximately $863.4 millionon a consolidated basis compared to $1,332.2 million in 2000. This decrease wasthe result of lower net sales in the manufacturing segment partially offset byincreased net sales in the retail and distribution segment. Years Ended December 31, ---------------------------------------- 2001 2000 % Change ---- ---- -------- ---- ---- -------- Net External Sales by Segment: (Dollar amounts in millions) Manufacturing $518.2 $1,013.1 (48.9%) Retail and Distribution 345.2 319.1 8.2% ------ -------- ------ Total Net Sales $863.4 $1,332.2 (35.2%) ====== ======== ====== The manufacturing segment's external net sales decreased 48.9% (or$494.9 million) in 2001 compared to 2000 driven almost entirely by a 48.1%decrease in the number of units sold, from approximately 59,700 units in 2000 toapproximately 31,000 units in 2001. In addition, the average selling price pernew trailer sold decreased by approximately 1.2% in 2001 compared to 2000 fromapproximately $16,900 in 2000 to approximately $16,700 in 2001. These decreaseswere driven by unfavorable overall economic conditions in the trailer industry.The Company's market share in the U.S. trailer industry decreased slightlyduring 2001 from approximately 24.5% in 2000 to approximately 22.8% in 2001. Asof December 31, 2001, the Company's backlog of orders was approximately $142.1million, as compared to $639.5 million as of December 31, 2000. The retail and distribution segment's external net sales increased by8.2% (or $26.1 million) during 2001 compared to 2000. This increase wasprimarily driven by increased sales from new branch and rental centers openedand acquired during 2001. On a same store basis net sales decreased by 21.7%.The total number of store locations as of December 31, 2001 was 47 as comparedto 34 as of December 31, 2000. The addition of these new stores resulted inleasing revenues and new trailer sales increasing by approximately 29.8% (or$9.8 million) and 21.9% (or $18.5 million), respectively, in 2001 as compared to2000. The increase in rental and leasing revenue reflects the Company's strategyto expand its rental and leasing operations. The increase in new trailer revenuewas driven by a 41.9% increase in the number of units sold from approximately4,300 units in 2000 to approximately 6,100 units in 2001, partially offset by a14.7% decline in the average selling price from approximately $19,700 in 2000 toapproximately $16,800 in 2001. Used trailer revenue was relatively flat in 2001as compared to 2000. 22GROSS PROFIT (LOSS) The Company finished 2001 with gross profit (loss) as a percent of salesof (13.8%) on a consolidated basis as compared to 8.7% in 2000. As discussedbelow, both of the Company's segments contributed to this decrease. Years Ended December 31, ----------------------------------------- 2001 2000 % Change ---- ---- -------- Gross Profit (Loss) by Segment: (Dollar amounts in millions) Manufacturing $ (73.9) $ 86.7 (185%) Retail and Distribution (47.6) 31.5 (251%) Eliminations 2.3 (2.2) 205% -------- ------- ---- Total Gross Profit (Loss) $(119.2) $116.0 (203%) ======== ======= ==== The manufacturing segment's gross profit (loss) decreased by 185% (or$160.6 million) primarily as a result of the following factors: - the decrease in net sales previously discussed; - new trailer and used trailer inventory valuation adjustments of approximately $3.0 million and $62.1 million, respectively; - increased warranty expense of approximately $7.0 million; and - increased warranty expense of approximately $7.0 million; and - the impact of inventory write-downs related to the Company's 2001 restructuring actions of approximately $3.7 million These factors were offset somewhat by cost reductions realized from theCompany's 2001 and 2000 restructuring actions. The retail and distribution segment's gross profit (loss) decreased by251% (or $79.1 million) primarily as a result of the following factors: - decline in average selling prices for new trailer sales of 14.7%; - impairment of equipment held for lease along with certain loss contingencies recognized related to its leasing activities totaling approximately $37.9 million; - decline in used trailer margins of approximately $8.0 million primarily as a result of the liquidation of the Company's used trailer inventory - new trailer and aftermarket parts inventory valuation adjustments of approximately $3.5 million and $3.0 million, respectively; and - decline in the equipment held for lease utilization rate during 2001 These factors were somewhat offset by gross margins of approximately $2.8million generated from the recently acquired Canadian branches.INCOME (LOSS) FROM OPERATIONS (BEFORE INTEREST, TAXES AND OTHER ITEMS) The Company finished 2001 with income (loss) from operations as a percentof sales of (27.7%) on a consolidated basis as compared to 1.8% in 2000. Asdiscussed below, both of the Company's segments contributed to this decrease. Years Ended December 31, ----------------------------------------- 2001 2000 % Change ---- ---- -------- Operating Income (Loss) by Segment: (Dollar amounts in millions) Manufacturing $(148.7) $ 36.9 (502%) Retail and Distribution (93.0) (10.9) (753%) Eliminations 2.3 (2.2) 205% ------- ------- ------ Total Operating Income (Loss) $(239.4) $ 23.8 (1,105%) ======= ======= ======= The manufacturing segment and the retail and distribution segment'sincome from operations decreased by 502% (or $185.6 million) and 753% (or $82.1million), respectively, primarily as a result of the decrease in gross profit(loss) previously discussed along with increased bad debt expense. Bad debtexpense for the manufacturing segment and retail and distribution segmentincreased by approximately $8.2 million 23and $8.7 million, respectively, in 2001 compared to 2000. This increase reflectsdeteriorating economic conditions in the transportation industry during 2001.The manufacturing segment also incurred higher expenses related to professionalfees and employee separation pay. The retail and distribution segment alsoincurred increased selling, general and administrative expenses to support theCompany's expanding rental and leasing business and to increase used trailersales volume.OTHER INCOME (EXPENSE) Interest expense totaled $21.3 million and $19.7 million for the yearsended December 31, 2001 and 2000, respectively. The increase in interest expenseprimarily reflects higher borrowings under the Company's revolving creditfacilities during 2001. Accounts receivable securitization costs related to the Company's accountsreceivable securitization facility, decreased from $7.1 million in 2000 to $2.2million in 2001 primarily as a result of decreased borrowings under thisfacility during 2001. Foreign currency transaction losses, net totaled $1.7 million and $0 forthe years ended December 31, 2001 and 2000, respectively. These net losses wereprimarily a result of transaction gains and losses being recorded related tointercompany transactions between the Company and its recently acquired Canadiansubsidiary, as well as U.S. denominated transactions between the Canadiansubsidiary and unrelated parties. Equity in losses of unconsolidated affiliate consists of the Company'sinterest in the losses of ETZ, a non-operating, European holding company, whichis the majority shareholder of BTZ, a European RoadRailer(R) operating companybased in Munich, Germany. As part of the Company's 2000 restructuringactivities, the Company recorded a $5.8 million charge to Other Income (Expense)during 2000 and an additional $1.4 million charge in 2001, as part of itsplanned divestiture of this investment. In January 2001, in connection with itsrestructuring activities, the Company increased its ownership interest in ETZfrom 25.1% to 100%. ETZ was not consolidated in 2001 and 2000 since control ofthe subsidiary was deemed to be temporary. Accordingly, the Company's equity inlosses of unconsolidated affiliate increased from $3.1 million in 2000 to $7.7million in 2001 In January 2002, the Company completed its divestiture of ETZ.As a result of this divestiture, the Company will cease reflecting an ownershipinterest in ETZ's results of operations in 2002. Other, net was $1.1 million in expense during 2001 compared to $0.9million in income during 2000. Other, net primarily includes items such asinterest income, gain or loss from the sale of fixed assets and other itemsINCOME TAXES The Company's effective tax rates were 15.6% and 39% of pre-tax income(loss) for 2001 and 2000, respectively. In 2001, the effective rate differedfrom the U.S. federal statutory rate of 35% primarily due to the recognition ofa valuation allowance against deferred tax assets that the Company determinedwere more likely than not to be realized before expiration. In 2000, theeffective rate differed from the U.S. Federal Statutory rate primarily due tostate taxes and the effects of permanent differences in financial and taxreporting of certain transactions.LIQUIDITY AND CAPITAL RESOURCES The Company's cash position increased $24.5 million during 2002 from $11.1million in cash and cash equivalents at December 31, 2001 to $35.7 million atDecember 31, 2002. This increase was due to cash provided by operatingactivities of $104.3 million and investing activities of $12.0 million partiallyoffset by cash used for financing activities of $91.8 million.EXPLANATION OF CASH FLOW A. OPERATING ACTIVITIES Net cash provided by operating activities of $104.3 million in 2002 isprimarily due to cash inflows from tax refunds of $38.5 million and theconversion of other working capital items into cash. The cash 24provided from other working capital included $58.3 million from inventories,$19.7 million from accounts receivable and $9.8 million from accounts payableand accrued liabilities. The net cash provided from working capital reflects theCompany's renewed focus on managing working capital resources. The net cash provided from inventories includes a $33.3 million reductionin used trailer inventories reflecting the efforts to reduce excess inventoryon-hand at December 31, 2001. Also contributing to the net cash provided frominventories was a reduction of $10.6 million in raw materials inventoriesreflective of the Company's efforts to better manage on-hand inventories. The net cash provided from accounts receivable reflects increased 2002fourth quarter sales, increased cash collections as a result of timing ofpayments, continued efforts to effectively manage delinquent customers and anincreased emphasis on collections. B. INVESTING ACTIVITIES Net cash provided by investing activities was $12.0 million in 2002primarily due to proceeds of $16.6 million from the sale of property, plant andequipment, payments of $13.3 million received on finance contracts and $5.3million from the sale of leased equipment, offset by additions of $9.8 millionto leased equipment, net additions of $7.7 million to finance contracts andcapital expenditures of $5.7 million. The proceeds from the sale of property, plant and equipment includes $9.0million for the sale of the company airplane and $6.6 million for the sale ofclosed branch locations. The majority of the additions to leased equipment were made to improve theproduct quality and mix of the fleet and were in response to customer demand.The finance contract additions were executed prior to the termination of thefinancing origination business. Capital expenditures included $4.5 million for the manufacturing segmentprimarily related to construction of a new production line for the Freight-Procommodity trailer and modifications to existing production lines as part ofcontinuous improvement initiatives. C. FINANCING ACTIVITIES Net cash used in financing activities of $91.8 million in 2002 reflectspayments of $78.6 million under long-term debt and capital lease obligations and$9.3 million for the net pay down or conversion to term loan of borrowings underthe revolving credit facility. Net cash used in financing activities alsoincludes $3.8 million in costs capitalized as part of the debt restructuring inApril 2002. The net pay down or conversion to term loan of borrowings under therevolving credit facility occurred as a result of the April 2002 debt restructuring under which the existing revolving credit facility and all outstanding borrowings were converted into a new facility containing a Bank Term Loan and Bank Line of Credit. The $78.6 million of payments includes $43.6 million for scheduledlong-term debt and capital lease obligation principal payments, $18.2 millionfor the pay-off of the previous accounts receivable facility, $11.8 million forthe pay-off of the airplane capital lease obligation and an additional paymentmade of $5.0 million on its Senior Notes and Bank Term Loan.SOURCES OF CAPITAL The Company has taken aggressive steps toward improving its liquidityposition during 2002, including the liquidation and normalization of itsinventory of used trailers, improved working capital management and controlledcapital expenditures. Accordingly, the Company's liquidity position has improvedsince the end of 2001 from approximately $24 million as of December 31, 2001, toapproximately $78 million as of December 31, 2002. The Company defines liquidityas cash on hand and available borrowings under its existing credit facilities. As part of the Company's focus on debt reduction, it paid $87.9 million in debt and capital lease obligations during 2002. As of December 31, 2002, the Company's total debt and capital lease obligations were $346.9 million as compared to $412.0 million in 2001. 25 Additionally, $267.3 million of debt and capital lease obligationsare due and payable during the first quarter of 2004. Based upon the Company'sforecasted operating results for 2003, it is unlikely that the Company will beable to repay all of the debt and capital lease obligations due in 2004 fromoperations. Further, the Company's obligations include a provision for an eventof default if the Company has not obtained a commitment letter to restructureits debt obligations prior to January 31, 2004. Therefore, the Company will berequired to refinance, amend or restructure existing obligations prior to theend of the first quarter of 2004 in order to continue as a going concern. The Company continues to pursue opportunities to divest of non-coreassets in order to reduce indebtedness. Proceeds from dispositions will be usedto further reduce the Company's indebtedness. All transactions are subject tolender and Board of Director approvals. There can be no assurance that theCompany will be successful in divesting any of these assets. The Company's ongoing liquidity will depend upon a number of factorsincluding its ability to continue to borrow under its bank line of credit andtrade receivables facility, manage cash resources and meet the financialcovenants under its new debt agreements. In the event the Company isunsuccessful in meeting its debt service obligations or if expectationsregarding the management and generation of cash resources are not met, theCompany would need to implement severe cost reductions, reduce capitalexpenditures, sell additional assets, restructure all or a portion of itsexisting debt and/or obtain additional financing. A. DEBT COVENANTS As of December 31, 2002, the Company was in compliance with its financial covenants. On February 28, 2003, the Company was in technical violation of certain of its financial covenants for the reporting period ended January 31, 2003. The Company received a waiver of current violations through April 15, 2003. The Company's April 2003 amended covenants contain, among other provisions as defined in the agreement, the following items: a subjective acceleration clause related to material adverse changes; restricts capital expenditures to $4.0 million within any twelve month period; restricts new finance contracts the Company can enter into to $5.0 million within any twelve month period; required levels of minimum EBITDA, minimum shareholders' equity and maximum debt to assets ratio; and the requirement that the Company have a commitment letter to refinance, amend or restructure its debt and capital lease obligations prior to January 31, 2004. In July 2002, the Company received a waiver of a default from PitneyBowes Credit Corporation (PBCC) under its Master Equipment Lease Agreement datedSeptember 30, 1997. The event of default was the result of delinquent payment oflease obligations from the Company's sublessee under the agreement. The waiverpermanently waived the provision of the agreement (effective from September 30,1997) related to delinquent payment of rental obligations from the Company'ssublessee. The Company is not and has never been delinquent with respect to itslease payments to PBCC. The Company has terminated its sublease agreement withthe sublessee and is in the process of repossessing the equipment. The sublesseefiled for bankruptcy protection in August 2002. B. DEBT In April 2002, the Company restructured its existing revolvingcredit facility and Senior Notes. In April 2003, the Company amended itsexisting Bank Term Loan, Bank Line of Credit and Senior Notes agreements (theagreements). The agreements change debt maturities and principal paymentschedules; provide for all assets, other than receivables, to be pledged ascollateral equally to the lenders; increase the cost of funds; and require theCompany to meet certain financial conditions, among other things. The agreementsalso contain certain restrictions on acquisitions and the payment of preferredstock dividends. The following reflects certain terms of the agreements. In April 2002 and as amended in April 2003, the Company restructuredits $125 million Revolving Credit Facility into a $107 million term loan (BankTerm Loan) and $18 million revolving credit facility 26(Bank Line of Credit). The Bank Term Loan and Bank Line of Credit both mature onMarch 30, 2004 and are secured by all of the assets, other than receivables, ofthe Company. The Bank Term Loan, of which approximately $31.5 million consistsof outstanding letters of credit, requires monthly payments totaling $14.6million per annum in 2003 and $12.4 million per annum in 2004, with the balancedue March 30, 2004. Interest on the Bank Term Loan, excluding letters of credit, isvariable based upon the adjusted London Interbank Offered Rate (LIBOR) plus 430basis points or Prime Rate plus 200 basis points. Interest on the borrowingsunder the Bank Line of Credit is based upon LIBOR plus 405 basis points or theagent bank's alternative borrowing rate as defined in the agreement. The Companypays a commitment fee on the unused portion of this facility at a rate of 100basis points per annum. All interest and fees are payable monthly. Theseinterest rates are subject to increases of up to a maximum of 500 basis pointsper annum if the Company does not meet certain performance targets for EBITDAand debt to asset ratios. Certain of these targets, as defined, are morerestrictive than the Company's debt covenant levels. As of December 31, 2002 and 2001 the Company had $182 and $192million, respectively of Senior Notes outstanding with original maturities in2002 through 2008. As part of the April 2002 restructuring and April 2003amending of these terms, the original maturity dates for $72 million of SeniorNotes, payable in 2002 through March 2004, have been extended to March 30, 2004.The maturity dates for the other $120 million of Senior Notes due subsequent toMarch 30, 2004 remain unchanged. The Senior Notes are secured by all of theassets, other than receivables, of the Company. Monthly principal payments totaling $25.5 million in 2003 and $22.3million in 2004 will be made on a prorata basis to all Senior Notes. Interest onthe Senior Notes, which is payable monthly, increased by 50 basis points,effective April 2003, and ranges from 10.16% to 11.79%. These interest rates aresubject to increases of up to a maximum of 500 basis points per annum if theCompany does not meet certain performance targets for EBITDA and debt to assetratios. Certain of these targets, as defined, are more restrictive than theCompany's debt covenant levels. C. CAPITAL LEASES In December 2000, the Company entered into a sale and leasebackfacility with an independent financial institution related to its trailer rentalfleet. The total facility size was $110 million and was syndicated in the firstquarter of 2001. The facility's initial term that expired in June 2002, has fourannual renewal periods and contains financial covenants substantially identicalto the Company's existing credit facilities. In April 2002, the Company entered into an amendment of its sale andleaseback agreement with an independent financial institution related to itstrailer rental fleet to waive financial covenant violations through March 30,2002 and amend the terms of the existing agreement. The amendment provided forincreased pricing and conforms the financial covenants to those in the amendedBank Term Loan, Bank Line of Credit and Senior Notes agreements described above.Further, the term of the facility was reduced from June 2006 to January 2005.Assuming all renewal periods are elected, the Company will make payments underthis facility of $11.3 million and $41.2 million in 2003 and 2004, respectively.As of December 31, 2002, the Company has $36.1 million of equipment financed and$50.1 million under the capital lease obligation of this facility. In December 2002, a sale and leaseback facility with threeindependent financial institutions related to its trailer rental fleet wasbrought on balance sheet as a capital lease. As of December 31, 2002, theCompany had $7.5 million in equipment financed and an unamortized lease value of$14.7 million. Two of the three pieces of this facility expire in 2004, with theremaining piece due to expire in 2005. The Company will make payments under thisfacility of $4.3 million, $9.2 million and $2.8 million in 2003, 2004 and 2005,respectively. D. TRADE RECEIVABLE FACILITY In April 2002, the Company replaced its previous $100 millionreceivable securitization facility with a new two year $110 million TradeReceivables Facility. The new facility allows the Company to sell, withoutrecourse, on an ongoing basis predominantly all of its domestic accountsreceivable to a wholly-owned, bankruptcy remote special purpose entity (SPE).The SPE sells an undivided interest in receivables to an outside liquidityprovider who, in turn, remits cash back to the SPE for receivables eligible forfunding. This new facility includes financial covenants identical to those inthe amended Bank Term Loan, Bank Line 27of Credit and Senior Notes agreements. As of December 31, 2002, the Company hadno outstanding borrowings under this facility and had not borrowed under thefacility since its inception. E. SECURITIES In January 2003, the Company filed with the SEC a shelf registrationstatement for the issuance of up to $50 million in securities, which may includedebt securities, common or preferred stock, depositary shares or warrants topurchase any of the aforementioned. The registration of these securities ispending review by the SEC of the registration statement and the 2002 Form 10-K.Proceeds from any issuance would be used to provide additional funds foroperations, repayment of any then outstanding debt and for other generalcorporate purposes. There can be no assurance that any issuance will be placed.USE OF CAPITAL A. CAPITAL EXPENDITURES Under the new debt agreements, the Company is restricted to $4.0million of capital expenditures in 2003. B. CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS A summary of payments due by period of the Company's contractualobligations and commercial commitments as of December 31, 2002 is shown in thetable below. A more complete description of these obligations and commitments isincluded in the Notes to the Consolidated Financial Statements.Contractual Obligations $ Millions 2003 2004 2005 2006 Thereafter Total------------------------------------- ------- ------- ------- ------- ---------- ------- DEBT (excluding interest): Revolving Bank Line of Credit $ -- $ -- $ -- $ -- $ -- $ -- Receivable Securitization Facility -- -- -- -- -- -- Mortgages & Other Notes Payable 2.9 3.4 3.6 2.0 5.1 17.0 Make Whole and Deferral Fee Notes -- 7.7 -- -- -- 7.7 Bank Term Loan 14.6 60.7 -- -- -- 75.3 Senior Notes 25.5 156.5 -- -- -- 182.0 ------- ------- ------- ------- ------- ------- TOTAL DEBT $ 43.0 $ 228.3 $ 3.6 $ 2.0 $ 5.1 $ 282.0 ======= ======= ======= ======= ======= =======OTHER: Capital Lease Obligations $ 15.6 $ 50.4 $ 2.8 $ -- $ -- $ 68.8 Operating Leases 8.1 7.0 3.7 2.9 3.1 24.8 ------- ------- ------- ------- ------- ------- TOTAL OTHER $ 23.7 $ 57.4 $ 6.5 $ 2.9 $ 3.1 $ 93.6 ======= ======= ======= ======= ======= =======TOTAL $ 66.7 $ 285.7 $ 10.1 $ 4.9 $ 8.2 $ 375.6 ======= ======= ======= ======= ======= =======Other Commercial Commitments $ Millions 2003 2004 2005 2006 Thereafter Total------------------------------------- ------- ------- ------- ------- ---------- ------- Letters of credit $ -- $ 31.5 -- $ -- $ -- $ 31.5Residual guarantees 3.8 5.6 5.4 9.8 5.9 30.5 ------- ------- ------- ------- ------- -------TOTAL $ 3.8 $ 37.1 $ 5.4 $ 9.8 $ 5.9 $ 62.0 ======= ======= ======= ======= ======= ======= Residual guarantees represent purchase commitments related tocertain new and used trailer transactions as well as certain productionequipment. The Company also has purchase options of $94.9 million on theaforementioned trailers and equipment. To the extent that the value of theunderlying property is less than the residual guarantee and the value is notexpected to be recovered, the Company has recorded a loss contingency. 28CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of consolidated financial statements in conformitywith accounting principles generally accepted in the United States requiresmanagement to make estimates and assumptions that directly affect the amountsreported in its consolidated financial statements and accompanying notes.Management bases its estimates on historical experience and other assumptionsthat it believes to be reasonable under the circumstances, the results of whichform the basis for making judgments about the carrying value of assets andliabilities that are not readily apparent from other sources. Managementcontinually evaluates the information used to make such estimates as itsbusiness and economic environment changes and has discussed these estimates withthe Audit Committee of the Board of Directors. The use of estimates is pervasivethroughout the Company's financial statements, but the accounting polices andestimates management considers most critical are as follows: a. Revenue Recognition The Company recognizes revenue from the sale of trailers andaftermarket parts when the customer has made a fixed commitment to purchase thetrailers for a fixed or determinable sales price, collection is reasonablyassured under the Company's normal billing and credit terms and ownership andall risks of loss have been transferred to the buyer, which is normally uponshipment or pick up by the customer. b. Allowance for Doubtful Accounts The Company records and maintains a provision for doubtful accountsfor customers based upon a variety of factors including the Company's historicalexperience, the length of time the receivable has been outstanding and thefinancial condition of the customer. If the circumstances related to specificcustomers were to change, the Company's estimates with respect to thecollectibility of the related receivables could be further adjusted. A 5% changein the allowance for doubtful accounts would lead to an approximate $0.7 millioneffect on our net loss before income taxes. c. Inventories Inventories are primarily stated at the lower of cost, determined onthe first-in, first-out (FIFO) method, or market. The cost of manufacturedinventory includes raw material, labor and overhead. As used trailersapproximate market value, a 5% change in the market values of used trailerinventory would lead to an approximate $1.1 million effect on our net lossbefore income taxes. d. Asset Impairment including Long-Lived Assets, Goodwill and Other Intangible Assets Long-lived assets are reviewed for impairment in accordance withSFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,whenever facts and circumstances indicate that the carrying amount may not berecoverable. Specifically, this process involves comparing an asset's carryingvalue to the estimated undiscounted future cash flows the asset is expected togenerate over its remaining life. If this process were to result in theconclusion that the carrying value of a long-lived asset would not berecoverable, a write-down of the asset to fair value would be recorded through acharge to operations. Fair value is determined based upon discounted cash flowsor appraisals as appropriate. Goodwill and other intangible assets are subject to periodicevaluations when circumstances warrant, or at least once a year, in accordancewith SFAS No. 142, Goodwill and Other Intangible Assets. This evaluationinvolves the comparing of the carrying value of the goodwill or intangibleassets to its fair value. The fair value is estimated based upon the presentvalue of future cash flows. In estimating the future cash flows, the Companytakes into consideration the overall and industry economic conditions andtrends, market risk of the Company and historical information. All of thefactors involve a high degree of judgment and complexity and any changes inthese factors could affect the carrying value of the assets in the future. e. Accrued and Contingent Liabilities The Company's warranty policy generally provides coverage forcomponents of the trailers the Company produces or assembles. Typically, thecoverage period is five years. The Company's policy is to accrue the estimatedcost of warranty coverage at the time of the sale. A 5% increase in warrantyaccruals would have increased total warranty provision by $0.6 million in 2002. 29 The Company also has reserves for environmental and legal exposures.The Company's environmental reserves represent the estimated cost to remediateany known contamination at any of its current or formerly owned manufacturing orretail branch locations. The reserve is evaluated quarterly to assess the rangeof potential clean-up cost on a site-by-site basis based upon testing performedonce an environmental issue has been identified. The evaluation also takes intoconsideration any state or federal assistance with the remediation costs. TheCompany determines its necessary legal reserves based upon a probability ofpotential outcome. A 5% increase in these reserves would not have a significantimpact on the total provision in 2002. f. Income Taxes The Company currently has a full valuation allowance equal to itsnet deferred tax assets based upon the realizability of those values. The levelof the Company's net operating losses over the past three years, industryeconomic conditions and the financial struggles of the Company have all affectedthe assessment of the Company's ability to realize the assets in the future. TheCompany believes that its estimates for the valuation allowance reserved againstdeferred tax assets are appropriate based on current facts and circumstances. A5% increase in the valuation allowance would result in a tax benefit ofapproximately $3.4 million.OTHER INFLATION The Company has generally been able to offset the impact of risingcosts through productivity improvements as well as selective price increases. Asa result, inflation has not had, and is not expected to have a significantimpact on the Company's business. NEW ACCOUNTING PRONOUNCEMENTS a. Goodwill and Other Intangible Assets The Company adopted SFAS No. 142 as of January 1, 2002. This newstandard changes the accounting for goodwill from an amortization method to animpairment-only approach and introduces a new model for determining impairmentcharges. SFAS No. 142 requires completion of the initial step of a transitionalimpairment test within six months of the adoption of this standard and, ifapplicable, completion of the final step of the adoption by December 31, 2002.The Company completed the initial transition impairment test as of January 1,2002 and determined that there was no impairment loss as a result of adoption.The Company conducted its annual impairment test as of October 1, 2002 and hasdetermined no subsequent impairment of goodwill exists. The Company willcontinue to perform annual impairment tests, as required under SFAS No. 142, andreview its goodwill for impairment when circumstances indicate that the fairvalue has declined significantly. b. Asset Retirement Obligations In June 2001, the FASB issued SFAS No. 143, Accounting for AssetRetirement Obligations with an effective date of June 15, 2002, which becomeseffective for the Company on January 1, 2003. This standard requires obligationsassociated with retirement of long-lived assets to be capitalized as part of thecarrying value of the related asset. The Company does not believe the adoptionof SFAS No. 143 will have a material effect on its financial position or resultsof operations. c. Asset Impairment or Disposal In August 2001, the FASB issued SFAS No. 144, Accounting for theImpairment or Disposal of Long-Lived Assets, supercedes APB No. 30, Reportingthe Results of Operations -- Reporting the Effects of Disposal of a Segment of aBusiness, and Extraordinary, Unusual and Infrequently Occurring Events andTransactions and SFAS No. 121, Accounting for the Impairment of Long-LivedAssets and for Long-Lived Assets to be Disposed Of. This standard retains thepreviously existing accounting requirements related to the recognition andmeasurement requirements of the impairment of long-lived assets to be held foruse, while expanding the measurement requirements of long-lived assets to bedisposed of by sale to include discontinued operations. It also expands on thepreviously existing reporting requirements for discontinued 30operations to include a component of an entity that either has been disposed ofor is classified as held for sale. The Company adopted the accounting provisionsof this standard on January 1, 2002. The effect of adopting the accountingprovisions of this standard was not material to the Company's financialstatements. Consistent with the provisions of this new standard, financialstatements for prior years have not been restated. As of December 31, 2002 and2001, the Company had $9.2 million and $13.0 million, respectively, classifiedas assets held for sale and recorded in Prepaid Expenses and Other on theConsolidated Balance Sheets. The Company continues to pursue the immediatedisposition of these assets as market conditions allow. d. Debt Extinguishment Costs In April 2002, the FASB issued SFAS No. 145, Rescission of FASBStatements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and TechnicalCorrections. This standard is required to be adopted by the Company on January1, 2003, but may be adopted early. SFAS No. 145 modifies the classificationcriteria for extraordinary items related to the extinguishment of debt.Effective April 1, 2002, the Company decided to early adopt the provisions ofSFAS No. 145. Under the new standard, $1.2 million in expenses associated withthe Company's debt restructuring in April 2002, which under prior standardswould have been recorded as an extraordinary item, were recorded in other, neton the Consolidated Statements of Operations. e. Termination Benefits and Exit Costs In June 2002, the FASB issued SFAS No. 146 Accounting for CostsAssociated with Exit or Disposal Activities. SFAS No. 146 nullifies EmergingIssues Task Force (EITF) Issue No., 94-3, Liability Recognition for CertainEmployee Termination Benefits and Other Costs to Exit an Activity (includingCertain Costs Incurred in a Restructuring). SFAS No. 146 generally requirescompanies to recognize costs associated with exit activities when they areincurred rather than at the date of a commitment to an exit or disposal plan andis to be applied prospectively to exit or disposal activities initiated afterDecember 31, 2002. The Company is currently not contemplating any restructuringactivities, but if such activities were to be undertaken in the future, theCompany would evaluate the effects, if any, that these activities could have onits results of operations or financial position. f. Stock-Based Compensation In December 2002, the FASB issued SFAS No. 148, Accounting forStock-Based Compensation - Transition and Disclosure - an amendment of FASBStatement No. 123. The statement is effective for fiscal years ending afterDecember 15, 2002 for transition guidance and annual disclosures and interimperiods beginning after December 15, 2002 for interim disclosure provisions.SFAS No. 148 provides alternative methods of transition for a voluntary changeto the fair value method of accounting for stock-based compensation and requiresa more prominent disclosure on an annual and interim basis of the method ofaccounting for stock-based compensation. As allowed by SFAS No. 148, the Companycontinues to account for stock-based compensation under APB No. 25, Accountingfor Stock Issued to Employees and therefore, SFAS No. 148 will not have anaffect on the Company's results of operations or financial condition. g. Guarantees In 2002, the FASB issued FASB Interpretation (FIN) 45, Guarantor'sAccounting and Disclosure Requirements for Guarantees, Including IndirectGuarantees of Indebtedness of Others. FIN 45 requires an issuer of a guaranteeto recognize an initial liability for the fair value of the obligations coveredby the guarantee. FIN 45 also addresses the disclosures required by a guarantorin interim and annual financial statements regarding obligations underguarantees. We will adopt the requirement for recognition of the liability forthe fair value of guaranteed obligations prospectively for guarantees enteredinto after January 1, 2003. We adopted the disclosure provisions as of December31, 2002. h. Variable Interest Entities In 2003, the FASB issued FIN 46, Consolidation of Variable InterestEntities. FIN 46 defines a variable interest entity (VIE) as a corporation,partnership, trust or any other legal structure that does not have equityinvestors with a controlling financial interest or has equity investors that donot provide sufficient financial resources for the entity to support itsactivities. FIN 46 requires consolidation of a VIE by the primary beneficiary ofthe assets, liabilities, and results of activities effective for 2003. FIN 46also 31requires certain disclosures by all holders of a significant variable interestin a VIE that are not the primary beneficiary. The Company is currentlyevaluating the impacts of FIN 46 to its consolidated financial statements anddoes not believe that the adoption of FIN 46 will have a material impact on theconsolidated results of operations, financial position or liquidity for theperiods presented herein.EQUIPMENT OFF BALANCE SHEET AND RELATED CUSTOMER CREDIT RISK The Company subleased certain highly specialized RoadRailer(R)equipment to Amtrak, who is experiencing financial difficulties. Due to thehighly specialized nature of the equipment, the recovery value of the equipmentis considered to be minimal. The unamortized lease value of this arrangement isapproximately $5.0 million as of December 31, 2002. The Company also has financecontracts related to this customer recorded on its December 31, 2002 balancesheet of approximately $10.7 million. As of December 31, 2002, the customer wascurrent in its obligations to the Company. As a result, the Company has notrecorded any provision for a loss on this equipment.ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In addition to the risks inherent in its operations, the Company hasexposure to financial and market risk resulting from volatility in commodityprices, interest rates and foreign exchange rates. The following discussionprovides additional detail regarding the Company's exposure to these risks. a. Commodity Price Risks The Company is exposed to fluctuation in commodity prices throughthe purchase of raw materials that are processed from commodities such asaluminum, steel, wood and virgin plastic pellets. Given the historicalvolatility of certain commodity prices, this exposure can significantly impactproduct costs. The Company may manage aluminum price changes by entering intofixed price contracts with its suppliers upon a customer sales order beingfinalized. Because the Company typically does not set prices for its products inadvance of its commodity purchases, it can take into account the cost of thecommodity in setting its prices for each order. To the extent that the Companyis unable to offset the increased commodity costs in its product prices, theCompany's results would be materially and adversely affected. b. Interest Rates As of December 31, 2002, the Company had approximately $125 millionof floating rate debt outstanding under its various financing agreements. Ahypothetical 100 basis-point increase in the floating interest rate from thecurrent level would correspond to approximately a $1.3 million increase ininterest expense over a one-year period. This sensitivity analysis does notaccount for the change in the Company's competitive environment indirectlyrelated to the change in interest rates and the potential managerial actiontaken in response to these changes. c. Foreign Exchange Rates The Company is subject to fluctuations in the Canadian dollarexchange rate and that impact on intercompany transactions between the Companyand its Canadian subsidiary, as well as U.S. denominated transactions betweenthe Canadian subsidiaries and unrelated parties. Since acquiring its Canadiansubsidiary, the Company has not undertaken any activities, such as hedgingactivities, to mitigate this exposure. Therefore, exchange rate fluctuationscould have a material impact on the results of operations. The Company also hashistorically entered into foreign currency forward contracts (principallyagainst the German Deutschemark and French Franc) to hedge the netreceivable/payable position arising from trade sales (including lease revenues)and purchases with regard to the Company's international activities. The Companydoes not hold or issue derivative financial instruments for speculativepurposes. As of December 31, 2002, the Company had no foreign currency forwardcontracts outstanding. 32ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA PAGES ----- Reports of Independent Public Accountants .................................. 34Consolidated Balance Sheets as of December 31, 2002 and 2001 ............... 36Consolidated Statements of Operations for the years ended December 31, 2002,2001 and 2000 .............................................................. 37Consolidated Statements of Stockholders' Equity for the years ended December31, 2002, 2001 and 2000 .................................................... 38Consolidated Statements of Cash Flows for the years ended December 31, 2002,2001 and 2000 .............................................................. 39Notes to Consolidated Financial Statements ................................. 40 33 Report of Independent AuditorsTo the Shareholders of Wabash National Corporation:We have audited the accompanying consolidated balance sheet of Wabash NationalCorporation and subsidiaries as of December 31, 2002, and the relatedconsolidated statements of operations, stockholders' equity and cash flows forthe year ended December 31, 2002. These financial statements are theresponsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audit. The consolidatedfinancial statements of Wabash National Corporation and subsidiaries as ofDecember 31, 2001 and for the two years in the period ended December 31, 2001,were audited by other auditors who have ceased operations. Those auditorsexpressed an unqualified opinion on those financial statements in their reportdated April 12, 2002.We conducted our audit in accordance with auditing standards generally acceptedin the United States. Those standards require that we plan and perform the auditto obtain reasonable assurance about whether the financial statements are freeof material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for ouropinion.In our opinion, the 2002 consolidated financial statements referred to abovepresent fairly, in all material respects, the consolidated financial position ofWabash National Corporation and subsidiaries as of December 31, 2002, and theconsolidated results of their operations and their cash flows for the year endedDecember 31, 2002, in conformity with accounting principles generally acceptedin the United States.As discussed in Note 2 to the Consolidated Financial Statements, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and OtherIntangible Assets," in 2002. ERNST & YOUNG LLPIndianapolis, IndianaFebruary 19, 2003except for Notes 1, 7, 9, and 12, as to which the date isApril 11, 2003 34 This report is a copy of a report previously issued by ArthurAndersen LLP. The report has not been reissued by Arthur Andersen nor has ArthurAndersen LLP provided a consent to the inclusion of its report in this Form10-K. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTSTo the Shareholders of Wabash National Corporation: We have audited the accompanying consolidated balance sheets ofWABASH NATIONAL CORPORATION (a Delaware corporation) and subsidiaries as ofDecember 31, 2001 and 2000, and the related consolidated statements ofoperations, stockholders' equity and cash flows for each of the three years inthe period ended December 31, 2001. These financial statements are theresponsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standardsgenerally accepted in the United States. Those standards require that we planand perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audits provide areasonable basis for our opinion. In our opinion, the consolidated financial statements referred toabove present fairly, in all material respects, the financial position of WabashNational Corporation and subsidiaries as of December 31, 2001 and 2000, and theresults of their operations and their cash flows for each of the three years inthe period ended December 31, 2001, in conformity with accounting principlesgenerally accepted in the United States. ARTHUR ANDERSEN LLPIndianapolis, Indiana,April 12, 2002. 35 WABASH NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) December 31, ------------------------- ASSETS 2002 2001 --------- --------- CURRENT ASSETS: Cash and cash equivalents .................................. $ 35,659 $ 11,135 Accounts receivable, net ................................... 34,396 58,358 Current portion of finance contracts ....................... 9,528 10,646 Inventories ................................................ 134,872 191,094 Refundable income taxes .................................... 911 25,673 Prepaid expenses and other ................................. 17,388 17,231 --------- --------- Total current assets ................................. 232,754 314,137PROPERTY, PLANT AND EQUIPMENT, net .............................. 145,703 170,330EQUIPMENT LEASED TO OTHERS, net ................................. 100,837 109,265FINANCE CONTRACTS, net of current portion ....................... 22,488 40,187GOODWILL, net ................................................... 34,652 34,540OTHER ASSETS .................................................... 29,135 24,045 --------- --------- $ 565,569 $ 692,504 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIES: Current maturities of long-term debt ....................... $ 42,961 $ 60,682 Current maturities of capital lease obligations ............ 12,860 21,559 Accounts payable ........................................... 60,457 51,351 Other accrued liabilities .................................. 61,424 69,246 --------- --------- Total current liabilities ............................ 177,702 202,838LONG-TERM DEBT, net of current maturities ....................... 239,043 274,021LONG-TERM CAPITAL LEASE OBLIGATIONS, net of current maturities .. 51,993 55,755DEFERRED INCOME TAXES ........................................... -- --OTHER NONCURRENT LIABILITIES AND CONTINGENCIES .................. 22,847 28,905STOCKHOLDERS' EQUITY: Preferred stock, 352,000 and 482,041 shares authorized, issued and outstanding with an aggregate liquidation value of $17,600 and $30,600, respectively . 3 5 Common stock, $0.01 par value, 75,000,000 shares authorized, 25,647,060 and 23,013,847 shares issued and outstanding, respectively ............................................ 257 230 Additional paid-in capital ................................. 237,489 236,804 Retained deficit ........................................... (162,222) (104,469) Accumulated other comprehensive loss ....................... (264) (306) Treasury stock at cost, 59,600 common shares ............... (1,279) (1,279) --------- --------- Total stockholders' equity ........................... 73,984 130,985 --------- --------- $ 565,569 $ 692,504 ========= ========= The accompanying notes are an integral part of these Consolidated Statements 36 WABASH NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Years Ended December 31, ----------------------------------------------- 2002 2001 2000 ----------- ----------- ----------- NET SALES $ 819,568 $ 863,392 $ 1,332,172COST OF SALES 779,117 982,605 1,216,205 ----------- ----------- ----------- Gross profit (loss) 40,451 (119,213) 115,967GENERAL AND ADMINISTRATIVE EXPENSES 53,897 56,955 34,354SELLING EXPENSES 23,501 25,370 21,520RESTRUCTURING CHARGES 1,813 37,864 36,338RESTRUCTURING CHARGES 1,813 37,864 36,338 ----------- ----------- ----------- Income (loss) from operations (38,760) (239,402) 23,755OTHER INCOME (EXPENSE): Interest expense (30,873) (21,292) (19,740) Trade receivables facility costs (4,072) (2,228) (7,060) Foreign exchange gains and losses, net 5 (1,706) -- Equity in losses of unconsolidated affiliate -- (7,668) (3,050) Restructuring charges -- (1,590) (5,832) Other, net 2,232 (1,139) 877 ----------- ----------- ----------- Loss before income taxes (71,468) (275,025) (11,050)INCOME TAX BENEFIT (15,278) (42,857) (4,314) ----------- ----------- -----------Net Loss $ (56,190) $ (232,168) $ (6,736)PREFERRED STOCK DIVIDENDS 1,563 1,845 1,903 ----------- ----------- -----------NET LOSS APPLICABLE TO COMMONSTOCKHOLDERS $ (57,753) $ (234,013) $ (8,639) =========== =========== ===========LOSS PER SHARE: Basic $ (2.43) $ (10.17) $ (0.38) =========== =========== =========== Diluted $ (2.43) $ (10.17) $ (0.38) =========== =========== ===========COMPREHENSIVE LOSS: Net Loss $ (56,190) $ (232,168) $ (6,736) Foreign currency translation adjustment 42 (306) -- ----------- ----------- -----------NET COMPREHENSIVE LOSS $ (56,148) $ (232,474) $ (6,736) =========== =========== =========== The accompanying notes are an integral part of these Consolidated Statements. 37 WABASH NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DOLLARS IN THOUSANDS) Preferred Stock Common Stock Additional --------------------------- -------------------------- Paid-In Shares Amount Capital Amount Capital ---------- ---------- ---------- ---------- ---------- BALANCES, December 31, 1999 482,041 $ 5 22,985,186 $ 230 $ 236,474 Net loss for the year -- -- -- -- -- Cash dividends declared: Common stock ($0.16 per share) -- -- -- -- -- Preferred stock -- -- -- -- -- Common stock issued under: Employee stock purchase plan -- -- 15,544 -- 158 Employee stock bonus plan -- -- 1,760 -- 28 ---------- ---------- ---------- ---------- ----------BALANCES, December 31, 2000 482,041 $ 5 23,002,490 $ 230 $ 236,660 Net loss for the year -- -- -- -- -- Foreign currency translation -- -- -- -- -- Cash dividends declared: Common stock ($0.09 per share) -- -- -- -- -- Preferred stock -- -- -- -- -- Common stock issued under: Employee stock purchase plan -- -- 7,138 -- 70 Employee stock bonus plan -- -- 1,960 -- 27 Outside directors' compensation -- -- 2,259 -- 47 ---------- ---------- ---------- ---------- ----------BALANCES, December 31, 2001 482,041 $ 5 23,013,847 $ 230 $ 236,804 Net loss for the year -- -- -- -- -- Foreign currency translation -- -- -- -- -- Cash dividends declared: Common stock -- -- -- -- -- Preferred stock -- -- -- -- -- Preferred Stock Conversion (130,041) (2) 2,589,687 26 334 Common stock issued under: Employee stock purchase plan -- -- 5,312 1 47 Employee stock bonus plan -- -- 10,300 -- 89 Stock option plan -- -- 11,168 -- 82 Outside directors' compensation -- -- 16,746 -- 133 ---------- ---------- ---------- ---------- ----------BALANCES, December 31, 2002 352,000 $ 3 25,647,060 $ 257 $ 237,489 ========== ========== ========== ========== ========== Retained Other Earnings Comprehensive Treasury (Deficit) Income(Loss) Stock Total ---------- ------------- ---------- ---------- BALANCES, December 31, 1999 $ 143,935 $ -- $ (1,279) $ 379,365 Net loss for the year (6,736) -- -- (6,736) Cash dividends declared: Common stock ($0.16 per share) (3,679) -- -- (3,679) Preferred stock (1,903) -- -- (1,903) Common stock issued under: Employee stock purchase plan -- -- -- 158 Employee stock bonus plan -- -- -- 28 ---------- ---------- ---------- ----------BALANCES, December 31, 2000 $ 131,617 $ -- $ (1,279) $ 367,233 Net loss for the year (232,168) -- -- (232,168) Foreign currency translation -- (306) -- (306) Cash dividends declared: Common stock ($0.09 per share) (2,073) -- -- (2,073) Preferred stock (1,845) -- -- (1,845) Common stock issued under: Employee stock purchase plan -- -- -- 70 Employee stock bonus plan -- -- -- 27 Outside directors' compensation -- -- -- 47 ---------- ---------- ---------- ----------BALANCES, December 31, 2001 $ (104,469) $ (306) $ (1,279) $ 130,985 Net loss for the year (56,190) -- -- (56,190) Foreign currency translation -- 42 -- 42 Cash dividends declared: Common stock -- -- -- -- Preferred stock (1,563) -- -- (1,563) Preferred Stock Conversion -- -- -- 358 Common stock issued under: Employee stock purchase plan -- -- -- 48 Employee stock bonus plan -- -- -- 89 Stock option plan -- -- -- 82 Outside directors' compensation -- -- -- 133 ---------- ---------- ---------- ----------BALANCES, December 31, 2002 $ (162,222) $ (264) $ (1,279) $ 73,984 ========== ========== ========== ========== The accompanying notes are an integral part of these Consolidated Statements. 38 WABASH NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) Years Ended December 31, ----------------------------------- 2002 2001 2000 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES:Net loss ................................................................................... $ (56,190) $(232,168) $ (6,736)Adjustments to reconcile net income to net cash provided by (used in) operating activities . Depreciation and amortization ........................................................... 28,626 32,143 30,051 Net (gain) loss on the sale of assets ................................................... (1,322) (504) 1,474 Provision for losses on accounts receivable and finance contracts ....................... 9,773 20,959 4,088 Deferred income taxes ................................................................... -- (14,441) (8,906) Equity in losses of unconsolidated affiliate ............................................ -- 7,183 3,050 Restructuring and other related charges ................................................. 1,813 41,067 46,650 Cash used in restructuring .............................................................. (373) (6,988) -- Used trailer valuation charges .......................................................... 5,443 62,134 9,600 Loss contingencies and impairment of equipment leased to others ......................... 4,831 37,900 -- Other non-cash adjustments .............................................................. 4,706 -- -- Change in operating assets and liabilities, excluding effects of the acquisitions Accounts receivable ................................................................. 19,695 1,790 52,709 Inventories ......................................................................... 58,335 107,755 (74,479) Refundable income taxes ............................................................. 24,762 (20,121) (5,552) Prepaid expenses and other .......................................................... (4,016) 3,863 5,368 Accounts payable and accrued liabilities ............................................ 9,776 (34,443) (69,880) Other, net .......................................................................... (1,577) 261 (1,106) --------- --------- --------- Net cash provided by (used in) operating activities ................................. 104,282 6,390 (13,669) --------- --------- ---------CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures ....................................................................... (5,703) (5,899) (60,342)Additions to equipment leased to others .................................................... (9,792) (70,444) (69,553)Additions to finance contracts ............................................................. (7,718) (18,662) (19,400)Investment in unconsolidated affiliate ..................................................... -- (7,183) (3,706)Acquisitions, net of cash acquired ......................................................... -- (6,336) --Proceeds from sale of leased equipment and finance contracts ............................... 5,337 60,556 60,845Principal payments received on finance contracts ........................................... 13,278 6,787 12,914Proceeds from the sale of property, plant and equipment .................................... 16,617 426 9,638 --------- --------- --------- Net cash provided by (used in) investing activities ................................. 12,019 (40,755) (69,604) --------- --------- ---------CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from: Issuance of bank term loan .............................................................. 80,402 -- -- Revolving bank line of credit ........................................................... 56,798 428,776 512,300 Long-term debt .......................................................................... -- -- 62,500 Sale of common stock .................................................................... 351 144 186Payments: Revolving bank line of credit ........................................................... (146,491) (361,006) (500,299) Long-term debt and capital lease obligations ............................................ (78,589) (21,738) (4,122) Common stock dividends .................................................................. -- (2,991) (3,679) Preferred stock dividends ............................................................... (443) (1,879) (1,903) Debt issuance costs ..................................................................... (3,805) -- -- --------- --------- --------- Net cash provided by (used in) financing activities ................................. (91,777) 41,306 64,983 --------- --------- ---------NET (DECREASE) INCREASE IN CASH ............................................................ 24,524 6,941 (18,290)CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD .................................. 11,135 4,194 22,484 --------- --------- ---------CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD ......................................... $ 35,659 $ 11,135 $ 4,194 ========= ========= =========Supplemental disclosures of cash flow information Cash paid during the year for: Interest ............................................................................ $ 27,913 $ 20,230 $ 19,694 Income taxes paid (refunded), net ................................................... (38,153) (7,047) 18,064 The accompanying notes are an integral part of these Consolidated Statements 39 WABASH NATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. DESCRIPTION OF THE BUSINESS, INDUSTRY AND FINANCIAL CONDITION Wabash National Corporation (the Company) designs, manufactures andmarkets standard and customized truck trailers and intermodal equipment underthe Wabash(R), Fruehauf(R) and RoadRailer(R) trademarks. The Company producesand sells aftermarket parts through its division, Wabash National Parts, and itswholly-owned subsidiary, Wabash National Trailer Centers (WNTC), formerly knownas North American Trailer Centers(TM). In addition to aftermarket parts sales,WNTC sells new and used trailers through its retail network and providesmaintenance service for the Company's and competitors' trailers and relatedequipment. On January 5, 2001, WNTC acquired Canadian branch locations inconnection with the Breadner acquisition. The Company's other significantwholly-owned subsidiaries include Apex Finance, Apex Trailer Leasing andRentals, L.P. and National Trailer Funding (the Finance Companies), and CloudOak Flooring Company, Inc. and WNC Cloud Merger Sub, Inc. (Wabash WoodProducts). The Finance Companies provide rental, leasing and finance programsto their customers for new and used trailers through the retail anddistribution segment. Wabash Wood Products manufactures hardwood flooringprimarily for the Company's manufacturing segment. After a 14.7% decline in demand during 2000 and a further decline of48.3% during 2001, the trailer industry in the United States saw a thirdconsecutive year of declines in demand during 2002 with overall new productionof 139,658 units down slightly from 140,084 units in 2001. During this threeyear industry retrenchment, the Company's market share of new trailers declinedfrom 24.5% in 2000 and 22.6% in 2001 to 19.4% during 2002. As a result of these conditions, the Company implemented acomprehensive plan to scale its operations to meet demand and to survive,including: o Hiring of new management; o Rationalizing manufacturing capacity; o Reducing its cost structure through continuous improvement initiatives; o Reducing used trailer inventories; o Divesting international operations; o Rationalizing retail and distribution capacity; and o Improving working capital management. Beginning in 2001 and continuing into 2002, the Company closed twoof its three trailer assembly facilities, conducted an employee layoff for thefirst time in the Company's history, liquidated approximately $110 million ofused trailers under an aggressive liquidation plan, completed its divestiture ofits European operations, closed approximately 10 of its 49 factory-owned branchlocations, closed one of its two wood flooring facilities and closed one of twoparts distribution centers. As a result of these dramatic steps, the Companyincreased its liquidity position (cash on hand and available borrowings underexisting credit facilities) from approximately $19 million as of September 30,2001 to approximately $78 million at the end of 2002. These actions also beganto improve the results from operations during 2002. The net loss in 2002 of$56.2 million represented a 76% improvement over the net loss reported in 2001of $232.2 million, despite a 5% decline in net sales during 2002 compared to2001. The net losses incurred in both 2001 and 2002 resulted in theCompany being in technical violation of financial covenants with certain of itslenders on December 31, 2001 and on February 28, 2003. The Company received awaiver of the violation from its lenders and subsequently amended its debtagreements in April 2002 and 2003, respectively. While the Company believes that industry conditions are likely torebound, the Company believes it has significantly restructured its operationsand, based on its projections, the Company anticipates generating positiveearnings before interest, taxes, depreciation and amortization (EBITDA) in 2003.Although the Company believes that the assumptions underlying the 2003projections are reasonable, there are risks related to market demand and salesin the U.S. and Canada, adverse interest rate or currency movements, realizationof anticipated cost reductions and levels of used trailer trade-ins that couldcause actual results to differ from the projections. Should results continue todecline, the Company is prepared to take additional cost cutting actions. Whilethere can be no assurance that the Company will achieve these results, theCompany believes it has adequately modified its operations to be in compliancewith its financial covenants throughout 2003 40and believes that its existing sources of liquidity combined with its operatingresults will generate sufficient liquidity such that the Company has the abilityto meet its obligations as they become due throughout 2003. However, based upon debt maturities and the Company's forecastedoperating results for 2003, it is unlikely that the Company will be able torepay all of the debt and capital lease obligations due in 2004 from operations.Therefore, the Company will be required to refinance, amend or restructureexisting obligations during the first quarter of 2004 in order to continue as agoing concern.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Basis of Consolidation The consolidated financial statements reflect the accounts of theCompany and its wholly-owned and majority-owned subsidiaries with the exceptionof ETZ, in 2001 and 2000, since the control of this subsidiary was deemed to betemporary. Accordingly, ETZ's operating results are included in Equity in Lossesof Unconsolidated Affiliate in the Consolidated Statements of Operations. ETZwas divested January of 2002 as discussed in Footnote 5. All significantintercompany profits, transactions and balances have been eliminated inconsolidation. Certain reclassifications have been made to prior periods toconform to the current year presentation. These reclassifications had no effecton net income (loss) for the periods previously reported. b. Use of Estimates The preparation of consolidated financial statements in conformitywith accounting principles generally accepted in the United States requiresmanagement to make estimates and assumptions that directly affect the amountsreported in its consolidated financial statements and accompanying notes. Actualresults could differ from these estimates. c. Foreign Currency Accounting The financial statements of the Company's Canadian subsidiary havebeen translated into U.S. dollars in accordance with Financial AccountingStandards Board (FASB) Statement No. 52, Foreign Currency Translation. Assetsand liabilities have been translated using the exchange rate in effect at thebalance sheet date. Revenues and expenses have been translated using aweighted-average exchange rate for the period. The resulting translationadjustments are recorded as Other Comprehensive Income (Loss) in Stockholders'Equity. Gains or losses resulting from foreign currency transactions areincluded in Foreign Exchange Gains and Losses, net on the Company's ConsolidatedStatements of Operations. The Company recorded foreign currency (gains) lossesof $0 during 2002, $1.7 million in 2001 and $0 during 2000. d. Revenue Recognition The Company recognizes revenue from the sale of trailers andaftermarket parts when the customer has made a fixed commitment to purchase thetrailers for a fixed or determinable sales price, collection is reasonablyassured under the Company's normal billing and credit terms and ownership andall risks of loss have been transferred to the buyer, which is normally uponshipment or pick up by the customer. The Company recognizes revenue from direct finance leases based upona constant rate of return while revenue from operating leases is recognized on astraight-line basis in an amount equal to the invoiced rentals. e. Used Trailer Trade Commitments The Company has commitments with certain customers to accept usedtrailers on trade for new trailer purchases. These commitments arise in thenormal course of business related to future new trailer orders. The Company hasaccepted trade ins from customers of approximately $40.5 million, $135.5 millionand $177.0 million in 2002, 2001 and 2000, respectively. As of December 31, 2002and 2001, the Company had approximately $7.0 million and $25.7 million,respectively, of outstanding trade commitments with customers. The netrealizable value of these commitments was approximately $6.4 million and $18.0million as of December 31, 2002 and 2001, respectively. The Company's policy isto recognize losses related to these commitments, if any, at the time the newtrailer revenue is recognized. 41 f. Cash and Cash Equivalents Cash equivalents consist of highly liquid investments, which arereadily convertible into cash and have maturities of three months or less. As ofDecember 31, 2002, the Company has $5.2 million in restricted cash representingescrowed amounts to pay the first quarter of 2003 interest on its Senior Notesand Term Loan. The amounts are escrowed in compliance with the Company's creditagreements and will be replenished quarterly. The restricted cash is included inPrepaid Expenses and Other on the Consolidated Balance Sheets. g. Accounts Receivable and Finance Contracts Accounts receivable and finance contracts as shown in theaccompanying Consolidated Balance Sheets are net of allowance for doubtfulaccounts. Accounts receivable primarily includes trade receivables. The Companyrecords and maintains a provision for doubtful accounts for customers based upona variety of factors including the Company's historical experience, the lengthof time the account has been outstanding and the financial condition of thecustomer. If the circumstances related to specific customers were to change, theCompany's estimates with respect to the collectibility of the related accountscould be further adjusted. Provisions to the allowance for doubtful accounts arecharged to General and Administrative Expenses on the Consolidated Statements ofOperations. The activity in the allowance for doubtful accounts was as follows(in thousands): Years Ended December 31, -------------------------------- 2002 2001 2000 -------- -------- -------- Balance at beginning of year $ 14,481 $ 3,745 $ 2,930 Provision 9,773 20,959 4,088 Write-offs, net (8,037) (10,223) (3,273) -------- -------- -------- Balance at end of year $ 16,217 $ 14,481 $ 3,745 ======== ======== ======== h. Inventories Inventories are primarily stated at the lower of cost, determined onthe first-in, first-out (FIFO) method, or market. The cost of manufacturedinventory includes raw material, labor and overhead. Inventories consist of thefollowing (in thousands): December 31, ---------------------- 2002 2001 -------- -------- Raw materials and components $ 27,646 $ 38,235 Work in progress ............ 14,447 10,229 Finished goods .............. 55,523 58,984 Aftermarket parts ........... 15,054 22,726 Used trailers ............... 22,202 60,920 -------- -------- $134,872 $191,094 ======== ======== The Company recorded used trailer inventory valuation adjustmentstotaling $5.4 million, $62.1 million and $9.6 million during 2002, 2001 and2000, respectively. These adjustments, which are reflected in Cost of Sales onthe Consolidated Statements of Operations, were calculated in accordance withthe Company's inventory valuation policies that are designed to state usedtrailers at the lower of cost or market. i. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Maintenance andrepairs are charged to expense as incurred, and expenditures that extend theuseful life of the asset are capitalized. Depreciation is recorded using thestraight-line method over the estimated useful lives of the depreciable assets.Estimated useful lives are 33 years for buildings and building improvements andrange from three to 10 years for machinery and equipment. Depreciation expenseon property plant and equipment was $14.7 million, $16.7 million and $14.0million for 2002, 2001 and 2000, respectively. 42 Property, plant and equipment consist of the following (inthousands): December 31, ------------------------- 2002 2001 --------- --------- Land $ 25,059 $ 27,907 Buildings and building improvements 91,774 92,987 Machinery and equipment 112,796 122,981 Construction in progress 3,108 817 --------- --------- 232,737 244,692 Less -- accumulated depreciation (87,034) (74,362) --------- --------- $ 145,703 $ 170,330 ========= ========= j. Equipment Leased to Others Equipment leased to others at December 31, 2002 and December 31,2001 was $100.8 million and $109.3 million, net of accumulated depreciation of$11.2 million and $9.4 million, respectively. Additions to equipment leased toothers are classified as investing activities on the Consolidated Statements ofCash Flows. The equipment leased to others is depreciated over the estimatedlife of the equipment or the term of the underlying lease arrangement, not toexceed 15 years, with a 20% residual value or a residual value equal to theestimated market value of the equipment at lease termination. Depreciationexpense on equipment leased to others, including capital lease assets, was $9.3million, $9.6 million and $10.9 million for 2002, 2001 and 2000, respectively. k. Goodwill The changes in the carrying amount of goodwill for the years endedDecember 31, 2001 and 2002 are as follows (in thousands): Retail and Manufacturing Distribution Total ------------- ------------ -------- Balance as of January 1, 2001 $ 18,862 $ 3,860 $ 22,722 Goodwill acquired -- 13,000 13,000 Goodwill acquired -- 13,000 13,000 Goodwill amortized (505) (664) (1,169) Effects of foreign currency -- (13) (13) -------- -------- --------Balance as of December 31, 2001 $ 18,357 $ 16,183 $ 34,540 Effects of foreign currency -- 112 112 -------- -------- --------Balance as of December 31, 2002 $ 18,357 $ 16,295 $ 34,652 ======== ======== ======== The Company adopted SFAS No. 142. Goodwill and Other IntangibleAssets, as of January 1, 2002. This new standard changes the accounting forgoodwill from an amortization method to an impairment-only approach andintroduces a new model for determining impairment charges. The new modelinvolves the comparing of the carrying value of the goodwill to its fair value.The Company estimates fair value based upon the present value of future cashflows. In estimating the future cash flows, the Company takes into considerationthe overall and industry economic conditions and trends, market risk of theCompany and historical information. The Company completed the initial transitionimpairment test as of January 1, 2002 and determined that there was noimpairment loss as a result of adoption. The Company conducted its annualimpairment test as of October 1, 2002 and has determined no subsequentimpairment of goodwill exists. The Company will continue to perform annualimpairment tests, as required under SFAS No. 142, and review its goodwill forimpairment when circumstances indicate that the fair value has declinedsignificantly. 43 The following table presents, on a proforma basis, net loss and lossper share as if SFAS No. 142 had been in effect for all years presented. For the Year Ended December 31, -----------------------------------------------(in thousands, except for loss-per-share amounts) 2002 2001 2000 ----------- ----------- ----------- Reported net loss $ (56,190) $ (232,168) $ (6,736)Goodwill amortization (net of tax) -- 1,124 589 ----------- ----------- -----------Adjusted net loss $ (56,190) $ (231,044) $ (6,147) =========== =========== ===========Basic and diluted loss per share: Reported net loss per share $ (2.43) $ (10.17) $ (0.38) Goodwill amortization (net of tax) per share -- 0.05 0.03 ----------- ----------- ----------- Adjusted net loss per share $ (2.43) $ (10.12) $ (0.35) =========== =========== =========== l. Other Assets The Company has other intangible assets including patents andlicenses, non-compete agreements and technology costs which are being amortizedon a straight-line basis over periods ranging from two to 12 years. Intangibleassets are included in Other Assets on the Consolidated Balance Sheets. As ofDecember 31, 2002 and 2001, the Company had intangible assets, net ofamortization of $6.0 million and $9.3 million, respectively. Amortizationexpense for 2002, 2001 and 2000 was $2.4 million, $1.9 million and $1.7 million,respectively, and is estimated to be $1.8 million, $1.3 million, $0.9 million,$0.6 million and $0.5 million for 2003, 2004, 2005, 2006 and 2007, respectively. The Company capitalizes the cost of computer software developed orobtained for internal use in accordance with Statement of Position No. 98-1,Accounting for the Costs of Computer Software Developed or Obtained for InternalUse. Capitalized software is amortized using the straight-line method over threeto five years. Software costs are included in Other Assets on the ConsolidatedBalance Sheets. As of December 31, 2002 and 2001, the Company had softwarecosts, net of amortization of $4.1 million and $6.3 million, respectively. m. Long-Lived Assets Long-lived assets are reviewed for impairment in accordance withSFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,whenever facts and circumstances indicate that the carrying amount may not berecoverable. Specifically, this process involves comparing an asset's carryingvalue to the estimated undiscounted future cash flows the asset is expected togenerate over its remaining life. If this process were to result in theconclusion that the carrying value of a long-lived asset would not berecoverable, a write-down of the asset to fair value would be recorded through acharge to operations. Fair value is determined based upon discounted cash flowsor appraisals as appropriate. n. Other Accrued Liabilities The Company's warranty policy generally provides coverage forcomponents of the trailer the Company produces or assembles. Typically, thecoverage period is five years. The Company's policy is to accrue the estimatedcost of warranty coverage at the time of the sale. The Company is self-insured up to specified limits for medical andworkers' compensation coverage. The self-insurance reserves have been recordedto reflect the undiscounted estimated liabilities, including claims incurred butnot reported, as well as catastrophic claims as appropriate. The Company recognizes a loss contingency for used trailer residualcommitments for the difference between the equipment's purchase price and itsfair market value when it becomes probable that the purchase price at theguarantee date will exceed the equipment's fair market value at that date. o. Income Taxes The Company determines its provision or benefit for income taxesunder the asset and liability method. The asset and liability method measuresthe expected tax impact at current enacted rates of future 44taxable income or deductions resulting from differences in the tax and financialreporting bases of assets and liabilities reflected in the Consolidated BalanceSheets. Future tax benefits of tax losses and credit carryforwards arerecognized as deferred tax assets. Deferred tax assets are reduced by avaluation allowance to the extent the Company concludes there is uncertainty asto their realization. p. Stock-Based Compensation As discussed further in Footnote 15, the Company has elected tofollow APB No. 25, Accounting for Stock Issued to Employees, in accounting forits stock options and, accordingly, no compensation cost has been recognized forstock options in the consolidated financial statements. However, SFAS No. 123,Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accountingfor Stock-Based Compensation-Transition and Disclosure, requires pro formapresentation as if compensation costs had been expensed under the fair valuemethod of the SFAS No. 123. For purposes of pro forma disclosure, the estimatedfair value of the options at the date of grant is amortized to expensed over thevesting period. The following table illustrates the effect on net loss and lossper share (LPS) as if compensation expense had been recognized: For the Year Ended December 31, -----------------------------------------------(in thousands, except for loss-per-share amounts) 2002 2001 2000 ----------- ----------- ----------- Reported net loss $ (56,190) $ (232,168) $ (6,736)Stock-based compensation expense (net of tax) (1,671) (1,871) (1,918) ----------- ----------- -----------Adjusted net loss $ (57,861) $ (234,039) $ (8,654) =========== =========== ===========Basic and diluted loss per share: Reported net loss per share $ (2.43) $ (10.17) $ (0.38) Stock-based compensation expense (net of tax) per share (0.07) (0.08) (0.08) ----------- ----------- ----------- Adjusted net loss per share $ (2.50) $ (10.25) $ (0.46) =========== =========== =========== q. New Accounting Pronouncements Asset Retirement Obligations In June 2001, the FASB issued SFAS No. 143, Accounting for AssetRetirement Obligations with an effective date of June 15, 2002, which becomeseffective for the Company on January 1, 2003. This standard requires obligationsassociated with retirement of long-lived assets to be capitalized as part of thecarrying value of the related asset. The Company does not believe the adoptionof SFAS No. 143 will have a material effect on its financial position or resultsof operations. Asset Impairment or Disposal In August 2001, the FASB issued SFAS No. 144, which supercedes APBNo. 30, Reporting the Results of Operations -- Reporting the Effects of Disposalof a Segment of a Business, and Extraordinary, Unusual and InfrequentlyOccurring Events and Transactions and SFAS No. 121, Accounting for theImpairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.This standard retains the previously existing accounting requirements related tothe recognition and measurement requirements of the impairment of long-livedassets to be held for use, while expanding the measurement requirements oflong-lived assets to be disposed of by sale to include discontinued operations.It also expands on the previously existing reporting requirements fordiscontinued operations to include a component of an entity that either has beendisposed of or is classified as held for sale. The Company adopted theaccounting provisions of this standard on January 1, 2002. The effect ofadopting the accounting provisions of this standard was not material to theCompany's financial statements. Consistent with the provisions of this newstandard, financial statements for prior years have not been restated. As ofDecember 31, 2002 and 2001, the Company had $9.2 million and $13.0 million,respectively, classified as assets held for sale and recorded in PrepaidExpenses and Other on the Consolidated Balance Sheets. The Company continues topursue the immediate disposition of these assets as market conditions allow. 45Debt Extinguishment Costs In April 2002, the FASB issued SFAS No. 145, Rescission of FASBStatements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and TechnicalCorrections. This standard is required to be adopted by the Company on January1, 2003, but may be adopted early. SFAS No. 145 modifies the classificationcriteria for extraordinary items related to the extinguishment of debt.Effective April 1, 2002, the Company decided to early adopt the provisions ofSFAS No. 145. Under the new standard, $1.2 million in expenses associated withthe Company's debt restructuring in April 2002, which under prior standardswould have been recorded as an extraordinary item, were recorded in Other, neton the Consolidated Statements of Operations. Termination Benefits and Exit Costs In June 2002, the FASB issued SFAS No. 146 Accounting for CostsAssociated with Exit or Disposal Activities. SFAS No. 146 nullifies EmergingIssues Task Force (EITF) Issue No., 94-3, Liability Recognition for CertainEmployee Termination Benefits and Other Costs to Exit an Activity (includingCertain Costs Incurred in a Restructuring). SFAS No. 146 generally requirescompanies to recognize costs associated with exit activities when they areincurred rather than at the date of a commitment to an exit or disposal plan andis to be applied prospectively to exit or disposal activities initiated afterDecember 31, 2002. The Company is currently not contemplating any restructuringactivities, but if such activities were to be undertaken in the future, theCompany would evaluate the effects, if any, that these activities could have onits results of operations or financial position. Stock-Based Compensation In December 2002, the FASB issued SFAS No. 148, effective for fiscalyears ending after December 15, 2002 for transition guidance and annualdisclosures and interim periods beginning after December 15, 2002 for interimdisclosure provisions. SFAS No. 148 provides alternative methods of transitionfor a voluntary change to the fair value method of accounting for stock-basedcompensation and requires a more prominent disclosure on an annual and interimbasis of the method of accounting for stock-based compensation. As allowed bySFAS No. 148, the Company continues to account for stock-based compensationunder APB No. 25, Accounting for Stock Issued to Employees and therefore, SFASNo. 148 will not have an affect on the Company's results of operations orfinancial condition. Guarantees In 2002, the FASB issued FASB Interpretation (FIN) 45, Guarantor'sAccounting and Disclosure Requirements for Guarantees, Including IndirectGuarantees of Indebtedness of Others. FIN 45 requires an issuer of a guaranteeto recognize an initial liability for the fair value of the obligations coveredby the guarantee. FIN 45 also addresses the disclosures required by a guarantorin interim and annual financial statements regarding obligations underguarantees. We will adopt the requirement for recognition of the liability forthe fair value of guaranteed obligations prospectively for guarantees enteredinto after January 1, 2003. We adopted the disclosure provisions as of December31, 2002. Variable Interest Entities In 2003, the FASB issued FIN 46, Consolidation of Variable InterestEntities. FIN 46 defines a variable interest entity (VIE) as a corporation,partnership, trust or any other legal structure that does not have equityinvestors with a controlling financial interest or has equity investors that donot provide sufficient financial resources for the entity to support itsactivities. FIN 46 requires consolidation of a VIE by the primary beneficiary ofthe assets, liabilities, and results of activities effective for 2003. FIN 46also requires certain disclosures by all holders of a significant variableinterest in a VIE that are not the primary beneficiary. The Company is currentlyevaluating the impacts of FIN 46 to its consolidated financial statements anddoes not believe that the adoption of FIN 46 will have a material impact on theconsolidated results of operations, financial position or liquidity for theperiods presented herein.3. FAIR VALUE OF FINANCIAL INSTRUMENTS SFAS No. 107, Disclosures About Fair Value of Financial Instruments,requires disclosure of fair value information for certain financial instruments.The differences between the carrying amounts and the 46estimated fair values, using the methods and assumptions listed below, of theCompany's financial instruments at December 31, 2002, and 2001 were immaterial. Cash and Cash Equivalents, Accounts Receivable and Accounts Payable.The carrying amounts reported in the Consolidated Balance Sheets approximatefair value. Long-Term Debt and Capital Lease Obligations. The fair value oflong-term debt and capital lease obligations, including the current portion, isestimated based on current quoted market prices for similar issues or debt withthe same maturities. The interest rates on the Company's bank borrowings underits long-term revolving bank line of credit agreement are adjusted regularly toreflect current market rates. The carrying values of the Company's long-termborrowings approximate fair value.4. RESTRUCTURING AND OTHER RELATED CHARGES a. 2001 Restructuring Plan During the third quarter of 2001, the Company recorded restructuringand other related charges totaling $40.5 million primarily related to therationalization of the Company's manufacturing capacity resulting in the closureof the Company's platform trailer manufacturing facility in Huntsville,Tennessee, and its dry van facility in Fort Madison, Iowa. In addition, theCompany closed a parts distribution facility in Montebello, California. During2001 and 2000, the Huntsville, Tennessee and Fort Madison, Iowa facilities hadrevenues of $73.5 million and $184.3 million and operating losses of $4.5million and operating income of $8.1 million, respectively. Included in the$40.5 million restructuring charge is the write-down of certain impaired fixedassets to their fair market value ($33.8 million), accrued severance benefitsfor approximately 600 employees ($0.9 million) and plant closure and other costs($2.1 million). In addition, a $3.7 million charge is included in Cost of Salesrelated to inventory write-downs at the closed facilities in 2001. During thefourth quarter of 2001, the Company reduced its plant closure reserve byapproximately $0.9 million as a result of the Company's ability to effectivelycontrol its closure costs. The Company's 2001 impairment charge reflects the write-down ofcertain long-lived assets that became impaired as a result of management'sdecision to close its operations at the two manufacturing plants discussedabove. The estimated fair market value of the impaired assets totaled $6.7million and was determined by management based upon economic conditions,potential alternative uses, market appraisals and potential markets for theassets which are held for sale and, accordingly, are classified in PrepaidExpenses and Other in the accompanying Consolidated Balance Sheets. Depreciationhas been discontinued on the assets held for sale pending their disposal. TheCompany continues to pursue the disposal of these idle assets. In accordancewith SFAS No. 144, effective January 1, 2002, the Company continues to reviewthe assets for potential impairment and appropriate classification as assetsheld for sale. During the third quarter of 2002, the Company recorded an additionalrestructuring charge of $1.5 million for asset impairment at the Huntsville,Tennessee facility. During the fourth quarter of 2002, the Company recorded anadditional restructuring charge of $0.1 million for asset impairment at the FortMadison, Iowa facility.Details of the restructuring charges and reserve for the 2001 Restructuring Planare as follows (in thousands): Utilized Original Additional ----------------------- Balance Provision Provision 2001 2002 12/31/02 --------- ---------- -------- -------- -------- Restructuring costs: Impairment of long-lived assets $ 33,842 $ 1,586 $(33,842) $ (1,586) $ -- Plant closure costs 1,763 -- (1,463) (300) -- Severance benefits 912 -- (912) -- -- Other 305 -- (105) (200) -- -------- -------- -------- -------- -------- 36,822 1,586 (36,322) (2,086) -- -------- -------- -------- -------- --------Inventory write-down 3,714 -- (3,714) -- -- -------- -------- -------- -------- --------Total restructuring & other related charges $ 40,536 $ 1,586 $(40,036) $ (2,086) $ -- ======== ======== ======== ======== ======== 47 b. 2000 Restructuring Plan In December 2000, the Company recorded restructuring and otherrelated charges totaling $46.6 million primarily related to the Company's exitfrom manufacturing products for export outside the North American market,international leasing and financing activities and the consolidation of certaindomestic operations. Included in this total is $40.8 million that has beenincluded as a component of income from operations. Specifically, $19.1 millionof this amount represented the impairment of certain equipment subject to leaseswith the Company's international customers, $8.6 million represented lossesrecognized for various financial guarantees related to international financingactivities, and $6.9 million was recorded for the write-down of other assets aswell as charges associated with the consolidation of certain domestic operationsincluding severance benefits of $0.2 million. Also included in the $40.8 millionis a $4.5 million charge for inventory write-downs related to the restructuringactions which is included in Cost of Sales. The Company has recorded $5.8million as a restructuring charge in Other Income (Expense) representing thewrite-off of the Company's remaining equity interest in ETZ for a decline infair value that is deemed to be other than temporary. The total impairment charge recognized by the Company as a result ofits restructuring activities was $20.8 million. The estimated fair value of theimpaired assets totaled $3.4 million and was determined by management based uponeconomic conditions and potential alternative uses and markets for theequipment. In accordance with SFAS No. 144, effective January 1, 2002, theCompany continues to review the assets for potential impairment and appropriateclassification as assets held for sale. In January 2002, the Company completed its divestiture of ETZ. As aresult of this divestiture, the Company adjusted its restructuring reserve by$1.4 million during the fourth quarter of 2001. This adjustment primarilyrelated to the assumption of certain financial guarantees in connection with thedivestiture. During the third quarter of 2002, the Company recorded anadditional restructuring charge of $0.2 million related to asset impairments onthe Sheridan, Arkansas facility closed in 2000 as part of the consolidation ofcertain domestic operations. Details of the restructuring charges and reserve for the 2000Restructuring Plan are as follows (in thousands): Utilized Original Additional ------------------------ Balance Provision Provision 2000-2001 2002 12/31/02 --------- ---------- --------- -------- -------- Restructuring of majority-owned operations: Impairment of long-lived assets $ 20,819 $ 227 $(20,819) $ (227) $ -- Loss related to equipment guarantees 8,592 -- (3,394) 492 5,690 Write-down of other assets & other charges 6,927 -- (5,568) (373) 986 -------- -------- -------- -------- -------- 36,338 227 (29,781) (108) 6,676 -------- -------- -------- -------- --------Restructuring of minority interest operations: ETZ equity interest 5,832 -- (5,832) -- -- Financial guarantees -- 1,381 -- (307) 1,074 -------- -------- -------- -------- -------- 5,832 1,381 (5,832) (307) 1,074 -------- -------- -------- -------- --------Inventory write-down and other charges 4,480 -- (4,480) -- -- -------- -------- -------- -------- --------Total restructuring and other related charges $ 46,650 $ 1,608 $(40,093) $ (415) $ 7,750 ======== ======== ======== ======== ======== The Company's total restructuring reserves were $7.8 million and$8.4 million at December 31, 2002 and December 31, 2001, respectively. Thesereserves are included in Other Accrued Liabilities in the accompanyingConsolidated Balance Sheets. The Company anticipates that these reserves will beadequate to cover the remaining charges to be incurred through 2004 which is theanticipated completion date for these restructuring plans.5. ACQUISITION AND DIVESTITURE a. Acquisition On January 5, 2001, the Company acquired the Breadner Group ofCompanies (the Breadner Group) in a stock purchase agreement (the BreadnerAcquisition). The Breadner Group was headquartered in Kitchener, Ontario, Canadaand had 10 branch locations in seven Canadian Provinces. The Breadner Group 48was the leading Canadian distributor of new trailers as well as a provider ofnew trailer services and aftermarket parts. The Breadner Group had revenues andincome from operations of approximately $135 million and $2.3 million (USDollars), respectively, for its fiscal year ended September 30, 2000 andemployed approximately 130 associates. For financial statement purposes, theBreadner Acquisition was accounted for as a purchase, and accordingly, theBreadner Group's assets and liabilities were recorded at fair value. TheBreadner Group's operating results are included in the Consolidated FinancialStatements since the date of acquisition. The aggregate consideration for thistransaction included approximately $6.3 million in cash and $10.0 million in along-term note and the assumption of certain liabilities. The long-term note hasan annual interest rate of 7.25% and scheduled principal payments are duequarterly April 2001 through January 2006. The excess of the purchase price overthe underlying assets acquired was approximately $13.0 million. b. Divestiture On November 4, 1997, the Company purchased a 25.1% equity interestin Europaische Trailerzug Beteiligungsgesellschaft mbH (ETZ). ETZ is themajority shareholder of Bayerische Trailerzug Gesellschaft fur BimodalenGuterverkehr mbH (BTZ), a European RoadRailer(R) operation based in Munich,Germany, which began operations in 1996 and has incurred operating losses sinceinception. The Company paid approximately $6.2 million for its ownershipinterest in ETZ during 1997 and made additional capital contributions of $7.2million and $3.7 million during 2001 and 2000, respectively. During 2001 and2000, the Company recorded approximately $7.7 million and $3.1 million,respectively, for its share of ETZ losses and the amortization of the premiums.Such amounts are recorded as Equity in Losses of Unconsolidated Affiliate on theaccompanying Consolidated Statements of Operations. In January 2001, in connection with its restructuring activities,the Company assumed the remaining ownership interest in ETZ from the majorityshareholder with the intent to pursue an orderly divestiture of ETZ. Becausecontrol of this subsidiary was deemed to be temporary, 100% of ETZ's 2001operating results have been recorded as Equity in Losses of UnconsolidatedAffiliate in the Consolidated Statements of Operations for 2001. In January2002, the Company completed the divestiture of ETZ.6. LOSS PER SHARE Loss per share (LPS) is computed in accordance with SFAS No. 128,Earnings per Share. A reconciliation of the numerators and denominators of thebasic and diluted LPS computations, as required by SFAS No. 128, is presentedbelow. Stock options redeemable for 125,340 shares, 78,534 shares and 0 sharesat December 31, 2002, 2001 and 2000, respectively, and convertible preferredstock redeemable for 823,200 shares, 1,194,745 shares and 1,194,745 shares atDecember 31, 2002, 2001 and 2000, respectively, were excluded from thecomputation of diluted LPS for 2002, 2001 and 2000 since the inclusion of theseitems would have resulted in an antidilutive effect (in thousands except pershare amounts): Net Loss Weighted Available to Average Loss Common Shares Per Share ------------ --------- --------- 2002Basic $ (57,753) 23,791 $ (2.43)Diluted $ (57,753) 23,791 $ (2.43)2001Basic $(234,013) 23,006 $ (10.17)Diluted $(234,013) 23,006 $ (10.17)2000Basic $ (8,639) 22,990 $ (0.38)Diluted $ (8,639) 22,990 $ (0.38) 497. ACCOUNTS RECEIVABLE SECURITIZATION On October 1, 2001, the Company entered into a $100 million ConduitSecuritization Facility (the A/R Facility) to replace its previous AccountsReceivable Securitization Facility. Under the terms of the A/R Facility, theCompany sold, on a revolving basis, virtually all of its domestic accountsreceivable to a wholly-owned, bankruptcy-remote special purpose entity (SPE).The SPE sold an undivided interest in receivables to an outside liquidityprovider who in turn remitted cash back to the Company's SPE for receivableseligible for funding. As of December 31, 2001, the amount outstanding under theA/R Facility was $17.7 million and the amount outstanding under the Company'sprevious facility as of December 31, 2000 was $69.4 million. As of December 31, 2001, the Company was in technical violation ofits financial covenants under the A/R Facility. Therefore, all amounts underthis facility were due and payable on demand. Accordingly, the Company hasreflected the $17.7 million outstanding under this facility as AccountsReceivable and Current Maturities of Long-Term Debt on the Consolidated BalanceSheet as of December 31, 2001. In April 2002, the Company replaced the A/R Facility with a new $110million Trade Receivables Facility. Under the terms of the Trade ReceivablesFacility, the Company sells, on a revolving basis, predominately all of itsdomestic accounts receivable to a wholly-owned, bankruptcy remote SPE. The SPEsells an undivided interest in receivables to an outside liquidity provider who,in turn, remits cash back to the Company's SPE for receivables eligible forfunding. This new facility includes financial covenants identical to theCompany's debt obligations. As of December 31, 2002, there were no borrowings outstanding under this facility. Proceeds advanced under these facilities are used to provideliquidity in order to fund operations. The cash flows related to thissecuritization are reflected as cash flows from operating activities in theaccompanying 2001 and 2000 Consolidated Statements of Cash Flows. There were noborrowings under this facility during 2002.8. EQUIPMENT LEASED TO OTHERS The Company has equipment on lease under both short-term andlong-term lease arrangements with their customers. This equipment includestrailers manufactured by the Company and used trailers acquired on trade.Equipment on short-term lease represents lease contracts that are less than oneyear and typically run month-to-month, while long-term leases have terms rangingfrom one to five years in duration. Items being leased include bothCompany-owned equipment, which is reflected on the Consolidated Balance Sheets,as well as equipment that was sold by the Company and then simultaneously leasedback to the Company which are accounted for as operating leases. a. Equipment On Balance Sheet The Company's equipment leased to others, net was approximately$100.8 million and $109.3 million at December 31, 2002 and 2001, respectively. During 2001, the market values of used trailers declinedsignificantly. This decline led the Company to perform an impairment analysis ofits equipment leased to others in accordance with SFAS No. 121. This analysisindicated that the undiscounted future cash flows of this equipment was notsufficient to recover the carrying amount of certain portions of this equipment.Therefore, the Company recorded an impairment charge of approximately $10.5million to reduce these assets to fair value. This charge is included in Cost ofSales in the Consolidated Statements of Operations. During 2002, the Company'son-going analysis of assets for impairment in accordance with SFAS No. 144determined that certain assets were impaired. This analysis indicated that theundiscounted future cash flows of this equipment was not sufficient to recoverthe carrying amount of this equipment. Therefore, the Company recorded animpairment charge of approximately $2.0 million to reduce these assets toappraised value. This charge is included in Cost of Sales in the ConsolidatedStatements of Operations. 50 The future minimum lease payments to be received by the Company underthese lease transactions as of December 31, 2002 are as follows (in thousands): Receipts -------- 2003 ................................................ $ 4,2332004 ................................................ 2,8612005 ................................................ 2,2572006 ................................................ 2,1752007 ................................................ 1,688Thereafter .......................................... 2,168 ------- $15,382 ======= b. Equipment Off Balance Sheet In certain situations, the Company has sold equipment leased to othersto independent financial institutions and simultaneously leased the equipmentback under operating leases. All of this equipment has been subleased tocustomers under long-term arrangements, typically five years. As of December 31,2002, the Company subleased certain highly specialized RoadRailer equipment toAmtrak, who is experiencing financial difficulties. Due to the highlyspecialized nature of the equipment, the recovery value of the equipment isconsidered to be minimal. The unamortized lease value of this arrangement isapproximately $5.0 million as of December 31, 2002. Additionally, while thesearrangements do not contain financial covenants, certain non-financial covenantssuch as provisions for cross default and material adverse changes are containedin these arrangements. Rental payments made by the Company under thistransaction totaled $1.3 million, $4.9 million and $4.7 million during 2002,2001 and 2000, respectively. The future minimum noncancellable lease payments the Company isrequired to make under the above mentioned transactions along with rents to bereceived under various sublease arrangements as of December 31, 2002 are asfollows (in thousands): Payments Receipts -------- -------- 2003 ............................... $1,317 $1,3512004 ............................... 1,317 1,3402005 ............................... 438 1,3402006 ............................... -- 9532007 ............................... -- 46Thereafter ......................... -- 4 ------ ------ $3,072 $5,034 ====== ====== The Company has end-of-term purchase options and residual guaranteesrelated to these transactions. These purchase options totaled $2.6 million as ofDecember 31, 2002 and 2001. These residual guarantees totaled $1.1 million as ofDecember 31, 2002 and 2001. The Company also has finance contracts related tothis customer recorded on its December 31, 2002, balance sheet of approximately$10.7 million. The Company recognizes a loss when the Company's operating leasepayments exceed the anticipated rents from the sublease arrangements withcustomers. As of December 31, 2002, the customer was current in its obligationsto the Company. As a result, the Company has not recorded any provision for aloss on this equipment. 9. CAPITAL LEASES Assets recorded under capital lease arrangements included in Property,Plant and Equipment, net and Equipment Leased to Others, net on the ConsolidatedBalance Sheets consist of the following (in thousands): December 31, ------------------------ 2002 2001 ------- ------- Property, Plant and Equipment, net ........... $ -- $11,503Equipment Leased to Others, net .............. 43,599 42,233 ------- ------- $43,599 $53,736 ======= ======= 51 Accumulated depreciation recorded on leased assets at December 31, 2002and 2001 was $2.1 million and $0.1 million, respectively. Depreciation expenserecorded on leased assets in 2002 and 2001 was $2.2 million and $0.1 million,respectively. Future minimum lease payments under capital leases, assumes that theCompany will refinance, amend or restructure certain of its capital leaseobligations by the end of the first quarter of 2004, are as follows (inthousands): Amounts ------- 2003 ..................................................... $ 15,5982004 ..................................................... 50,3852005 ..................................................... 2,7942006 ..................................................... --2007 ..................................................... --Thereafter -- -------- $ 68,777Amount representing interest ............................. (3,924) --------Capital lease obligations ................................ 64,853Obligations due within one year .......................... (12,860) --------Long-term capital lease obligations ...................... $ 51,993 ======== During December 2000, the Company entered into a sale and leasebackfacility with an independent financial institution related to its rentalequipment. As of December 31, 2000, the Company had $31.0 million of equipmentfinanced through this facility which was accounted for as an operating lease.Rent expense related to this lease was approximately $9.2 million in 2001 and $0in 2000. As of December 31, 2001, the Company was in technical violation of itsfinancial covenants under this facility resulting in the unamortized lease valuebeing due and payable. In April 2002, the facility was amended which resulted ina new lease. In accordance with SFAS No. 13, Accounting for Leases, the newlease was accounted for as a capital lease. Accordingly, the Company hasreflected the unamortized lease value as a capital lease obligation of $65.2million in the Consolidated Balance Sheet as of December 31, 2001. The leasedequipment was recorded at fair value of $42.2 million in the ConsolidatedBalance Sheet as of December 31, 2001. The $23.0 million difference between theunamortized lease value and the fair value of the leased equipment was recordedas a charge to Cost of Sales in the Consolidated Statement of Operations for theyear ended December 31, 2001. This capital lease has financial covenantsidentical to the Company's debt as discussed in Footnote 12. As of December 31,2002, the Company had $36.1 million of equipment financed and $50.1 millionunder the capital lease obligation for this facility. During September 1997, the Company entered into a sale and leasebackfacility with independent financial institutions related to certain of itsrental equipment. As of December 31, 2001, the Company had $18.0 million inequipment financed through this facility which was accounted for as an operatinglease. Rent expense related to this lease was approximately $4.3 million in2002, $4.4 million in 2001 and $4.4 million in 2000. During the fourth quarterof 2002, the lease was amended resulting in a new lease. In accordance with SFASNo. 13, the new lease has been accounted for as a capital lease. Accordingly,the Company has reflected the unamortized lease value as a capital leaseobligation of $14.7 million in the Consolidated Balance Sheet as of December 31,2002. The leased equipment was recorded at fair value of $7.5 million in theConsolidated Balance Sheet as of December 31, 2002. The $7.2 million differencebetween unamortized lease value and the fair value of the leased equipment wasrecorded as a charge to Cost of Sales in the Consolidated Statement ofOperations with $4.4 million being recorded as a loss contingency as of December31, 2001, and the remaining $2.8 million being recorded in 2002. During 2001, the Company renewed a lease for a corporate aircraft. Thislease arrangement expired in 2002 and, in accordance with SFAS No. 13, wasreflected as a capital lease. Rent expense related to this lease was $1.4million in 2001 and $1.4 million in 2000. During the second quarter of 2002, thedecision was made to dispose of the airplane. In accordance with SFAS No. 144,the capital lease asset was written down to fair market value and reclassified,as an asset held for sale, to Prepaid Expenses and Other in the ConsolidatedBalance Sheet. Adjustments to reduce the fair value of the aircraft of $1.1million and $0.8 million were recognized in the second and third quarters of2002, respectively, as charges to General and Administrative Expense in theConsolidated Statement of Operations. Ultimately, the airplane was sold to athird party in December 2002, and the remaining lease liability of $11.3 millionwas paid off. 5210. OTHER LEASE ARRANGEMENTS a. Equipment Financing The Company has entered into agreements for the sale and leaseback ofcertain production equipment at its manufacturing locations. As of December 31,2002 the unamortized lease value related to these agreements are approximately$14.9 million. Under these agreements, the initial lease terms expired during2001. The Company elected to renew these agreements and anticipates renewingthem through their maximum lease terms (2004-2008). Future minimum leasepayments related to these arrangements are approximately $4.2 million per yearand the end of term residual guarantees and purchase options are $2.4 millionand $3.6 million, respectively. These agreements contain no financial covenants;however, they do contain non-financial covenants including cross defaultprovisions which could be triggered if the Company is not in compliance withcovenants in other debt or leasing arrangements. Total rent expense for these leases in 2002, 2001 and 2000 was $4.4million, $4.1 million and $2.0 million, respectively. b. Other Lease Commitments The Company leases office space, manufacturing, warehouse and servicefacilities and equipment under operating leases, the majority of which expirethrough 2006. Future minimum lease payments required under these other leasecommitments as of December 31, 2002 are as follows (in thousands): Amounts ------- 2003 ................................................. $2,6252004 ................................................. 1,4842005 ................................................. 8332006 ................................................. 6442007 ................................................. 183Thereafter 12 ------ $5,781 ====== Total rental expense under operating leases was $5.4 million, $5.8million, and $5.5 million for 2002, 2001 and 2000, respectively.11. FINANCE CONTRACTS The Company previously provided financing for the sale of new and usedtrailers to its customers. The Company no longer originates finance contracts.The financing is principally structured in the form of finance leases, typicallyfor a five-year term. Finance Contracts, as shown on the accompanyingConsolidated Balance Sheets, are as follows (in thousands): December 31, ----------------------- 2002 2001 -------- -------- Lease payments receivable $ 34,817 $ 53,151Estimated residual value 5,636 6,589 -------- -------- 40,453 59,740Unearned finance charges (6,881) (11,563) -------- -------- 33,572 48,177Other, net .............. (1,556) 2,656 -------- -------- 32,016 50,833Less: current portion ... (9,528) (10,646) -------- -------- $ 22,488 $ 40,187 ======== ======== Other, net includes the sale of certain finance contracts with fullrecourse provisions. As a result of the recourse provision, the Company hasreflected an asset and an offsetting liability of $0.9 million at December 31,2002 in the Company's Consolidated Balance Sheets as a Finance Contract andOther Noncurrent Liabilities and Contingencies. In addition, other, net atDecember 31, 2002 includes $2.5 million for loss contingencies on financecontracts recorded as charges to General and Administrative Expenses on theCompany's Consolidated Statements of Operations. Other, net of $2.7 million atDecember 31, 2001 53includes finance contracts with full recourse provisions of $2.1 million andequipment subject to capital lease awaiting customer pick-up of $0.6 million.The future minimum lease payments to be received from finance contracts as ofDecember 31, 2002 are as follows (in thousands): Amounts ------- 2003............................................. $11,0842004............................................. 9,0932005............................................. 5,7052006............................................. 5,0452007............................................. 2,227Thereafter....................................... 1,663 ------- $34,817 =======12. DEBT In April 2002, the Company restructured its existing revolving creditfacility and Senior Notes. In April 2003, the Company amended its existing BankTerm Loan, Bank Line of Credit and Senior Notes agreements (the agreements). Theagreements change debt maturities and principal payment schedules; provide forall assets, other than receivables, to be pledged as collateral equally to thelenders; increase the cost of funds; and require the Company to meet certainfinancial conditions, among other things. The agreements also contain certainrestrictions on acquisitions and the payment of preferred stock dividends. Thefollowing reflects the terms of the agreements. a. Long-term debt consists of the following (in thousands): DECEMBER 31, ------------------------ 2002 2001 -------- --------- Revolving Bank Line of Credit ................................ $ -- $ 14,642Receivable Securitization Facility ........................... -- 17,700Mortgage and Other Notes Payable (3.0% - 8.17%, Due 2004-2008) 16,962 35,361Bank Term Loan (Due March 2004) .............................. 75,273 75,000Series A Senior Notes (10.16%, Due March 2004) ............... 47,408 50,000Series C-H Senior Notes (10.91% - 11.3%, Due 2004-2008) ...... 87,231 92,000Series I Senior Notes (11.79%, Due 2005-2007) ................ 47,408 50,000Make Whole and Deferral Fee Notes (Due March 2004) ........... 7,722 -- --------- --------- 282,004 334,703 Less: Current maturities ........................... (42,961) (60,682) --------- --------- $ 239,043 $ 274,021 ========= ========= b. Maturities of long-term debt at December 31, 2002, assumes that theCompany will refinance, amend or restructure certain of its obligations by theend of the first quarter of 2004, are as follows (in thousands): Amounts ------- 2003 ..... $ 42,9612004 ..... 228,4042005 ..... 3,5562006 ..... 1,9632007 ..... 1,476Thereafter 3,644 -------- $282,004 ======== c. Revolving Bank Line of Credit and Bank Term Loan In April 2002 and as amended in April 2003, the Company restructuredits $125 million Revolving Credit Facility into a $107 million term loan (BankTerm Loan) and $18 million revolving credit facility (Bank Line of Credit). TheBank Term Loan and Bank Line of Credit both mature on March 30, 2004 and aresecured by all of the assets of the Company, other than receivables. The BankTerm Loan, of which approximately $31.5 million consists of outstanding lettersof credit, requires monthly payments totaling $14.6 million per annum in 2003and $12.4 million per annum in 2004, with the balance due March 30, 2004. 54 Interest on the Bank Term Loan, excluding letters of credit, isvariable based upon the adjusted London Interbank Offered Rate (LIBOR) plus 430basis points or Prime Rate plus 200 basis points. Interest on the borrowingsunder the Bank Line of Credit is based upon LIBOR plus 405 basis points or theagent bank's alternative borrowing rate as defined in the agreement. The Companypays a commitment fee on the unused portion of this facility at a rate of 100basis points per annum. All interest and fees are payable monthly. Theseinterest rates are subject to increases of up to a maximum of 500 basis pointsper annum if the Company does not meet certain performance targets for EBITDAand debt to asset ratios. Certain of these targets, as defined, are morerestrictive than the Company's debt covenant levels. At December 31, 2002, the Company had $75.3 million outstanding underthe Bank Term Loan, excluding letters of credit, with a weighted averageinterest rate of 5.54%. The Company had available credit under the Bank Line ofCredit of approximately $14.2 million and no outstanding borrowings. At the end of 2001, the Company had a revolving bank line of credit inCanada that permitted the Company to borrow up to CDN $20 million. In April2002, an agreement was signed canceling the facility, and the balance on thisline of credit was paid off. d. Senior Notes As of December 31, 2002 and 2001, the Company had $182 and $192million, respectively of Senior Notes outstanding with originally maturities in2002 through 2008. As part of the April 2002 restructuring and April 2003amending of these terms, the original maturity dates for $72 million of SeniorNotes, payable in 2002 through March 2004, were extended to March 30, 2004. Thematurity dates for the other $120 million of Senior Notes due subsequent toMarch 30, 2004 remain unchanged. The Senior Notes are secured by all of theassets, other than receivables, of the Company. Monthly principal payments totaling $25.5 million in 2003 and $22.3million in 2004 will be made on a prorata basis to all Senior Notes. Interest onthe Senior Notes, which is payable monthly, increased by 50 basis points,effective April 2003, and ranges from 10.16% to 11.79%. These interest rates aresubject to increases of up to a maximum of 500 basis points per annum if theCompany does not meet certain performance targets for EBITDA and debt to assetratios. Certain of these targets, as defined, are more restrictive than theCompany's debt covenant levels. e. Make Whole and Deferral Fee Notes As part of the debt restructuring in April 2002, the agreements calledfor two additional obligations to be paid to certain holders of Senior Notes and the Revolving Credit Facility. These obligations were the result of maturityschedule changes requiring the prepayment or deferral of certain scheduledmaturities. The prepayment obligation or Make Whole Notes represent the interestforegone by the lender with the change in scheduled debt payments affecting allSenior Note Series, except Series C. The obligation earned monthly and theestimated full obligation is determined using treasury bill (T-bill) yield rateswith maturities ranging from three months to 10 years. The T-bill rates are usedto calculate the interest between the prepayment date and original schedulepayment date and are selected to correspond to the maturity date of theunderlying debt. The Make Whole Notes are earned monthly until their maturitydate of March 30, 2004. As of December 31, 2002, the Make Whole Notes wereestimated to be $6.2 million, which is reflected in Long Term Debt and OtherAssets in the Consolidated Balance Sheets. The asset is being amortized, underthe effective interest method, over the full maturity of the underlying debt. Asof December 31, 2002, the asset, net of amortization, was $5.2 million. The deferral obligation or Deferral Fee Notes represents a fee earnedfor deferring payments originally scheduled to be made in 2002 under the SeniorNotes Series A and C and Revolving Credit Facility. The obligation is earnedfrom the date of deferral on a monthly basis. The full obligation calculatedbased on the amount of payments deferred multiplied by 50 basis points, plusinterest on the accrued fee at rates ranging from 6% to 10.41%. The Deferral FeeNotes are earned until their maturity date of March 30, 2004. As of December 31,2002, the Deferral Fee Notes were estimated to be $1.5 million, which isreflected in Long-Term Debt and Other Assets in the Consolidated Balance Sheets.The asset is being amortized, under the effective interest method, over the fullmaturity of the underlying debt. As of December 31, 2002, the asset, net ofamortization, was $1.3 million. 55 f. Mortgage and Other Notes Payable Mortgage and other notes payable includes debt incurred in connectionwith the Breadner acquisition discussed in Footnote 5, an obligation associatedwith the exercise in 2001 of an equipment purchase option under an operatinglease secured by the equipment and other term borrowings secured by property. g. Covenants As of December 31, 2002, the Company was in compliance with itsfinancial covenants. On February 28, 2003, the Company was in technicalviolation of certain of its financial covenants for the reporting period endedJanuary 31, 2003. The Company received a waiver of current violations throughApril 15, 2003. The Company's April 2003 amended covenants contain, among otherprovisions as defined in the agreement, the following items: a subjectiveacceleration clause related to material adverse changes; restricts capitalexpenditures to $4.0 million within any twelve month period; restricts newfinance contracts the Company can enter into to $5.0 million within any twelvemonth period; required levels of minimum EBITDA, minimum shareholders' equityand maximum debt to assets ratio; and the requirement that the Company have acommitment letter to refinance, amend or restructure its debt and capital leaseobligations prior to January 31, 2004. The Company is required to maintain the following levels of minimum cumulative year-to-date EBITDA, minimum shareholders' equity and maximum debt toassets ratio, as defined in the agreements, on a quarterly basis: March 31, June 30, September 30, December 31, 2003 2003 2003 2003 ----------------------------------------------------------- EBITDA ............. $ 0 $ 5,000,000 $15,000,000 $20,000,000Shareholders' equity $ 40,000,000 $35,000,000 $30,000,000 $25,000,000Debt to assets ratio .95 .95 .95 .95 In addition to these financial covenants, the Company is now requiringto have a commitment letter by January 31, 2004 in order to avoid an event ofdefault under the agreements. Debt to Assets ratio is defined as the ratio of i)outstanding principal of Senior Notes, Bank Term loan, excluding letters ofcredit, and Bank Line of Credit to ii) the sum of cash and cash equivalents,inventory, prepaid and other expenses and property, plant and equipment, net. The agreements also contain a subjective acceleration clause, whichprovides for an event of default upon the occurrence of a material adversechange, as defined in the agreements. The Company has evaluated this clause inaccordance with FASB Technical Bulletin 79-3 and based upon expected operatingperformance and consultation with its advisors has concluded that thepossibility of this clause being exercised is remote. Accordingly, the Companyhas classified its debt in accordance with its scheduled maturities, and not allas current due to the existence of this clause, as of December 31, 2002. In July 2002, the Company received a waiver of a default from PitneyBowes Credit Corporation (PBCC) under its Master Equipment Lease Agreement datedSeptember 30, 1997. The event of default was the result of delinquent payment oflease obligations from the Company's sublessee under the agreement. The waiverpermanently waived the provision of the agreement (effective from September 30,1997) related to delinquent payment of rental obligations from the Company'ssublessee. The Company is not and has never been delinquent with respect to itslease payments to PBCC. The Company has terminated its sublease agreement withthe sublessee and is in the process of repossessing the equipment. The sublesseefiled for bankruptcy protection in August 2002. 5613. STOCKHOLDERS' EQUITY a. Capital Stock DECEMBER 31, ---------------(Dollars in thousands) 2002 2001-------------------------------------------------------------------------------------------------- Preferred Stock - $0.01 par value, 25,000,000 shares authorized:Series A Junior Participating Preferred Stock 300,000 shares authorized, 0 shares issued and outstanding .......... $-- $--Series B 6% Cumulative Convertible Exchangeable Preferred Stock, 352,000 shares authorized, issued and outstanding at December 31, 2002 and 2001 ($17.6 million aggregate liquidation value) ......................... 3 4Series C 5.5% Cumulative Convertible Exchangeable Preferred Stock, 0 and 130,041 shares authorized, issued and outstanding at December 31, 2002 and 2001, respectively ............................ -- 1 ---- ---- Total Preferred Stock .............................................. $ 3 $ 5 ==== ====Common Stock - $0.01 par value, 75,000,000 shares authorized, 25,647,060 and 23,013,847 shares issued and outstanding at December 31, 2002 and 2001, respectively ......................... $257 $230 ==== ==== The Series B 6% Cumulative Convertible Exchangeable Preferred Stock(Series B Stock) is convertible at the discretion of the holder, at a conversionprice of $21.38 per share, into up to approximately 823,200 shares of commonstock. This conversion is subject to adjustment for dilutive issuances andchanges in outstanding capitalization by reason of a stock split, stock dividendor stock combination. Each share of Series B Stock entitles the holder to thesame voting right as a holder of common stock. As a result of dividendrestrictions under the new debt agreements, the Company has not paid dividendssince the first quarter of 2002. As of December 31, 2002, dividends in arrearson Series B Stock was $0.8 million. The Series C 5.5% Cumulative Convertible Exchangeable Preferred Stock(Series C Stock) is convertible at the discretion of the holder, at a conversionprice of $35.00 per share, into up to approximately 371,500 shares of commonstock, subject to adjustment, as defined. However, the Series C Stock can alsobe mandatorily converted into common stock if (i) the average trading price overthe last 20 consecutive trading days exceeds the conversion price or (ii)dividends payable on the Series C Stock are in arrears two quarters. When the Company, due to dividend restrictions under the new debtagreements, did not pay dividends on the June 15 and September 15 dividenddates, the mandatory conversion clause went into effect. Under this clause onSeptember 15, 2002, the Company converted its 130,041 issued and outstandingshares of the Series C Stock into approximately 2.6 million shares of theCompany's common stock. The Series C Stock converted into common stock at therate of approximately 20 shares of common stock for each full share of Series CStock based on the current conversion price of $5.16. On the conversion date,accrued and unpaid dividends, along with applicable interest, with respect toshares of Series C Stock were converted into 69,513 shares of common stock basedon the conversion price of $5.16. The Board of Directors has the authority to issue up to 25 millionshares of unclassified preferred stock and to fix dividends, voting andconversion rights, redemption provisions, liquidation preferences and otherrights and restrictions. b. Stockholders' Rights Plan On November 7, 1995, the Board of Directors adopted a StockholderRights Plan (the "Rights Plan"). The Rights Plan is designed to deter coerciveor unfair takeover tactics, to prevent a person or group from gaining control ofthe Company without offering fair value to all shareholders and to deter otherabusive takeover tactics, which are not in the best interest of stockholders. 57 Under the terms of the Rights Plan, each share of common stock isaccompanied by one right; each right entitles the stockholder to purchase fromthe Company, one one-thousandth of a newly issued share of Series A PreferredStock at an exercise price of $120. The rights become exercisable ten days after a public announcement thatan acquiring person or group (as defined in the Plan) has acquired 20% or moreof the outstanding Common Stock of the Company (the Stock Acquisition Date) orten days after the commencement of a tender offer which would result in a personowning 20% or more of such shares. The Company can redeem the rights for $.01per right at any time until ten days following the Stock Acquisition Date (the10-day period can be shortened or lengthened by the Company). The rights willexpire in November 2005, unless redeemed earlier by the Company. If, subsequent to the rights becoming exercisable, the Company isacquired in a merger or other business combination at any time when there is a20% or more holder, the rights will then entitle a holder to buy shares of theacquiring company with a market value equal to twice the exercise price of eachright. Alternatively, if a 20% holder acquires the Company by means of a mergerin which the Company and its stock survives, or if any person acquires 20% ormore of the Company's Common Stock, each right not owned by a 20% or moreshareholder, would become exercisable for Common Stock of the Company (or, incertain circumstances, other consideration) having a market value equal to twicethe exercise price of the right.14. STOCK-BASED INCENTIVE PLANS a. Stock Option and Stock Related Plans The Company has stock incentive plans that provide for the issuance ofstock appreciation rights (SAR) and the granting of common stock options toofficers and other eligible employees. During 2001, the company adopted a SAR Plan giving eligibleparticipants the right to receive, upon exercise thereof, the excess of the fairmarket value of one share of stock on the date of exercise over the exerciseprice of the SAR as determined by the Company. All SARs granted expire ten yearsafter the date of grant. As of December 31, 2001, the Company had granted130,000 SARs at a weighted average exercise price of $8.64. The 2001 grants wereterminated in 2002. No SARS were granted by the Company in 2002. SARs require the Company to continually adjust compensation expense forthe changes in the fair market value of the Company's stock. During 2002 and2001, expense recorded related to SARs was not material. The Company has two non-qualified stock option plans (the 1992 and 2000Stock Option Plans) which allow eligible employees to purchase shares of commonstock at a price not less than market price at the date of grant. Under theterms of the Stock Option Plans, up to an aggregate of 3,750,000 shares arereserved for issuance, subject to adjustment for stock dividends,recapitalizations and the like. Options granted to employees under the StockOption Plans generally become exercisable in annual installments over threeyears for options granted under the 2000 Plan and five years for options grantedunder the 1992 Plan. Options granted to non-employee Directors of the Companyare fully vested on the date of grant and are exercisable six months thereafter.All options granted expire ten years after the date of grant. 58 A summary of stock option activity and weighted-average exercise pricesfor the periods indicated are as follows: Number of Weighted-Average Options Exercise Price --------- ---------------- Outstanding at December 31, 1999 1,718,905 $ 21.57 --------- --------- Granted .................. 277,500 7.50 Exercised ................ -- -- Cancelled ................ (76,780) 20.43Outstanding at December 31, 2000 1,919,625 19.59 --------- --------- Granted .................. 89,500 9.47 Exercised ................ -- -- Cancelled ................ (231,400) 16.79Outstanding at December 31, 2001 1,777,725 19.39 --------- --------- Granted .................. 375,000 10.01 Exercised ................ (11,168) 7.38 Cancelled ................ (294,981) 17.37Outstanding at December 31, 2002 1,846,576 $ 17.93 ========= ========= The following table summarizes information about stock optionsoutstanding at December 31, 2002: Weighted Weighted Weighted Range of Average Average Number Average Exercise Number Remaining Exercise Exercisable Exercise Prices Outstanding Life Price at 12/31/02 Price --------- ----------- --------- -------- ----------- -------- $ 6.68 to $10.01 553,501 8.3 yrs. $ 9.08 157,007 $ 7.84$10.02 to $13.35 24,500 8.4 yrs. $12.16 11,168 $12.37$13.36 to $16.69 258,800 3.3 yrs. $15.32 231,800 $15.32$16.70 to $20.03 267,050 0.8 yrs. $17.93 267,050 $17.93$20.04 to $23.36 405,225 3.9 yrs. $21.74 320,225 $21.78$26.70 to $30.04 186,000 2.2 yrs. $28.75 186,000 $28.75$30.05 to $33.38 151,500 0.6 yrs. $32.22 151,500 $32.22 Using the Black-Scholes option valuation model, the estimated fairvalues of options granted during 2002, 2001 and 2000 were $5.67, $5.20 and $3.54per option, respectively. Principal assumptions used in applying theBlack-Scholes model were as follows:Black-Scholes Model Assumptions 2002 2001 2000 ---- ---- ---- Risk-free interest rate........ 5.11% 5.07% 5.32%Expected volatility ........... 49.40% 45.58% 45.38%Expected dividend yield........ 1.26% 1.26% 2.21%Expected term ................. 10 yrs. 10 yrs. 10 yrs. b. Other Stock Plans During 1993, the Company adopted its 1993 Employee Stock Purchase Plan(the "Purchase Plan"), which enables eligible employees of the Company topurchase shares of the Company's $0.01 par value common stock. Eligibleemployees may contribute up to 15% of their eligible compensation toward thesemi-annual purchase of common stock. The employees' purchase price is based onthe fair market value of the common stock on the date of purchase. Nocompensation expense is recorded in connection with the Purchase Plan. During2002 and 2001, 5,312 and 7,138 shares were issued to employees at an averageprice of $8.88 and $9.77 per share, respectively. At December 31, 2002 and 2001,there were 241,736 and 247,048 shares, respectively, available for offeringunder this Purchase Plan. During 1997, the Company adopted its Stock Bonus Plan (the "BonusPlan"). Under the terms of the Bonus Plan, common stock may be granted toemployees under terms and conditions as determined by the Board of Directors.During 2002 and 2001, 10,300 and 1,960 shares, respectively, were issued toemployees at an average price of $8.64 and $14.14, respectively. At December 31,2002 and 2001, there were 466,380 and 476,680 shares, respectively, availablefor offering under the Bonus Plan. 5915. EMPLOYEE 401(K) SAVINGS PLAN Substantially all of the Company's employees are eligible toparticipate in a defined contribution plan that qualifies under Section 401(k)of the Internal Revenue Code. The Plan provides for the Company to match, incash, a percentage of each employee's contributions under various formulas. TheCompany's matching contribution and related expense for the plan wasapproximately $1.0 million, $1.0 million and $1.5 million for 2002, 2001 and2000, respectively.16. SUPPLEMENTAL CASH FLOW INFORMATION Selected cash payments and non cash activities were as follows (inthousands): DECEMBER 31, ------------------------------- 2002 2001 2000 ------ -------- ----- Non cash transactions: Capital lease obligation incurred (Footnote 10) 14,731 77,363 -- Purchase option exercised related to equipment -- 13,825 -- Guarantees (Footnote 13(f)) Receivable Securitization Facility (Footnote 8) -- 17,700 -- Acquisitions, net of cash acquired: Fair value of assets acquired ............. -- 59,012 -- Liabilities assumed ....................... -- (52,676) -- ----- ------- ----- Net cash paid ......................... $ -- $ (6,336) $ -- ===== ======== =====17. INCOME TAXES a. Income Tax (Benefit) Provision The consolidated income tax (benefit) provision for 2002, 2001 and 2000consists of the following components (in thousands): 2002 2001 2000 ---- ---- ---- Current: U.S. Federal ......................... $(13,789) $(27,597) $ 3,196 Foreign .............................. 979 (819) -- State ................................ (2,468) -- 1,396Deferred ............................... -- (14,441) (8,906) -------- -------- -------- Total consolidated provision (benefit) $(15,278) $(42,857) $ (4,314) ======== ======== ======== The Company's effective tax rates were 21.4%, 15.6% and 39.0% ofpre-tax income/(loss) for 2002, 2001 and 2000, respectively, and differed fromthe U.S. Federal statutory rate of 35% as follows: 2002 2001 2000 ---- ---- ---- Pretax book loss ............................ $ (71,468) $(275,025) $ (11,050) Federal tax benefit at 35% statutory rate (25,014) (96,259) $ (3,868) State and local income taxes ............. (1,604) (554) 591 Foreign income taxes - rate differential . -- (142) -- Valuation allowance ...................... 12,706 55,305 -- Other .................................... (1,366) (1,207) (1,037) --------- --------- ---------Total income tax expense/(benefit) .......... $ (15,278) $ (42,857) $ (4,314) ========= ========= ========= 60 b. Deferred Taxes Deferred income taxes are primarily due to temporary differencesbetween financial and income tax reporting for the depreciation of property,plant and equipment and equipment under lease, the recognition of income fromassets under finance leases, charges the Company recorded in 2002 and 2001related to the restructuring of certain operations, and tax credits and lossescarried forward. The Company has a federal tax net operating loss carryforward of $150.9million, which will expire in 2022 if unused. The Company has various tax creditcarryforwards which will expire beginning in 2013 if unused. Under SFAS No. 109,Accounting for Income Taxes, deferred tax assets are reduced by a valuationallowance when, in the opinion of management, it is more likely than not thatsome portion or all of the deferred tax assets will not be realized. The Companyhas determined that a valuation allowance is necessary and, accordingly, hasrecorded a valuation allowance for all deferred tax assets as of December 31,2002 and 2001, respectively. In future periods, the Company will evaluate theincome tax valuation allowance and adjust (reduce) the allowance when managementhas determined that impairment to realizability of the related deferred taxassets, or a portion there of, has been removed. The components of deferred tax assets and deferred tax liabilities asof December 31, 2002 and 2001 were as follows (in thousands): 2002 2001 ---- ---- Deferred tax (assets): Rentals on finance leases ............................... $(22,998) $(21,241) Leasing difference ...................................... (11,989) (10,284) Operations restructuring ................................ (26,799) (26,428) Tax credits and loss carryforwards ...................... (53,360) (36,394) Other ................................................... (85,280) (60,789) Other ................................................... (85,280) (60,789)Deferred tax liabilities: Book-tax basis differences-property, plant and equipment 73,557 68,343 Earned finance charges on finance leases ................ 10,770 10,138 Other ................................................... 48,088 21,350 -------- --------Net deferred tax liability/(asset), before valuation allowance $(68,011) $(55,305) -------- --------Valuation allowance .......................................... $ 68,011 $ 55,305 -------- --------Net deferred tax liability/(asset) ........................... $ -- $ -- ======== ======== c. Change in Tax Laws In March 2002, Congress enacted the Job Creation and Worker AssistanceAct of 2002 which allows corporate taxpayers who incur net operating losses intax years ending in 2001 and 2002 to carry back such losses to offset federaltaxable income generated in the previous five years. The Company received arefund of federal income taxes of approximately $13 million in April 2002related to the carryback of losses incurred during 2001 to tax years ended 1996,1997 and 1998. d. Other In the fourth quarter of 2002, the Company recorded a state income taxbenefit of approximately $2.4 million associated with adjustments to income taxaccruals resulting from the statutory closure of certain audit years.18. COMMITMENTS AND CONTINGENCIES a. Litigation Various lawsuits, claims and proceedings have been or may be institutedor asserted against the Company arising in the ordinary course of business,including those pertaining to product liability, labor and 61health related matters, successor liability, environmental and possible taxassessments. While the amounts claimed could be substantial, the ultimateliability cannot now be determined because of the considerable uncertaintiesthat exist. Therefore, it is possible that results of operations or liquidity ina particular period could be materially affected by certain contingencies.However, based on facts currently available, management believes that thedisposition of matters that are currently pending or asserted will not have amaterial adverse effect on the Company's financial position, liquidity orresults of operations. Brazil Joint Venture In March 2001, Bernard Krone Industria e Comercio de Maquinas AgricolasLtda. ("BK") filed suit against the Company in the Fourth Civil Court ofCuritiba in the State of Parana, Brazil. This action seeks recovery of damagesplus pain and suffering. Because of the bankruptcy of BK, this proceeding is nowpending before the Second Civil Court of Bankruptcies and CreditorsReorganization of Curitiba, State of Parana (No.232/99). This case grows out of a joint venture agreement between BK and theCompany, which was generally intended to permit BK and the Company to market theRoadRailer(R) trailer in Brazil and other areas of South America. When BK wasplaced into the Brazilian equivalent of bankruptcy late in 2000, the jointventure was dissolved. BK subsequently filed its lawsuit against the Companyalleging that it was forced to terminate business with other companies becauseof the exclusivity and non-compete clauses purportedly found in the jointventure agreement. The lawsuit further alleges that Wabash did not properlydisclose technology to BK and that Wabash purportedly failed to comply with itscontractual obligations in terminating the joint venture agreement. In itscomplaint, BK asserts that it has been damaged by these alleged wrongs by theCompany in the approximate amount of $8.4 million. The Company answered the complaint in May 2001, denying any wrongdoingand pointing out that, contrary to the allegation found in the complaint, amerger of the Company and BK, or the acquisition of BK by the Company, was neverthe purpose or intent of the joint venture agreement between the parties; theonly purpose was the business and marketing arrangement as set out in theagreement. The Company believes that the claims asserted against it by BK arewithout merit and intends to defend itself vigorously against those claims. TheCompany believes that the resolution of this lawsuit will not have a materialadverse effect on its financial position, liquidity or future results ofoperations; however, at this early stage of the proceeding, no assurance can begiven as to the ultimate outcome of the case. E-Coat System On September 17, 2001 the Company commenced an action against PPGIndustries, Inc. ("PPG") in the United States District Court, Northern Districtof Indiana, Hammond Division at Lafayette, Indiana, Civil Action No. 4:01 CV 55.In the lawsuit, the Company alleges that it has sustained substantial damagesstemming from the failure of the PPG electrocoating system (the "E-coat system")and related products that PPG provided for the Company's Huntsville, Tennesseeplant. The Company alleges that PPG is responsible for defects in the design ofthe E-coat system and defects in PPG products that have resulted in malfunctionsof the E-coat system and poor quality coatings on numerous trailers. PPG filed a Counterclaim in that action on or about November 8, 2001,seeking damages in excess of approximately $1.35 million based upon certainprovisions of the November 3, 1998 Investment Agreement between it and theCompany. The Company filed a Reply to the Counterclaim denying liability for theclaims asserted. The Company subsequently amended its complaint to include twoadditional defendants, U.S. Filter and Wheelabrator Abrasives Inc., whodesigned, manufactured, or provided equipment for the E-coat system. The Company denies and is vigorously defending PPG's counterclaim. Italso believes that the claims asserted in its complaint are valid andmeritorious and it intends to fully prosecute those claims. The Company believesthat the resolution of this lawsuit will not have a material adverse effect onits financial position, liquidity or future results of operations; however, atthis early stage of the proceeding, no assurance can be given as to the ultimateoutcome of the case. 62 Environmental In the second quarter of 2000, the Company received a grand jurysubpoena requesting certain documents relating to the discharge of wastewatersinto the environment at a Wabash facility in Huntsville, Tennessee. The subpoenasought the production of documents and related records concerning the design ofthe facility's discharge system and the particular discharge in question. On May16, 2001, the Company received a second grand jury subpoena that sought theproduction of additional documents relating to the discharge in question. TheCompany is fully cooperating with federal officials with respect to theirinvestigation into the matter. The Company received an oral communication fromthe government's lawyer in the matter that he intends to seek charges under thefederal Clean Water Act. Subsequent to that oral communication, in December 2002the Company and its outside counsel met with the government's lawyer to discusspotential resolutions to this matter, and the government's lawyer is nowconsidering the information provided by the Company at that meeting. At thistime, the Company is unable to predict the outcome of the federal grand juryinquiry into this matter, but does not believe it will result in a materialadverse effect on its financial position, liquidity or future results ofoperations; however, at this stage of the proceedings, no assurance can be givenas to the ultimate outcome of the case. On April 17, 2000, the Company received a Notice of Violation/Requestfor Incident Report from the Tennessee Department of Environmental Conservation(TDEC) with respect to the same matter. The Company and TDEC negotiated asettlement agreement to resolve this matter, under which the Company paid$100,000 in October 2002. b. Environmental The Company generates and handles certain material, wastes andemissions in the normal course of operations that are subject to various andevolving Federal, state and local environmental laws and regulations. The Company assesses its environmental liabilities on an on-going basisby evaluating currently available facts, existing technology, presently enactedlaws and regulations as well as experience in past treatment and remediationefforts. Based on these evaluations, the Company estimates a lower and upperrange for the treatment and remediation efforts and recognizes a liability forsuch probable costs based on the information available at the time. As ofDecember 31, 2002 and 2001, the estimated potential exposure for such costsranges from approximately $0.3 million to approximately $1.1 million and fromapproximately $0.5 million to approximately $1.7 million, respectively, forwhich the Company has a reserve of approximately $0.9 million recorded in OtherNoncurrent Liabilities and Contingencies on the Consolidated Balance Sheets asof December 31, 2002 and 2001. These reserves were primarily recorded forexposures associated with the costs of environmental remediation projects toaddress soil and ground water contamination as well as the costs of removingunderground storage tanks at its branch service locations. The possible recoveryof insurance proceeds has not been considered in the Company's estimatedcontingent environmental costs. Future information and developments will require the Company tocontinually reassess the expected impact of these environmental matters.However, the Company has evaluated its total environmental exposure based oncurrently available data and believes that compliance with all applicable lawsand regulations will not have a materially adverse effect on the consolidatedfinancial position or results of operations of the Company. c. Used Trailer Restoration Program During 1999, the Company reached a settlement with the IRS related tofederal excise tax on certain used trailers restored by the Company during 1996and 1997. The Company has continued the restoration program with the samecustomer since 1997. The customer has indemnified the Company for any potentialexcise tax assessed by the IRS for years subsequent to 1997. As a result, theCompany has recorded a liability and a corresponding receivable of approximately$8.6 million and $8.3 million in the accompanying Consolidated Balance Sheets atDecember 31, 2002 and 2001, respectively. During 2001, the IRS completed itsfederal excise tax audit of 1999 and 1998 resulting in an assessment ofapproximately $5.4 million. The Company believes it is fully indemnified forthis liability and that the related receivable is fully collectible. 63 d. Letters of Credit As of December 31, 2002 and 2001, the Company had standby letters ofcredit totaling approximately $31.5 million and $29.0 million issued inconnection with the rental fleet facility, workers compensation claims andcertain foreign sales transactions. Letters of credit in connection with therental fleet facility were $21.3 million at December 31, 2002 and 2001,respectively. e. Royalty Payments The Company is obligated to make quarterly royalty payments inaccordance with a licensing agreement related to the development of theCompany's composite plate material used on its proprietary DuraPlate(R) trailer.The amount of the payments varies with the production volume of usable material,but requires minimum royalties of $0.5 million annually through 2005. Paymentsfor 2002, 2001 and 2000 were $1.0 million, $1.4 million and $2.1 million,respectively. f. Used Trailer Residual Guarantees and Purchase Commitments In connection with certain historical new trailer sale transactions,the Company had entered into residual value guarantees and purchase optionagreements with customers or financing institutions whereby the Company agreedto guarantee an end-of-term residual value or has an option to purchase the usedequipment at a pre-determined price. By policy, the Company no longer providesused trailer residual guarantees. Under these guarantees, future payments which may be required as ofDecember 31, 2002 totaled approximately $27.0 million as follows (in thousands): Purchase Option Guarantee Amount --------------- ---------------- 2003 ..... $21,401 $ 3,8002004 ..... 48,860 4,7812005 ..... 18,454 4,3522006 ..... -- 9,6802007 ..... -- 4,395Thereafter -- -- ------- ------- $88,715 $27,008 ======= ======= In relation to the guarantees on these transactions, as of December 31,2002 and 2001, the Company recorded loss contingencies of $1.2 million and $0.8million, respectively. The contingencies are recorded in Accrued Liabilities andOther Noncurrent Liabilities and Contingencies on the Consolidated BalanceSheets.19. SEGMENTS AND RELATED INFORMATION a. Segment Reporting Under the provisions of SFAS No. 131, Disclosures about Segments of anEnterprise and Related Information, the Company has two reportable segments:manufacturing and retail and distribution. The manufacturing segment producesand sells new trailers to the retail and distribution segment or to customerswho purchase trailers direct or through independent dealers. The retail anddistribution segment includes the sale, leasing and financing of new and usedtrailers, as well as the sale of aftermarket parts and service through itsretail branch network. In addition, the retail and distribution segment includesthe sale of aftermarket parts through Wabash National Parts. The accounting policies of the segments are the same as those describedin the summary of significant accounting policies except that the Companyevaluates segment performance based on income from operations. The Company hasnot allocated certain corporate related charges such as administrative costs andincome taxes from the manufacturing segment to the Company's other reportablesegment. The Company accounts for intersegment sales and transfers at cost plusa specified mark-up. Reportable segment information is as follows (inthousands): 64 Retail and Combined Consolidated Manufacturing Distribution Segments Eliminations Total ------------- ------------ -------- ------------ ------------ 2002--------------------------------Revenues External customers $ 492,267 $ 327,301 $ 819,568 $ -- $ 819,568 Intersegment sales 37,793 4,188 41,981 (41,981) -- ------- ------- --------- -------- -------Total revenues $ 530,060 $ 331,489 $ 861,549 $ (41,981) $ 819,568 =========== =========== =========== =========== ===========Depreciation & amortization 15,152 13,474 28,626 -- 28,626Restructuring charge from operations 1,813 -- 1,813 -- 1,813Loss from operations (16,566) (22,287) (38,853) 93 (38,760)Reconciling items to net loss: Interest income (216) (66) (282) -- (282) Interest expense 11,325 19,548 30,873 -- 30,873 Equity in losses of unconsolidated affiliate -- -- -- -- -- Restructuring charge included in other -- -- -- -- -- Losses (gains) on foreign currency -- (5) (5) -- (5) Trade receivables facility costs 4,072 -- 4,072 -- 4,072 Other (income) expense (229) (1,721) (1,950) -- (1,950) Income tax benefit (15,278) -- (15,278) -- (15,278) ------- ------- --------- -------- -------Net loss (16,240) (40,043) (56,283) 93 (56,190) ======= ======= ========= ======== =======Capital expenditures 4,514 1,189 5,703 -- 5,703Assets 658,662 368,835 1,027,497 (461,928) 565,5692001-------------------------------Revenues External customers $ 518,212 $ 345,180 $ 863,392 $ -- $ 863,392 Intersegment sales 61,854 2,427 64,281 (64,281) -- ----------- ----------- ----------- ----------- -----------Total revenues $ 580,066 $ 347,607 $ 927,673 $ (64,281) $ 863,392 =========== =========== =========== =========== ===========Depreciation & amortization 18,191 13,952 32,143 -- 32,143Restructuring charge from operations 37,493 371 37,864 -- 37,864Loss from operations (148,727) (92,975) (241,702) 2,300 (239,402)Reconciling items to net loss: Interest income (178) (171) (349) -- (349) Interest expense 20,235 1,057 21,292 -- 21,292 Equity in losses of unconsolidated affiliate 7,668 -- 7,668 -- 7,668 Restructuring charge included in other 1,590 -- 1,590 -- 1,590 Losses (gains) on foreign currency -- 1,706 1,706 -- 1,706 Trade receivables facility costs 2,228 -- 2,228 -- 2,228 Other (income) expense 2,088 (600) 1,488 -- 1,488 Income tax benefit (42,038) (819) (42,857) -- (42,857) ----------- ----------- ----------- ----------- -----------Net loss (140,320) (94,148) (234,468) 2,300 (232,168) =========== =========== =========== =========== ===========Capital expenditures 4,463 1,436 5,899 -- 5,899Assets 710,683 389,263 1,099,946 (407,442) 692,5042000-------------------------------Revenues External customers $ 1,013,108 $ 319,064 $ 1,332,172 $ -- $ 1,332,172 Intersegment sales 83,796 1,141 84,937 (84,937) -- ----------- ----------- ----------- ----------- -----------Total revenues $ 1,096,904 $ 320,205 $ 1,417,109 $ (84,937) $ 1,332,172 =========== =========== =========== =========== ===========Depreciation & amortization 16,390 13,661 30,051 -- 30,051Restructuring charge from operations 22,771 13,567 36,338 -- 36,338Income (loss) from operations 36,897 (10,926) 25,971 (2,216) 23,755Reconciling items to net income (loss): Interest income (340) (174) (514) -- (514) Interest expense 18,632 1,108 19,740 -- 19,740 Equity in losses of unconsolidated affiliate 3,050 -- 3,050 -- 3,050 Restructuring charge included in other 5,832 -- 5,832 -- 5,832 Losses (gains) on foreign currency -- -- -- -- -- Trade receivables facility costs 7,060 -- 7,060 -- 7,060 Other (income) expense (862) 499 (363) -- (363) Income tax benefit (4,314) -- (4,314) -- (4,314) ----------- ----------- ----------- ----------- -----------Net income (loss) 7,839 (12,359) (4,520) (2,216) (6,736) =========== =========== =========== =========== ===========Capital expenditures 48,712 11,630 60,342 -- 60,342Assets 846,740 407,915 1,254,655 (473,041) 781,614 65 b. Geographic Information International sales, primarily to Canadian customers, accounted forapproximately 9.1%, 9.2% and 3.1% of net sales during 2002, 2001 and 2000,respectively. As previously discussed, the Company acquired a Canadian subsidiary inJanuary, 2001. At December 31, 2002 and 2001, the amount reflected in property,plant and equipment, net of accumulated depreciation related to this subsidiarywas approximately $2.0 million. Fixed assets utilized outside of North Americaduring 2002, 2001 and 2000 were immaterial. c. Product Information The Company offers products primarily in three general revenuecategories of new trailers, used trailers and parts. The new and used trailercategories include trailers of varying sizes and specifications such as dry andrefrigerated trailers. Other revenues include trailer service work performed atbranch locations, leasing revenues, interest income from finance contracts, andfreight. The following table sets forth the major product category revenues andtheir percentage of total revenues: 2002 2001 2000 ------------------- -------------------- --------------------- $ % $ % $ % ------------------- -------------------- --------------------- New Trailers 563,496 68.8 614,363 71.2 1,079,913 81.1Used Trailers 92,317 11.3 73,287 8.5 74,660 5.6Parts 99,447 12.1 103,694 12.0 109,821 8.2Other 64,308 7.8 72,048 8.3 67,778 5.1 ------------------- -------------------- ---------------------Total Revenues 819,568 100.0 863,392 100.0 1,332,172 100.0 =================== =================== ===================== d. Major Customers The Company had one customer that represented 10.9%, 19.0% and 11.4% ofnet sales in 2002, 2001 and 2000, respectively. The Company's net sales in theaggregate to its five largest customers were 30.3%, 34.4% and 30.5% of its netsales in 2002, 2001 and 2000, respectively. 6620. CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of the unaudited quarterly results ofoperations for fiscal years 2002, 2001 and 2000 (Dollars in thousands except pershare amounts). First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- 2002----------------------------Net Sales $ 161,952 $ 210,251 $ 241,474 $ 205,891Gross profit 39 6,227 21,731 12,454Net loss (14,589)(5) (21,677)(6) (8,319) (11,605)Basic loss per share(1) $ (0.65) $ (0.96) $ (0.37) $ (0.46)Diluted loss per share(1) $ (0.65) $ (0.96) $ (0.37) $ (0.46)2001----------------------------Net Sales $ 242,629 $ 212,172 $ 241,945 $ 166,646Gross loss (1,743) (26) (32,733) (84,711)Net loss (17,730) (18,117) (61,373)(3) (134,948)(4)Basic loss per share(1) $ (0.79) $ (0.81) $ (2.69) $ (5.88)Diluted loss per share(1) $ (0.79) $ (0.81) $ (2.69) $ (5.88)2000----------------------------Net Sales $ 352,848 $ 358,729 $ 345,818 $ 274,777Gross profit 34,423 34,045 29,512 17,987Net income (loss) 9,132 7,515 4,992 (28,375)(2)Basic earnings (loss) per share(1) $ 0.38 $ 0.31 $ 0.20 $ (1.25)Diluted earnings (loss) per share(1) $ 0.38 $ 0.31 $ 0.20 $ (1.25)(1)Earnings (loss) per share are computed independently for each of the quarters presented. Therefore, the sum of the quarterly earnings per share may differ from annual earnings per share due to rounding.(2)The fourth quarter 2000 results include restructuring and other related charges of $46.6 million ($28.5 million, net of tax).(3)The third quarter 2001 results include restructuring and other related charges of $40.5 million ($25.6 million, net of tax).(4)The fourth quarter 2001 results include loss contingencies and impairment charge related to the Company's leasing operations of $37.9 million and used trailer inventory valuation of $18.6 million.(5)The first quarter 2002 results include new trailer inventory valuation charges of $2.1 million. (6)The second quarter 2002 results include loss contingencies of $6.0 million related to the Company's leasing operations and used trailer inventory valuation charges of $4.0 million. 67ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE NonePART IIIITEM 10 -- EXECUTIVE OFFICERS OF THE REGISTRANT The Company hereby incorporates by reference the information containedunder the heading "Election of Directors" from its definitive Proxy Statement tobe delivered to stockholders of the Company in connection with the 2003 AnnualMeeting of Stockholders to be held June 2, 2003. The following are the executive officers of the Company: NAME AGE POSITION ---- --- -------- William P. Greubel............ 51 President, Chief Executive Officer and DirectorRodney P. Ehrlich.............. 56 Senior Vice President -- Product DevelopmentRichard J. Giromini............ 49 Senior Vice President -- Chief Operating OfficerMark R. Holden................. 43 Senior Vice President -- Chief Financial Officer William P. Greubel. Mr. Greubel has been President, Chief ExecutiveOfficer and Director of the Company since May 2002. As a Director he also serveson the Executive and Nominating Committees of the Board. Mr. Greubel was aDirector and Chief Executive Officer of Accuride Corporation, a manufacturer ofwheels for trucks and trailers, from 1998 until May 2002 and served as Presidentof Accuride Corporation from 1994 to 1998. Previously, Mr. Greubel was employedby AlliedSignal Corporation from 1974 to 1994 in a variety of positions ofincreasing responsibility, most recently as Vice President and General Managerof the Environmental Catalysts and Engineering Plastics business units. Rodney P. Ehrlich. Mr. Rodney Ehrlich has been Senior Vice President --Product Development of the Company since October 2001. Mr. Ehrlich was VicePresident-Engineering and has been in charge of the Company's engineeringoperations since the Company's founding. Richard J. Giromini. Mr. Giromini has been Senior Vice President -Chief Operating Officer since joining the Company on July 15, 2002. Prior tothat, Mr. Giromini was with Accuride Corporation from April 1998 to July 2002,where he served in capacities as Senior Vice President - Technology andContinuous Improvement; Senior Vice President and General Manager - LightVehicle Operations; and President and CEO of AKW LP. Previously, Mr. Girominiwas employed by ITT Automotive, Inc. from 1996 to 1998 serving as the Directorof Manufacturing. Mark R. Holden. Mr. Holden has been Senior Vice President--ChiefFinancial Officer since October 2001. Mr. Holden has served as VicePresident--Chief Financial Officer and Director of the Company since May 1995 toOctober 2001 and Vice President--Controller of the Company from 1992 until May1995.ITEM 11 -- EXECUTIVE COMPENSATION The Company hereby incorporates by reference the information containedunder the heading "Compensation" from its definitive Proxy Statement to bedelivered to the stockholders of the Company in connection with the 2003 AnnualMeeting of Stockholders to be held June 2, 2003.ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The Company hereby incorporates by reference the information containedunder the heading "Beneficial Ownership of Common Stock" from its definitiveProxy Statement to be delivered to the stockholders of the Company in connectionwith the 2003 Annual Meeting of Stockholders to be held on June 2, 2003. 68ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company hereby incorporates by reference the information containedunder the heading "Related Party Transaction" from its definitive ProxyStatement to be delivered to the stockholders of the Company in connection withthe 2003 Annual Meeting of Stockholders to be held on June 2, 2003.ITEM 14 -- CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures. The Chief ExecutiveOfficer and the Chief Financial Officer have reviewed the Company's disclosurecontrols and procedures as of a date within the 90-day period prior to thefiling of this annual report (the "Evaluation Date"). Based on that review, theyhave concluded that, as of the Evaluation Date, these controls and procedureswere, in design and operation, effective to assure that the information requiredto be included in this report has been properly collected, processed, and timelycommunicated to those responsible in order that it may be included in thisreport. Changes in Internal Controls. Subsequent to the Evaluation Date, therehave been no significant changes, including corrective actions, in the Company'sinternal controls or in other factors that could significantly affect thedisclosure controls and procedures.PART IVITEM 15 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K(a) Financial Statements: The Company has included all required financial statements in Item 8 of this Form 10-K. The financial statement schedules have been omitted as they are not applicable or the required information is included in the Notes to the consolidated financial statements. For the year ended December 31, 2000, ETZ was a significant subsidiary under Rule 3-09 of Regulation S-X. Therefore, the Company was required to file audited financial statements of ETZ for the year ended December 31, 2000 by June 30, 2001. The Company has received audited financial statements under German generally accepted accounting principles for the year ended December 31, 2000, but has not been able to obtain these financial statements in conformity with accounting principles generally accepted in the United States. For the year ended December 31, 2001, ETZ was not a significant subsidiary under Rule 3-09 of Regulation S-X. The Company divested ETZ in January 2002.(b) Reports on Form 8-K: On November 14, 2002, the Company filed a current report on Form 8-K for the purpose of furnishing under Item 9 a copy of the written certification required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. On November 12, 2002, the Company filed a current report on Form 8-K for the purpose of furnishing under Item 9 a copy of a senior management presentation at an investor conference. On October 7, 2002, the Company filed a current report on Form 8-K for the purpose of furnishing under Item 9 a copy of a senior management presentation to institutional investors.(c) Exhibits: The following exhibits are filed with this Form 10-K or incorporated herein by reference to the document set forth next to the exhibit listed below:2.01 Purchase Agreement dated March 31, 1997, as amended (1)3.01 Certificate of Incorporation of the Company (2)3.02 Certificate of Designations of Series A Junior Participating Preferred Stock (2)3.03 Amended and restated By-laws of the Company (20)3.04 Certificate of Designations of Series B 6% Cumulative Convertible Exchangeable Preferred Stock (6)3.05 Certificate of Designations of Series C 5.5% Convertible Exchangeable Preferred Stock (9)4.01 Specimen Stock Certificate (17) 694.02 First Amendment to Shareholder Rights Agreement dated October 21, 1998 (10)4.03 Form of Indenture for the Company's 6% Convertible Subordinated Debentures due 2007 (6)4.04 Second Amendment to Shareholder Rights Agreement dated December 18, 2000 (14)10.01 Loan Agreement, Mortgage, Security Agreement and Financing Statement between Wabash National Corporation and City of Lafayette dated as of August 15, 1989 (2)10.02 1992 Stock Option Plan (2)10.03 Real Estate Sale Agreement by and between Kraft General Foods, Inc. and Wabash National Corporation, dated June 1, 1994 (3)10.04 6.41% Series A Senior Note Purchase Agreement dated January 31, 1996, between certain Purchasers and Wabash National Corporation (4)10.05 Master Loan and Security Agreement in the amount of $10 million by Wabash National Finance Corporation in favor of Fleet Capital Corporation dated December 27, 1995 (4)10.06 First Amendment to the 6.41% Series A Senior Note Purchase Agreement dated January 31, 1996 between certain Purchasers and Wabash National Corporation (5)10.07 Series B-H Senior Note Purchase Agreement dated December 18, 1996 between certain Purchasers and Wabash National Corporation (5)10.08 Revolving Credit Loan Agreement dated September 30, 1997, between NBD Bank, N.A. and Wabash National Corporation (7) 10.09 Investment Agreement and Shareholders Agreement dated November 4, 1997, between ETZ (Europaische Trailerzug Beteiligungsgesellschaft mbH) and Wabash National Corporation (7)10.10 Receivable Sales Agreement between the Company and Wabash Funding Corporation and the Receivables Purchase Agreement between Wabash Funding Corporation and Falcon Asset Securitization Corporation (8)10.11 Indemnification Agreement between the Company and Roadway Express, Inc. (11)10.12 364-day Credit Agreement dated June 22, 2000, between Bank One, Indiana, N.A., as administrative agent and Wabash National Corporation (12)10.13 Series I Senior Note Purchase Agreement dated September 29, 2000, between Prudential Insurance Company and Wabash National Corporation (13)10.14 Share Transfer Agreement dated December 12, 2000, between Bayerische Kapitalbeteiligungsgesellschaft mBH and Wabash National Corporation (15)10.15 Participation Agreement and Equipment Lease between Apex Trailer Leasing and Rentals, L.P., as Lessee, and Wabash Statutory Trust, as Lessor, dated December 29, 2000 (15)10.16 2000 Stock Option Plan (16)10.17 Consulting and Non-Competition Agreement dated July 16, 2001 between Donald J. Ehrlich and Wabash National Corporation (17)10.18 Offer of Employment dated August 13, 2001 between Arthur R. Brown and the Company (19) 10.19 Originators Receivables Sale Agreement dated October 4, 2001 Wabash National LP and NOAMTC, Inc. as originators and Wabash National Financing LLC, Receivable Sales Agreement dated October 4, 2001 between Wabash Financing LLC and WNC Funding LLC and the Receivables Purchase Agreement dated October 4, 2001 between WNC Funding LLC and North Coast Funding Corporation (18)10.20 2001 Stock Appreciation Rights Plan (18)10.21 Asset Purchase Agreement dated January 11, 2002, between Bayerische Trailerzug Gesellschaft fur Bimodalen Guterverkehr mbH (ETZ) and Wabash National Corporation (19)10.22 Share Purchase Agreement dated January 11, 2002, between Brennero Trasporto Rotaia S.p.A. and Bimodal Verwaltungs Gesellschaft mbH (collectively the "Purchasers") and Wabash National Corporation (the Seller) (19)10.23 Master Amendment Agreement dated April 11, 2002 between the Company and various financial institutions (19)10.24 Amended and Restated 9.66% Series A Senior Secured Notes Purchase Agreement dated April 12, 2002, between certain purchasers and the Comnpany (19)10.25 Amended and Restated Series C-H Senior Secured Notes Purchase Agreement dated April 12, 2002, between certain purchasers and the Company (19)10.26 Amended and Restated Series I 11.29% Senior Secured Note Purchase Agreement dated April 12, 2002, between Prudential Insurance Company and the Company (19)10.27 Amended and Restated Credit Agreement dated April 11, 2002 between Bank One, Indiana, NA, as administrative agent and the Company (19)10.28 Receivables Purchase and Servicing Agreement dated April 11, 2002 between General Electric Capital Corporation, as initial Purchaser and as Agent and the Company (19) 7010.29 Receivables Sale and Contribution Agreement dated April 11, 2002 between Wabash National Corporation as Performance Guarantor, NOAMTC, Inc. and Wabash National LP, as originators and WNC Receivables, LLC, as Buyer (19)10.30 Annex X to the Receivables Sale and Contribution Agreement and Receivables Purchase and Servicing Agreement each dated April 11, 2002 (19)10.31 Executive Employment Agreement dated April, 2002 between the Company and William P. Greubel (20)10.32 Severance Agreement including Exhibit A Form of Waiver and Release Agreement dated May 6, 2002 between the Company and Richard E. Dessimoz (21)10.33 Severance Agreement dated May 6, 2002 and Letter Agreement dated July 1, 2002 between the Company and Derek L. Nagle (21)10.34 Executive Employment Agreement dated June 28, 2002 between the Company and Richard J. Giromini (21) 10.35 Nonqualified Stock Option Agreement dated July 15, 2002 between the Company and Richard J. Giromini (21) 10.36 Restricted Stock Agreement between the Company and Richard J. Giromini (21) 10.37 Executive Employment Agreement dated June 14, 2002 between the Company and Mark R. Holden (21)10.38 Nonqualified Stock Option Agreement dated May 6, 2002 between the Company and Mark R. Holden (21) 10.39 Non-qualified Stock Option Agreement between the Company and William P. Greubel (21) 10.40 Exhibit A Form of Waiver and Release Agreement dated May 6, 2002 between the Company and Derek L. Nagle (23)10.41 First Amendment to Executive Employment Agreement dated December 4, 2002 between the Company and William P. Greubel (23)10.42 Consulting and Non-Competition Agreement dated September 1, 2002 between the Company and Charles Ehrlich (23)10.43 Restricted Stock Agreement between the Company and William P. Greubel (23)10.44 Third Master Amendment Agreement dated April 11, 2003 between the Company and various financial institutions (23)10.45 Second Amendment to Amended and Restated 9.66% Series A Senior Secured Notes Purchase Agreement dated April 11, 2003, between certain purchasers and the Company (23)10.46 Second Amendment to Amended and Restated Series C-H Senior Secured Notes Purchase Agreement dated April 11, 2003, between certain purchasers and the Company (23)10.47 Second Amendment to Amended and Restated Series I 11.29% Senior Secured Note Purchase Agreement dated April 11, 2003, between Prudential Insurance Company and the Company (23)10.48 Second Amendment to Amended and Restated Credit Agreement dated April 11, 2003 between Bank One, Indiana, NA, as administrative agent and the Company (23)10.49 Omnibus Amendment No. 2 to the Receivables Sale and Contribution Agreement and Receivables Purchase and Servicing Agreement each dated April 11, 2003 (23)21.00 List of Significant Subsidiaries (23)23.01 Consent of Ernst & Young LLP (23)23.02 Notice Regarding Consent of Arthur Andersen LLP (23) (1) Incorporated by reference to the Registrant's Form 8-K filed on May 1, 1997 (2) Incorporated by reference to the Registrant's Registration Statement on Form S-1 (No. 33-42810) or the Registrant's Registration Statement on Form 8-A filed December 6, 1995 (item 3.02 and 4.02) (3) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended June 30, 1994. (4) Incorporated by reference to the Registrant's Form 10-K for the year ended December 31, 1995 (5) Incorporated by reference to the Registrant's Form 10-K for the year ended December 31, 1996 (6) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended March 31, 1997 (7) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended September 30, 1997 (8) Incorporated by reference to the Registrant's Form 8-K filed on April 14, 1998 (9) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended September 30, 1998 (10) Incorporated by reference to the Registrant's Form 8-K filed on October 26, 1998 (11) Incorporated by reference to the Registrant's Form 10-K for the year ended December 31, 1999 (12) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended June 30, 2000 (13) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended September 30, 2000 (14) Incorporated by reference to the Registrant's Amended Form 8-A filed January 18, 2001 (15) Incorporated by reference to the Registrant's Form 10-K for the year ended December 31, 2000 (16) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended March 31, 2001 (17) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended June 30, 2001 (18) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended September 30, 2001 (19) Incorporated by reference to the Registrant's Form 10-K for the quarter ended December 31, 2001 (20) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended March 31, 2002 (21) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended June 30, 2002 (22) Incorporated by reference to the Registrant's Form 10-Q for the quarter ended September 30, 2002 (23) Filed herewith 71 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. WABASH NATIONAL CORPORATIONApril 15, 2003 By: /s/ MARK R. HOLDEN -------------------------------------------- Mark R. Holden Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)Pursuant to the requirements of the Securities Exchange Act of 1934, this reporthas been signed below by the following persons on behalf of the registrant inthe capacities and on the date indicated.Date Signature and Title---- -------------------April 15, 2003 By: /s/ WILLIAM P. GREUBEL ----------------------------------------- William P. Greubel President and Chief Financial Officer and Director (Principal Executive Officer)April 15, 2003 By: /s/ MARK R. HOLDEN ----------------------------------------- Mark R. Holden Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)April 15, 2003 By: /s/ JOHN T. HACKETT ----------------------------------------- John T. Hackett Chairman of the Board of DirectorsApril 15, 2003 By: /s/ DAVID C. BURDAKIN ----------------------------------------- David C. Burdakin DirectorApril 15, 2003 By: /s/ LUDVIK F. KOCI ----------------------------------------- Ludvik F. Koci DirectorApril 15, 2003 By: /s/ DR. MARTIN C. JISCHKE ----------------------------------------- Dr. Martin C. Jischke DirectorApril 15, 2003 By: /s/ E. HUNTER HARRISON ----------------------------------------- E. Hunter Harrison Director 72 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, William P. Greubel, certify that:1. I have reviewed this annual report on Form 10-K of Wabash NationalCorporation;2. Based on my knowledge, this annual report does not contain any untruestatement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this annualreport;3. Based on my knowledge, the financial statements, and other financialinformation included in this annual report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this annual report;4. The registrant's other certifying officers and I are responsible forestablishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;5. The registrant's other certifying officers and I have disclosed, based onour most recent evaluation, to the registrant's auditors and the audit committeeof registrant's board of directors (or persons performing the equivalentfunction): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and6. The registrant's other certifying officers and I have indicated in thisannual report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.Date: April 15, 2003 /s/William P. Greubel ----------------------------------------- William P. Greubel President and Chief Executive Officer (Principal Executive Officer) 73 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Mark R. Holden, certify that:1. I have reviewed this annual report on Form 10-K of Wabash NationalCorporation;2. Based on my knowledge, this annual report does not contain any untruestatement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this annual report;3. Based on my knowledge, the financial statements, and other financialinformation included in this annual report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this annual report;4. The registrant's other certifying officers and I are responsible forestablishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;5. The registrant's other certifying officers and I have disclosed, based on ourmost recent evaluation, to the registrant's auditors and the audit committee ofregistrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and6. The registrant's other certifying officers and I have indicated in thisannual report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.Date: April 15, 2003 /s/Mark R. Holden ----------------------------------------- Mark R. Holden Senior Vice President and Chief Financial Officer (Principal Financial Officer) 74 EXHIBIT 10.40 EXHIBIT A: FORM OF WAIVER AND RELEASE AGREEMENT In consideration of the severance pay provided to me by WabashNational Corporation ("Wabash"), which severance pay is described in theSeverance Agreement between me and the Company effective May 6, 2002 (the"Severance Payment") and is a payment I would not be entitled to withoutentering into this Waiver and Release Agreement, I voluntarily enter into thisWaiver and Release Agreement. More specifically, the Severance Payment that isthe consideration for this Waiver and Release Agreement is a payment of$515,625.00 representing the entire Severance Payment. I, on my own behalf and on behalf of my heirs, executors,administrators, attorneys and assigns, hereby unconditionally and irrevocablyrelease, waive and forever discharge Wabash and each of its affiliates, parentssuccessors, predecessors, and the subsidiaries, directors, owners, members,shareholders, officers, agents, and employees of Wabash and its affiliates,parents, successors, predecessors, and subsidiaries (collectively all of theforgoing are referred to as the "Employer"), from any and all causes of action,claims and damages, including attorneys' fees, whether known or unknown,foreseen or unforeseen, presently asserted or otherwise arising through the dateof my signing of the Waiver and Release Agreement, concerning my employment orseparation from employment. This release includes, but is not limited to, anyclaim or entitlement to salary, bonuses, any other payments, benefits or damagesarising under any federal law (including but not limited to, Title VII of theCivil Rights Act of 1964, the Age Discrimination in Employment Act, the EmployeeRetirement Income Security Act of 1974, the Americans with Disabilities Act, andthe Family and Medical Leave Act, each as amended); any claim arising under anystate or local ordinances or regulations, and any claim arising under any commonlaw principle or public policy, including but not limited to all suits in tortor contract, such as, wrongful termination, defamation, emotional distress,invasion of privacy or loss of consortium. I understand that by signing this Waiver and Release AgreementI am not waiving any claims or administrative charges which cannot be waived bylaw. I am waiving, however, any right to monetary recovery or individual reliefshould any federal, state or local agency (including the Equal EmploymentOpportunity Commission (the "EEOC")) pursue any claim on my behalf arising outof or related to my employment with and/or separation from employment with theEmployer. I further agree, without any reservation whatsoever, never tosue the Employer or become a party to a lawsuit on the basis of any and allclaimsof any type lawfully and validly released in this Waiver and Release Agreement.If I sue in violation of the preceding sentence of this Waiver and ReleaseAgreement, I will (1) pay all costs and expenses incurred by the Employer indefending against a suit or enforcing this Waiver and Release Agreement,including litigation and court costs, expenses and reasonable attorneys' feesand (2) I will repay the Severance Payment I received in consideration for thisWaiver and Release Agreement. I am signing this Waiver and Release Agreement knowingly andvoluntarily. I acknowledge that: (1) I am hereby advised in writing to consult an attorney before signing this Waiver and Release Agreement; (2) I have relied solely on my own judgment and/or that of my attorney regarding the consideration for and the terms of this Waiver and Release Agreement and am signing this Waiver and Release Agreement knowingly and voluntarily of my own free will; (3) I am not entitled to the Severance Payment amount unless I agree to and honor the terms of this Waiver and Release Agreement. (4) I have been given at least twenty one (21) days to consider this Waiver and Release Agreement; (5) I may revoke this Waiver and Release Agreement within seven (7) days after signing it by submitting a written notice of revocation to Wabash to the Vice President Human Resources, WABASH NATIONAL CORPORATION, P.O. Box 6129, Lafayette, IN 47903 prior to 5:00 pm on the seventh day after signing it. I further understand that this Waiver and Release Agreement is not effective or enforceable until after the seven (7) day period of revocation has expired without revocation, and that if I revoke this Waiver and Release Agreement, I will not receive any Severance Payment. THIS WAIVER AND RELEASE AGREEMENT DOES NOT BECOME EFFECTIVE UNTIL THE EXPIRATION OF THE SEVEN DAY PERIOD; (6) 1 have read and understand the Waiver and Release Agreement and further understand that it includes a general release of any and all known and unknown, foreseen or unforeseen, claims presently asserted or otherwise arising through the date of my signing of this Waiver and Release Agreement that I may have against the Employer; and 10 (7) I understand that this Waiver and Release Agreement does not waive any age discrimination claims that may arise after the effective date of this Waiver and Release Agreement. (8) No statements or conduct by the Employer have in any way coerced or unduly influenced me to execute this Waiver and Release Agreement. I represent and promise that prior to the execution of thisWaiver and Release Agreement I have surrendered to the Company all Companyproperty, including, but not limited to, any and all confidential information,licenses, trademarks, patents, in written, electronic or other tangible form. Inaddition, I have returned any and all computer equipment with passwords, Companyissued credit, security, identification, or telephone cards, with passwords, andall other Company owned property and keys, contemporaneously with providing theproper means for accessing the property. I further agree that I will not make any disparaging orderogatory remarks or comments about the Company or the Company's current andformer officers, directors, shareholders, principals, attorneys, agents, oremployees, or my employment with the Company. I further acknowledge that there are no other agreements ofany nature between the Employer and me with respect to the matters discussed inthis Waiver and Release Agreement, except as expressly stated herein, and thatin signing this Waiver and Release Agreement, I am not relying on any agreementsor representation, except those expressly contained in this Waiver and ReleaseAgreement and the Severance Agreement. I further acknowledge and agree that if any provision of thisWaiver and Release Agreement is found, held or deemed by a court of competentjurisdiction to be void, unlawful or unenforceable under any applicable statuteor controlling law, the remainder of this Waiver and Release Agreement shallcontinue in full force and effect. This Waiver and Release Agreement is deemed made and enteredinto in the State of Indiana, and in all respects shall be interpreted, enforcedand governed under applicable federal law, and in the event that any referenceshall be made to state law, the internal laws of the Indiana shall apply. Anydisputes under this Waiver and Release Agreement shall be adjudicated by a courtof competent jurisdiction in the State of Indiana. 11 This Waiver and Release Agreement shall not in any way beconstrued as an admission by the Company of any liability for potential claim orpotential claim. I understand that, to receive the Severance Payment amount, Imust sign and return this Waiver and Release Agreement no sooner than myemployment termination date and no later than twenty one (21) days from the datemy employment was terminated. St. Louis County Mo.EXECUTED on this 13th day of December, 2002 at Lafayette Indiana. /s/ Derek L. Nagle -------------------------------- DEREK L. NAGLESTATE OF Missouri -------------------CITY/COUNTY OF St. Louis ------------------- The foregoing instrument was acknowledged before me in the indicatedjurisdiction this 13th day of December, 2002, by Derek L. Nagle. My commission expires: 06/24/05 /s/ ------------------------------ Notary Public 12 Exhibit 10.41 FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT This Amendment No. 1 (the "Amendment") to the Employment Agreement(as defined below) is entered into as this 4th day of December, 2002, by WabashNational Corporation (the "Company") and William Greubel (the "Executive"). WHEREAS, the Company and Executive entered into an EmploymentAgreement dated April 12, 2002 (the "Employment Agreement"); WHEREAS, capitalized terms used but not otherwise defined in thisAmendment shall have the meanings ascribed to them in the Employment Agreement;and WHEREAS, pursuant to Section 12 of the Employment Agreement, theparties to the Employment Agreement hereby wish to amend the EmploymentAgreement to provide for the reimbursement of certain expenses incurred by theExecutive in connection with the Evansville Home. NOW, THEREFORE, in consideration of the foregoing and the mutualpromises, agreements, covenants, representations and warranties set forth belowand in the Employment Agreement, the parties hereto agree as follows: 1. RELOCATION EXPENSES. The fifth through ninth sentences ofSection 3.6 of the Employment Agreement, beginning with the words "If theExecutive is unable..." are hereby deleted and replaced in their entirety withthe following: From November 1, 2002 through November 1, 2003 or until such time as the Executive is able to close on the sale of the Evansville Home, whichever is sooner, the Company shall reimburse the Executive for the monthly payment of Two Thousand Seven Hundred Thirty Four Dollars and Zero Cents ($2,734.00) in monthly principal and interest on the Executive's mortgage on the Evansville Home, and the reasonable monthly electric, heating and cooling and insurance expenses of the Evansville Home. Except as specified herein, Executive shall be responsible for all other expenses associated with the Evansville Home. Such costs to be grossed up so that the Executive pays no federal or state income taxes for such expenses. Notwithstanding the foregoing, if the Executive is unable to sell the Evansville Home for the fair market value of the Evansville Home on the date (the "Listing Date") that the Executive put the Evansville Home on the market, then the Company may, in its sole discretion, choose to buy the Evansville Home from the Executive at the fair market value on the Listing Date or direct that the Evansville Home be sold to a third party. If the Company directs that the Evansville Home be sold to a third party, the Company shall reimburse the Executive the difference between the sales price and the fair market value of the Evansville Home as of the Listing Date. Accordingly, all offers for the purchase of the Evansville Home that are presented to the Executive must be presented to the Company and the Company may direct the Executive to accept any offer for the purchase of the home that has reasonable and customary market terms. This Agreement terminates upon the sale of or the Company's purchase of the Evansville home or by November 1, 2003, whichever is earlier; This Agreement can be extended subject to Board of Directors approval and evaluation of need for further extension of the Agreement. 2. AMENDMENTS. This Amendment may be amended or modified only bya written instrument executed by both the Company and the Executive. 3. GOVERNING LAW. This Amendment shall be construed, interpretedand enforced in accordance with the laws of the State of Indiana, regardless ofthe laws that might otherwise govern under applicable principles of conflicts oflaw. 4. COUNTERPARTS. This Amendment may be executed in one or morecounterparts, each of which shall be deemed an original, and all of whichtogether shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned have duly executed thisAmendment, or have caused this Amendment to be duly executed on their behalf, asof the day and year first hereinabove written. WILLIAM GREUBEL /s/ WILLIAM GREUBEL --------------------------- WABASH NATIONAL CORPORATION /s/ JOHN T. HACKETT --------------------------- By: John T. Hackett Title: Chairman of the Board of Directors Exhibit 10.42 CONSULTING AND NON-COMPETITION AGREEMENTTHIS CONSULTING AND NON-COMPETITION AGREEMENT ("Agreement") is made and enteredinto as of the 1st day of September, 2002 (the "Effective Date"), by and betweenWabash National Corporation, and its subsidiaries and affiliates, (the("Company"), and Charles Ehrlich, an individual ("Consultant"). AGREEMENTSECTION 1. ENGAGEMENT. During the consulting Term (as defined below), theCompany engages Consultant, and Consultant agrees to provide to the Company theServices described in Section 2.SECTION 2. CONSULTING SERVICES.(a) During the period commencing on September 1, 2002 (the "Effective Date") andcontinuing through December 31, 2003, unless terminated earlier pursuant toSection 6 (the "Consulting Term"), Consultant will, at the request of theofficers of the Company provide consulting services to the Company with respectto all aspects of their business affairs, including without limitation, withrespect to manufacturing activities of the Company (collectively, the"Services").(b) Consultant shall provide the Services at such times and at such locations asmay be reasonably requested by the Company;(c) Consultant shall not engage in any activity that would interfere with thetimely and faithful performance of the Services. However Consultant is notprevented from engaging in additional activities in connection with personal orbusiness investments and community affairs that are not inconsistent with and donot interfere with the performance of the Services.(d) Consultant shall devote such time and diligent effort to the Services asrequired to fully discharge his responsibilities and shall perform the Servicesin a competent and professional manner, consistent with generally acceptedstandards of decorum, conduct and sound business practices.(e) Consultant shall retain and exercise full control over the order, sequence,details, manner and means by which he provides the Services. The Company shallnot have the right to control or direct the order, sequence, details, manner ormeans by which Consultant provides the Services except as provided in thisAgreement.SECTION 3. PAYMENT.(a) The Company will pay to Consultant a fixed monthly consulting fee payable bythe last day of the month, or the next following business day, during theConsulting Term as follows: From September 2002 through December 2002, TwentyOne Thousand Two Hundred Forty Three Dollars and Twenty Cents ($21,243.20); fromJanuary 2003 through December 2003, Twenty One Thousand Seven Hundred ThirtyDollars and Five Cents ($21,730.05).(b) COBRA Expenses. The Company shall reimburse Consultant for the amount of anyexpenses paid by Consultant pursuant to Title X of the Consolidated OmnibusBudget Reconciliation Act of 1985, as amended, and attributable to continuanceof coverage under the Company's health and hospitalization plan for the periodcommencing on the Effective Date and ending Eighteen months thereafter.(c) Expenses. Consultant shall be solely responsible for all costs and expensesincurred in connection with the provision of the Services; provided, however,that the Company will reimburse him for reasonable and necessary businessexpenses of Consultant for travel (at the request of the Company) pursuant tothe Company's policy on reimbursement that is applicable to employees of theCompany.(d) Benefits. Consultant will not be entitled to any remuneration for theServices except as specifically set forth in Sections 3(a), 3(b) and 3(c).Consultant will not be entitled to receive any insurance of any kind from orthrough the Company and will not be entitled to participate in any pension,retirement, deferred compensation or other benefit plans, or any other employeebenefits generally provided by the Company to their respective employees. Theforegoing shall not constitute a release by Consultant of the rights, if any, hemay have to participate in any employee benefit plans of the Company as a formeremployee of the Company.(e) Acknowledgment. The parties acknowledge that the compensation provided inthis Agreement was negotiated at arm's-length and represents the fair marketvalue for the Services provided by Consultant hereunder.SECTION 4. INDEPENDENT CONTRACTOR RELATIONSHIP. In performance of the Services,Consultant at all times will act and perform solely as an independent contractorand not an employee of the Company. Notwithstanding any other provision of thisAgreement, this Agreement shall not be deemed to represent or evidence thehiring of Consultant by any party as an employee, nor does it constitute acontract of employment. No acts or assistance given to Consultant by the Companyshall be construed to alter their independent contractor relationship, andnothing contained in this Agreement shall be construed to place the parties in arelationship of partners, joint venturers, principal and agent or franchisor andfranchisee. Consultant will make no representations to third partiesinconsistent with the relationship established by this Agreement. All amountspayable hereunder to Consultant shall be paid without any reduction by theCompany for any taxes, including but not limited to foreign or federal, state orlocal income, employment, self-employment or withholding taxes, it being theintention of the parties that Consultant shall be solely responsible for thepayment of all taxes, fines, penalties or assessments imposed on or related toConsultant's activities pursuant to this Agreement.SECTION 5. RESIGNATIONS; NO LIABILITY.(a) Consultant hereby resigns his positions as an employee and/or officer of theCompany, to the extent applicable, as of 12:01 a.m. on the Effective Date.Consultant agrees to promptly return to the Company any and all property of theCompany in his possession, custody or control, exclusive of his computer desktopand related hardware: all Company files and programs being removed pursuant toCompany policy and licensing agreements.(b) Consultant hereby acknowledges and agrees that he has voluntarily resignedfrom, and terminated his employment with, and his status as an employee and/orofficer of, the Company, except as provided above, and hereby furtheracknowledges and agrees that the Company shall not have any obligations orliabilities of any kind or nature in connection with such resignation andtermination.(c) Consultant hereby acknowledges that, as of the Effective Date, Consultanthas been paid all monies due to him from the Company on account of salary,wages, compensation, commissions, bonuses, vacation, benefits and all otherentitlements in respect of Consultant's services to the Company through andincluding the Effective Date, excluding any amount payable pursuant to theprovisions of this Agreement.SECTION 6. TERMINATION.(a) Termination for Cause. The Company may terminate the engagement ofConsultant pursuant to Section 1 for Cause, which shall mean termination by theCompany for any one or more of the following reasons: (a) any violation of anyof the provisions of Section 7 or Section 8 of this Agreement; or (b) anyrefusal by Consultant to perform his duties reasonably requested by the Company.(b) Resignation by Consultant. Consultant may resign from Consultant'sengagement pursuant to Section 1 at any time by providing at least ninety (90)days' written notice to the Company. The effective date of the resignation shallbe stated in the notice.(c) Termination by Mutual Agreement; Death; Permanent Disability. The engagementof Consultant pursuant to Section 1 may be terminated at any time by mutualagreement of the parties. The engagement of Consultant pursuant to Section 1will automatically terminate if Consultant dies or becomes Permanently Disabledduring the Consulting Term. Consultant shall be deemed to have become"Permanently Disabled" for purposes of this Section 6(c) if Consultant becomesunable to perform the Services for any period of at least six (6) consecutivemonths.(d) Rights and Obligations Upon Termination. Upon any termination of theengagement of Consultant pursuant to Section 1 under the terms of this Section6, the obligations of Consultant to provide the Services, and the obligations ofthe Company to continue to pay Consultant pursuant to Section 3(a), shallterminate immediately upon any such event, and neither party will have anyfurther rights against or owe any further obligations to the other party, exceptfor (i) rights or obligations arising out of a breach of the terms hereof, (ii)rights to the compensation due and payable under Section 3 through the date oftermination of the engagement of Consultant, and (iii) the rights andobligations of the parties under Section 7 and Section 8 of this Agreement.SECTION 7. NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY.The obligations of Consultant pursuant to Sections 7 (a) and 7(b) shall survivethrough December 31, 2003 regardless of termination pursuant to Section 6 ofthis Agreement. All other obligations and duties shall survive any terminationof the engagement of Consultant pursuant to Section 6.(a) Non-Competition. From the Effective date through the term of this Agreement(the "Restricted Period"), Consultant hereby covenants and agrees with theCompany that Consultant shall not, directly or indirectly, for himself or onbehalf of or in conjunction with any individual, company, partnership, limitedliability company, corporation, joint venture, strategic alliance or business orother entity of whatever nature (each, a Person"), engage in the business of, orown, manage, operate, join, control, lend money or other assistance to, orparticipate in or otherwise be connected with (as an individual, officer,director, manager, employee, partner, trustee, proprietor, joint venturer,consultant, member, agent or otherwise), any Person that is, directly orindirectly, (i) involved in the business of designing, manufacturing, marketingand/or financing standard or customized truck trailers (or any relatedservices), (ii) involved in any business which competes at any time during theRestricted Period with any of the respective businesses of the Company, or (iii)involved in any other business in which the Company or any of its Affiliates isengaged as of the Effective Date or at any time during the Restricted Period.Because of the nature of the business of the Company and its Affiliates, thepotential irreparable harm that will occur to the Company as a result ofcompetition by Consultant is not necessarily tied to the physical location orpresence of the Company, Consultant, or any competitor or customer of theCompany. Therefore, the non-competition restrictions set forth in this Section7(a) shall apply to the broadest enforceable geographic area, as follows: anystate, commonwealth or other jurisdiction within Canada or the United States ofAmerica (or any portion thereof).(b) Non-Solicitation. During the Restricted Period, Consultant hereby covenantsand agrees with the Company that Consultant shall not, directly or indirectly(as an individual, officer, director, member, manager, partner, shareholder,employee, trustee, proprietor, joint venturer, consultant, agent or in any othercapacity whatsoever), (i) interfere with the contractual relationship of theCompany with any of the Customers (as defined below) of the Company, (ii)attempt to provide (or solicit to provide) products or services to suchCustomers which are the same as or substantially similar to those products orservices provided by the Company pursuant to the existing contractualarrangements with such Customers, (iii) hire, employ or attempt to hire oremploy any person who is an employee of the Company or any of its Affiliates atany time prior to or during the Restricted Period, or (iv) in any way (a) causeor assist or attempt to cause or assist any person who is an employee of theCompany at any time prior to or during the Restricted Period to leave the employof the Company or (b) directly or indirectly seek to solicit, induce, bringabout, influence, promote, facilitate, or encourage any person who is anemployee of the Company at any time prior to or during the Restricted Period toleave the employ of the Company to join a competitor or otherwise. "Customer" ofthe Company shall mean any Person which, within the twelve (12) month periodimmediately preceding the date in question, used or purchased, or contracted touse or purchase, any products or services of the Company.(c) Confidentiality. Consultant acknowledges that during his affiliation withthe Company, he has been given access to or become acquainted with certainconfidential information relating to the organization, business, properties,operation and condition of the Company, including, but not limited to,financial, managerial, manufacturing, legal and other corporate and businessinformation and records of the Company. (collectively, "ConfidentialInformation"). Confidential Information also includes any information,documents, formulas, patterns, devices, secret inventions, processes,compilations of information, records, specifications, files, documents,drawings, equipment, financial data, customer lists special agreements,marketing information, marketing and/or promotional techniques and methods,pricing information andprocedures, purchasing information and procedures sales policies and procedures,employee lists, store and office policies and procedure manuals, books andpublications, business records, computer records, computer printouts, Company"know how", plans and programs and sources of supplies and inventory, andknowledge with respect to prior or pending litigation and other legal matters,to the extent they relate to the Company, and,Consultant agrees that he will hold the Confidential Information in strictconfidence and will not disclose, publish, sell or license any ConfidentialInformation to any third party, nor use the Confidential Information in anymanner. Consultant also agrees not to disclose to third parties any ofConsultant's work product related to or that becomes part of the ConfidentialInformation, or the fact that any similarity exists between the ConfidentialInformation and information independently developed by another person or entity.The prohibition against Consultant's use of the Confidential Informationincludes, but is not limited to, the exploitation of any products or servicesthat embody or are derived from the Confidential Information and the exercise ofjudgment or the performance of analysis based upon knowledge of the ConfidentialInformation, if otherwise permitted, would be to the benefit of any third party.The prohibition against Consultant's use of Confidential Information alsoincludes the disclosure of any information relating to prior or pendinglitigation and matters pertaining to the Company.Furthermore, Consultant acknowledges the return of all documents containing andConfidential Information, and is not in possession of any files, papers,materials, notes, computer records, or documents, written or electronic, of anykind containing any Confidential Information. Consultant agrees that if, in theevent of any breach of this provision, the Company will suffer immediate andirreparable harm which cannot adequately be measured or calculated in terms ofmonetary damages, and that immediate temporary and permanent injunctive reliefshall be appropriate, in addition to any other legal or equitable remediesavailable under applicable law, and also reasonable expenses, includingattorneys' fees incurred in the enforcement of this provision.Confidential information does not include information that, at the time ofdisclosure is in the public domain or thereafter becomes part of the publicdomain without any act or omission of the Consultant; or, as proven byConsultant, has been acquired from a third party who has not breached afiduciary obligation to Company.(d) Non-Disclosure of Terms. The Parties shall not at any time communicate ordivulge any information regarding the circumstances surrounding this Agreement,or the terms and conditions or amounts payable under this Agreement, to anyother Person; provided, however, that nothing in this Section 7(c)(iv) shallprevent Consultant from sharing with his legal, accounting and financialadvisors on a confidential basis any legal or financial information regardingthis Agreement. However, if the Company determines that this Agreement is deemedto be material and, there fore, subject to disclosure by the Company pursuant tovarious legal requirements, this clause will be deemed void in its entirety andwill not be considered a breach of this Agreement upon the Company filing thisAgreement or otherwise making this agreement public.SECTION 8. NON-DISPARAGEMENT. The Parties agree that they will not make anydisparaging or derogatory remarks or statements about the Company, or theCompany's current and former officers, directors, shareholders, principals,attorneys, agents or employees, or his prior employment with the Company. Theobligations of Consultant pursuantto this Section shall survive termination of the engagement and indefinitelythereafter.SECTION 9. REASONABLENESS OF TERMS. Consultant agrees that the restrictionscontained in Section 7 and in Section 8 are reasonable and necessary to protectthe goodwill, trade secrets, proprietary interests and other legitimate businessinterests of the Company. Each of the covenants set forth in those Sections areseverable and separate. In the event that any court of competent jurisdictionlater determines that any of the restrictions in those Sections are notreasonable and/or are too broad to be enforceable, the parties agree that thecourt may reasonably restrict the scope of those Sections, so long as suchrestriction is no broader than that contained in the applicable covenant.SECTION 10. INJUNCTIVE RELIEF. Consultant agrees that the disclosure of anyConfidential Information would cause irreparable harm to Company'scompetitiveness and further agrees that Company shall be entitled to aninjunction, without the posting of bond, against the disclosure or use ofConfidential Information prohibited by this Agreement. In addition, either Partyshall be entitled to its reasonable attorneys' fees in the enforcing thisAgreement and all damages and other remedies provided by law or in equity, whichshall be cumulative.SECTION 11. ASSIGNMENT OF INTELLECTUAL PROPERTY. Consultant shall assign tothe Company as soon as practicable following the date hereof all of Consultant'sright, title and interest in and to any and all Intellectual Property (asdefined below), including any copyright therein and any copyright renewalthereof, for the United States of America and throughout the world. Consultantagrees to cooperate with the Company and execute any and all necessary documentsrequested to assign the Intellectual Property to the Company and to permit theCompany to file, obtain and enforce any patents, copyrights or other proprietaryrights in the Intellectual Property. Consultant understands that this obligationwill continue indefinitely after termination of this Agreement and will maintainall records necessary to effectuate this paragraph. "Intellectual Property"shall mean all legally-recognized rights, whether statutory or at common law, tothe designs, writings, computer software or firm source code, object code, database structures, inventions, formulas, discoveries, developments, methods,know-how and processes (whether or not patentable or copyrightable orconstituting trade secrets) conceived, made, developed or discovered, byConsultant (whether alone or with others) at any time prior to or duringConsultant's employment with the Company or at any time during the RestrictedPeriod and that relate, directly or indirectly, to the past, present or futurebusiness activities, research, product design or development, personnel andbusiness opportunities, of the Company, or result from tasks assigned toConsultant by the Company or done by Consultant for, or on behalf of, theCompany. Intellectual Property includes, but is not limited to, works ofauthorship, developments, inventions, innovations, designs, discoveries,improvements, trade secrets, applications, techniques, know-how and ideas,whether or not patentable or copyrightable, patents, patent applications,copyrights and applications or registrations therefore, trademarks andapplications or registrations therefore, conceived, created, made, developed orfirst reduced to practice by Consultant (solely or in cooperation with others)in connection with his or her previous employment with the Company or inconnection with the performance of the Services or which derive from informationor materials Consultant has received from the Company. Consultant agrees thatany Intellectual Property which constitutes a work of authorship that iscopyrightable shall constitute a "work for hire" as defined in the 17 U.S.C.ss.101 et seq., andshall be the property of the Company. Intellectual Property shall not includeany of the forgoing that Consultant authors independent of the Company and/orindependent of this Agreement and subsequent to December 31, 2003.SECTION 12. TAXES AND COMPLIANCE WITH LAWS. Consultant shall be solelyresponsible for compliance with all state, local and federal laws, orders, codesand ordinances applicable to the performance of Consultant's obligations underthis Agreement or the compensation paid to Consultant pursuant to thisAgreement. Consultant shall indemnify, defend and hold harmless the Company, andeach of their respective officers, directors, representatives, agents andemployees, from and against any and all liabilities which the Company may incuras a result of any failure by Consultant to pay any local, state or federalincome, employment, self-employment or withholding tax, including withoutlimitation any failure to timely pay any estimated tax.SECTION 13. NONASSIGNABILITY, BINDING AGREEMENT.(a) By Consultant. Consultant shall not assign or delegate this Agreement or anyright or interest under this Agreement without the Company's prior writtenconsent.(b) By the Company. The Company may assign, delegate, or transfer this Agreementand all of the Company's rights and obligations under this Agreement to any ofits affiliates or to any business entity that by merger, consolidation orotherwise acquires all or substantially all of the assets of the Company or towhich the Company transfers all or substantially all of its assets. Uponassignment, delegation, or transfer to any business entity, such entity shall bedeemed to be substituted for the Company for all purposes of this Agreement.(c) Binding Effect. Subject to Sections 13(a) and (b), this Agreement shall bebinding upon and inure to the benefit of the parties, any successors to orassigns of the Company, Consultant's heirs and the personal representatives orexecutor of his estate.SECTION 14. SEVERABILITY. If a court of competent jurisdiction makes a finaldetermination that any term or provision of this Agreement is invalid orunenforceable, the remaining terms and provisions shall be unimpaired and theinvalid or unenforceable term or provision shall be deemed replaced by a term orprovision that is valid and enforceable and that most closely approximates theintention of the parties with respect to the invalid or unenforceable term orprovision, as evidenced by the remaining valid and enforceable terms andconditions of this Agreement.SECTION 15. AMENDMENT. This Agreement may not be modified, amended or waived inany manner except by an instrument in writing signed by both parties to thisAgreement.SECTION 16. WAIVER. The waiver by either party of compliance by the other partywith any provision of this Agreement shall not operate or be construed as awaiver of any other provision of this Agreement (whether or not similar), or acontinuing waiver or a waiver of any subsequent breach by a party of a provisionof this Agreement. Performance by either of the parties of any act not requiredof it under the terms and conditions of this Agreement shall not constitute awaiver of the limitations on its obligations under this Agreement, and noperformance shall estop that party from asserting those limitations as to anyfurther or future performance of itsobligations.SECTION 17. GOVERNING LAW AND JURISDICTION. This Agreement shall be governedby the laws of the state of Indiana, without regard to rules as to choice of lawand courts sitting in Tippecanoe County, Indiana shall have jurisdiction andvenue of all disputes arising under this Agreement.SECTION 18. NOTICES. Any notice or other communication required shall be inwriting and sent by U.S. Certified Mail addressed, return receipt requested, orto such other addresses as each party shall specify in writing.If to Wabash: If to Consultant:Wabash National LP Charles EhrlichP.O. Box 6129 Lafayette, IN 47903 ------------------------------------Attention: Chief Legal Officer ------------------------------------SECTION 19. EXPENSES. Each of the parties shall bear all of his or its ownexpenses, in connection with the negotiation, preparation and enforcement ofthis Agreement; provided, that, in the event a proceeding is brought by eitherparty to enforce the terms or provisions of this Agreement, the prevailing partyshall be entitled to reimbursement of all expenses, including reasonableattorneys' fees and other out-of-pocket expenses.SECTION 20. PRIOR AGREEMENTS. This Agreement contains the entire agreementbetween the parties with respect to the subject matter hereof and supercedes anyand all prior oral or written agreements or handbooks.SECTION 21. HEADINGS. The headings of the Sections of this Agreement areinserted for convenience only and shall not be deemed to constitute part of thisAgreement or to affect the construction of this Agreement.SECTION 22. REMEDIES. All remedies specified in this Agreement shall becumulative and not exclusive of any other rights or remedies, and either partymay pursue all rights and remedies available at law or in equity for a breach ofthis Agreement.IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of theEffective Date."COMPANY" "CONSULTANT"WABASH NATIONAL CORPORATION CHARLES EHRLICHBy: /s/ CYNTHIA KRETZ /s/ CHARLES EHRLICH------------------------------------------------ --------------------------Name: Cynthia Kretz------------------------------------------------ Title: General Counsel and Corporate Secretary------------------------------------------------ EXHIBIT 10.43 WABASH NATIONAL CORPORATION EXECUTIVE RESTRICTED STOCK AGREEMENT Wabash National Corporation, a Delaware corporation (the "Company"),hereby grants shares of its common stock, $.01 par value, (the "Stock") to theGrantee named below, subject to the vesting conditions set forth in theattachment.Grant Date: May 6, 2002Name of Grantee: William P. GreubelGrantee's Social Security Number: _____-____-_____Number of Shares of Stock Covered by Grant: _________Purchase Price per Share of Stock: $.01 BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS ANDCONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT.Grantee: ------------------------------------------------------------------------ (Signature)Company: ------------------------------------------------------------------------ (Signature) Title: ------------------------------------------------------------------Attachment This is not a stock certificate or a negotiable instrument. WABASH NATIONAL CORPORATION EXECUTIVE RESTRICTED STOCK AGREEMENTRESTRICTED STOCK/ This grant is an award of Stock in the numberNONTRANSFERABILITY of shares set forth on the cover sheet, at the purchase price set forth on the cover sheet, and subject to the vesting conditions described below ("Restricted Stock"). You agree to pay the purchase price for the Restricted Stock concurrent with your execution of this agreement. To the extent not yet vested, your Restricted Stock may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Restricted Stock be made subject to execution, attachment or similar process.ISSUANCE AND VESTING The Company will issue your Restricted Stock in your name as of the Grant Date. This Restricted Stock grant vests as to 100% of the total number of shares covered by this grant on the first to occur of: (i) your termination by the Company without cause or for good reason within 180 days following a change of control pursuant to Section 5.4 of your employment agreement with the Company dated April 12, 2002 (the "Employment Agreement"), or (ii) March 31, 2005. Notwithstanding anything to the contrary contained in this Agreement or the Employment Agreement, this Restricted Stock grant is not subject to forfeiture on a termination of your employment with the Company for any reason.FORFEITURE AND REPURCHASE FOR If and to the extent that (i) you realizeUNVESTED STOCK value from the 150 shares of common stock of Accuride Corporation which you own on the date of grant of the Restricted Stock (the "Accuride Shares"), whether such shares are redeemed by Accuride, exchanged for cash, notes and/or publicly traded securities or otherwise, or (ii) Accuride Corporation securities become publicly traded, prior to March 31, 2005, you will forfeit and return to the Company a percentage of unvested shares of Restricted Stock equal to (A) the percentage of $262,500 realized by you, or (B) the percentage the fair market value of the Accuride Corporation common stock is, if it has become publicly traded, of $262,500. The Company will repay the amount that you paid for those shares of Stock, if any, which amount shall be paid in cash.ESCROW The certificates for the Restricted Stock shall be deposited in escrow with the Secretary of the Company to be held in accordance with the provisions of this paragraph. Each deposited certificate shall be accompanied by a duly executed 2 Assignment Separate from Certificate in the form attached hereto as Exhibit A. The deposited certificates shall remain in escrow until such time or times as the certificates are to be released or otherwise surrendered for cancellation as discussed below. Upon delivery of the certificates to the Company, you shall be issued an instrument of deposit acknowledging the number of shares of Stock delivered in escrow to the Secretary of the Company. All regular cash dividends on the Stock (or other securities at the time held in escrow) shall be paid directly to you and shall not be held in escrow. However, in the event of any stock dividend, stock split, recapitalization or other change affecting the Company's outstanding common stock as a class effected without receipt of consideration or in the event of a stock split, a stock dividend or a similar change in the Company Stock, any new, substituted or additional securities or other property which is by reason of such transaction distributed with respect to the Stock shall be immediately delivered to the Secretary of the Company to be held in escrow hereunder, but only to the extent the Stock is at the time subject to the escrow requirements hereof. The shares of Stock held in escrow hereunder shall be subject to the following terms and conditions relating to their release from escrow or their surrender to the Company for repurchase and cancellation: o As your interest in the shares vests as described above, the certificates for such vested shares shall be released from escrow and delivered to you, at your request. o Should the Company exercise its Repurchase Right with respect to any unvested shares held at the time in escrow hereunder, then the escrowed certificates for such unvested shares shall, concurrently with the payment of the purchase price for such shares of Stock, be surrendered to the Company for cancellation, and you shall have no further rights with respect to such shares of Stock. o Should the Company elect not to exercise its Repurchase Right with respect to any shares held at the time in escrow hereunder, then the escrowed certificates for such shares shall be surrendered to you.WITHHOLDING TAXES You agree, as a condition of this grant, that you will make acceptable arrangements to pay any withholding or other taxes 3 that may be due as a result of the vesting of Stock acquired under this grant. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the vesting of shares arising from this grant, the Company shall have the right to require such payments from you, or withhold such amounts from other payments due to you from the Company.SECTION 83(b) Under Section 83 of the Internal Revenue CodeELECTION of 1986, as amended (the "Code"), the difference between the purchase price paid for the shares of Stock and their fair market value on the date any forfeiture restrictions applicable to such shares lapse will be reportable as ordinary income at that time. For this purpose, "forfeiture restrictions" include the Company's Repurchase Right as to unvested Stock described above. You may elect to be taxed at the time the shares are acquired rather than when such shares cease to be subject to such forfeiture restrictions by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days after the Grant Date. You will have to make a tax payment to the extent the purchase price is less than the fair market value of the shares on the Grant Date. No tax payment will have to be made to the extent the purchase price is at least equal to the fair market value of the shares on the Grant Date. The form for making this election is attached as Exhibit B hereto. Failure to make this filing within the thirty (30) day period will result in the recognition of ordinary income by you (in the event the fair market value of the shares increases after the date of purchase) as the forfeiture restrictions lapse. YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE ANY 83(b) ELECTION.SHAREHOLDER RIGHTS You have the right to vote the Restricted Stock and to receive any dividends declared or paid on such stock. Any distributions you receive as a result of any stock split, stock dividend, combination of shares or other similar transaction shall be deemed to be a part of the Restricted Stock and subject to the same conditions and restrictions applicable thereto. The Company may in its sole discretion require any dividends paid 4 on the Restricted Stock to be reinvested in shares of Stock, which the Company may in its sole discretion deem to be a part of the shares of Restricted Stock and subject to the same conditions and restrictions applicable thereto. No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued.ADJUSTMENTS In the event of a stock split, a stock dividend or a similar change in the Company stock, the number of shares covered by this grant shall be adjusted (and rounded down to the nearest whole number). Your Restricted Stock shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.LEGENDS All certificates representing the Stock issued in connection with this grant shall, where applicable, have endorsed thereon the following legends: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE."APPLICABLE LAW This Agreement will be interpreted and enforced under the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. 5 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, _____________hereby sells, assigns and transfers untoWabash National Corporation, a Delaware corporation (the "Company"),____________(__________) shares of common stock of the Company represented byCertificate No. ___ herewith and does hereby irrevocable constitute and appoint______________ Attorney to transfer the said stock on the books of the Companywith full power of substitution in the premises. Dated:____________, 2002 ------------------------------------------ Print Name ------------------------------------------ Signature Spouse Consent (if applicable) ___________________ (Purchaser's spouse) indicates by the execution of thisAssignment his or her consent to be bound by the terms herein as to his or herinterests, whether as community property or otherwise, if any, in the shares ofcommon stock of the Company. ------------------------------------------ SignatureINSTRUCTIONS: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE.THE PURPOSE OF THIS ASSIGNMENT IS TO ENABLE THE COMPANY TO EXERCISE ITS"REPURCHASE OPTION" SET FORTH IN THE AGREEMENT WITHOUT REQUIRING ADDITIONALSIGNATURES ON THE PART OF PURCHASER. EXHIBIT B ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE The undersigned hereby makes an election pursuant to Section 83(b) ofthe Internal Revenue Code with respect to the property described below andsupplies the following information in accordance with the regulationspromulgated thereunder: 1. The name, address and social security number of the undersigned: Name: --------------------------------------------------------------- Address: ------------------------------------------------------------ -------------------------------------------------------------------- Social Security No.: ------------------------------------------------ 2. Description of property with respect to which the election is being made: _________ shares of common stock, par value $.01 per share, Wabash National Corporation, a Delaware corporation, (the "Company"). 3. The date on which the property was transferred is ________ __, 2002. 4. The taxable year to which this election relates is calendar year 2002. 5. Nature of restrictions to which the property is subject: The shares of stock are subject to the provisions of a Restricted Stock Agreement between the undersigned and the Company. The shares of stock are subject to forfeiture under the terms of the Agreement. 6. The fair market value of the property at the time of transfer(determined without regard to any lapse restriction) was $__________ per share,for a total of $__________. 7. The amount paid by taxpayer for the property was $__________. 8. A copy of this statement has been furnished to the Company.Dated: _____________, 2002 --------------------------- Taxpayer's Signature --------------------------- Taxpayer's Printed Name PROCEDURES FOR MAKING ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(b) The following procedures MUST be followed with respect to the attachedform for making an election under Internal Revenue Code section 83(b) in orderfor the election to be effective: 1. You must file one copy of the completed election form with the IRSService Center where you file your federal income tax returns within 30 daysafter the Grant Date of your Restricted Stock. 2. At the same time you file the election form with the IRS, you mustalso give a copy of the election form to the Secretary of the Company. 3. YOU MUST FILE ANOTHER COPY OF THE ELECTION FORM WITH YOUR FEDERALINCOME TAX RETURN (GENERALLY, FORM 1040) FOR THE TAXABLE YEAR IN WHICH THE STOCKIS TRANSFERRED TO YOU. EXHIBIT 10.44-------------------------------------------------------------------------------- THIRD MASTER AMENDMENT AGREEMENT dated as of April 11, 2003 among APEX TRAILER LEASING & RENTALS, L.P., as Lessee WABASH NATIONAL CORPORATION, as Guarantor WABASH STATUTORY TRUST -- 2000, as Lessor U.S. BANK NATIONAL ASSOCIATION (as successor to the corporate trust business of State Street Bank and Trust Company), not in its individual capacity except as provided herein, but solely as Trustee THE INSTITUTIONS INDICATED IN SCHEDULE I, as Tranche A Lenders FLEET CAPITAL CORPORATION, as Tranche B Lender FLEET CAPITAL CORPORATION, as Owner Participant FLEET CAPITAL CORPORATION, as Collateral Agent and FLEET CAPITAL CORPORATION, as Administrative Agent-------------------------------------------------------------------------------- TABLE OF CONTENTS PAGE ARTICLE I DEFINITIONS; CONSENT.......................................................................2 SECTION 1.1 Use of Defined Terms..............................................................2 SECTION 1.2 Consent...........................................................................2ARTICLE II AMENDMENTS.................................................................................2 SECTION 2.1 Amendments to the Participation Agreement.........................................2 (a) Amendment to Section 6.1(e)(vii)......................................................2 (b) Amendment to Section 6.1(e)(viii).....................................................2 (c) Amendment to Section 6.1..............................................................3 (d) Amendment to Section 10.1.............................................................3 (e) Amendment to Financial Covenants......................................................3 (f) Amendment to Exhibit A................................................................3 SECTION 2.2 Amendments to Appendix A to the Participation Agreement...........................4 SECTION 2.3 Amendments to the Lease...........................................................4 (a) Amendment to Section 17.1.............................................................4ARTICLE III CONDITIONS TO EFFECTIVENESS................................................................4 SECTION 3.1 Conditions Precedent..............................................................4 (a) Closing Proceedings...................................................................4 (b) Amendments to Credit Agreement and Note Purchase Agreements...........................4 (c) Fees, Costs and Expenses..............................................................4 (d) Representations and Warranties........................................................5 (e) Fees and Expenses.....................................................................5ARTICLE IV MISCELLANEOUS PROVISIONS...................................................................5 SECTION 4.1 Waiver............................................................................5 SECTION 4.2 Ratification of and References to the Operative Documents.........................5 SECTION 4.3 Headings, Etc.....................................................................5 SECTION 4.4 Counterparts......................................................................5 SECTION 4.5 Governing Law; Entire Agreement...................................................5 SECTION 4.6 Instructions to the Trustee.......................................................6 -i- TABLE OF CONTENTS (continued) SCHEDULE I Institutions Participating as Tranche A LendersSCHEDULE II Financial CovenantsSCHEDULE III DefinitionsSCHEDULE IV Fee ScheduleEXHIBIT A Compliance Certificate -ii- THIRD MASTER AMENDMENT AGREEMENT THIS THIRD MASTER AMENDMENT AGREEMENT (this "Amendment"), dated as ofApril 11, 2003, to the Amended and Restated Participation Agreement (the"Participation Agreement"), dated as of March 30, 2001, and the Amended andRestated Equipment Lease (the "Lease"), dated as of March 30, 2001, is enteredinto by and among APEX TRAILER LEASING & RENTALS, L.P., a Delaware limitedpartnership, as the Lessee (in such capacity, together with its permittedsuccessors, the "Lessee"); WABASH NATIONAL CORPORATION, a Delaware corporation,as guarantor (the "Guarantor"); WABASH STATUTORY TRUST - 2000, a Connecticutstatutory trust, as Lessor (together with its permitted successors and assigns,the "Lessor"); U.S. BANK NATIONAL ASSOCIATION (as successor to the corporatetrust business of State Street Bank and Trust Company), not in its individualcapacity, except as set forth herein, but solely as Trustee (the "Trustee" andin its individual capacity, the "Trust Company"); the Institutions indicated inSchedule I as "Tranche A Lenders" (each, together with its permitted successorsand assigns, a "Tranche A Lender," and together with the other Tranche ALenders, the "Tranche A Lenders"), FLEET CAPITAL CORPORATION, a Rhode Islandcorporation ("Fleet Capital"), as the Tranche B Lender (in such capacity,together with its permitted successors and assigns, the "Tranche B Lender", andtogether with the Tranche A Lenders, the "Lenders"); FLEET CAPITAL, as the OwnerParticipant (in such capacity, together with its permitted successors andpermitted assigns, the "Owner Participant", and together with the Lenders, the"Participants"); FLEET CAPITAL, as administrative agent for the Lenders (in suchcapacity, together with its permitted successors and assigns, the"Administrative Agent"); and FLEET CAPITAL, as collateral agent for the Lenders(in such capacity, together with its permitted successors and assigns, the"Collateral Agent"). W I T N E S S E T H: WHEREAS, the Lessee, the Lessor, the Guarantor, the Trustee, theLenders, the Owner Participant, the Administrative Agent, and the CollateralAgent have heretofore entered into a certain Participation Agreement dated March30, 2001; WHEREAS, the Lessee, the Lessor, the Guarantor, the Trustee, theLenders, the Owner Participant, the Administrative Agent, and the CollateralAgent have heretofore entered into a Master Amendment Agreement, dated as ofApril 11, 2002, to the Participation Agreement; WHEREAS, the Lessee, the Lessor, the Guarantor, the Trustee, theLenders, the Owner Participant, the Administrative Agent, and the CollateralAgent have heretofore entered into a Second Master Amendment Agreement, dated asof December 13, 2002, to the Participation Agreement; WHEREAS, the Lessee and the Lessor have heretofore entered into acertain Lease dated as of March 30, 2001; WHEREAS, the Lessee, the Lessor, the Guarantor, the Trustee, theLenders, the Owner Participant, the Administrative Agent, and the CollateralAgent now desire to amend the Participation Agreement; WHEREAS, the Lessee and the Lessor now desire to amend the Lease; NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I DEFINITIONS; CONSENT SECTION 1.1 Use of Defined Terms. Capitalized terms used but nototherwise defined in this Amendment have the respective meanings specified inAppendix A to the Participation Agreement; and the rules of interpretation setforth in Appendix A to the Participation Agreement shall apply to thisAmendment. SECTION 1.2 Consent. Subject to the conditions precedent set forth inArticle III below, the Participants, the Collateral Agent and the AdministrativeAgent grant their consent to certain transactions as follows: (a) In connection with the amendments specified in Article II below,the Guarantor has informed the Participants, the Collateral Agent and theAdministrative Agent of its intention to amend the Note Purchase Agreements andthe Credit Agreement, in each case in a manner similar to the amendmentshereunder. At the Guarantor's request, the Participants, the Collateral Agentand the Administrative Agent consent to such amendments. ARTICLE II AMENDMENTS SECTION 2.1 Amendments to the Participation Agreement. (a) Amendment to Section 6.1(e)(vii). Section 6.1(e)(vii) of theParticipation Agreement is hereby amended and restated to read as follows: (vii) as soon as available, and in any event within (30) daysafter the last day of each calendar month, (x) a copy of all informationrelating to the Equipment subject to the Lease; (y) a copy of one or morespreadsheets of the Lessee, including the Lessee's master equipment spreadsheet(the "Equipment Spreadsheets") indicating, among other things, net book value,appraisal value (where available), rental status, location and the status, saleor other disposition relating to all trailers owned, leased or otherwisecontrolled by the Lessee for such month and (z) a statement setting forth theaccount receivables aging for the previous month of the Lessee. (b) Amendment to 6.1(e)(viii). Section 6.1(e)(viii) is hereby amendedand restated to read as follows: (viii) in the course of each calendar month, all informationconcerning the business or financial condition of the Guarantor as is providedto (and at the same time as is provided) to the Bank Group, the ReceivablesGroup, and the Master Equipment Lease parties or any of the Noteholders,including without limitation, and by no later than fifteen (15) days after theend of each monthly accounting period of the Guarantor, the following (preparedin such format and detail as is required by the Administrative Agent): (1) astatement of projected cash sources and uses of the Guarantor and itsSubsidiaries for the 13 calendar weeks following such end and a report (to theextent requested by the Administrative Agent from time to time) 2containing management's discussion and analysis of such projections and (2) astatement of cash sources and uses for the immediately preceding monthlyaccounting period of the Guarantor and for such historical period as isreasonably required by the Administrative Agent, in comparative form against thefigures and for the corresponding date and period in the projected cash flowstatements required under the foregoing subsection (1); the foregoing statementsrequired under subsections (1) and (2) being duly certified by the chieffinancial officer or treasurer of the Guarantor. (c) Amendment to Section 6.1. Section 6.1 is amended to add newsubsections (n) and (o) which shall read as follows: (n) Deliver Refinancing Commitment Letter. The Lessee and theGuarantor shall deliver, by no later than January 31, 2004, a commitment letteror letters (in form and substance satisfactory to the Participants) to refinancethe Obligations. (o) Deliver Business Plan. The Guarantor shall deliver, by nolater than June 30, 2003, a business plan with respect to the Lessee detailingthe Guarantor's operational plans and financial projections for the Lessee forthe immediately following 24 months in a form satisfactory to the Participants. (d) Amendment to Section 10.1. Section 10.1 is amended to add a newsubsections (c) and (d) which shall read as follows: (c) The Guarantor acknowledges that it is required to paycertain closing fees (excluding in any event reimbursement for out of pocketcosts and expenses) to the Participants, the Collateral Agent and theAdministrative Agent in connection with, and as required by, the this Amendmentand comparable amendments to the Note Purchase Agreements and the CreditAgreement (the "Third Amendment Closing Fees"), including the following: (i)closing date fees, payable to the Noteholders, the Receivables Group, theLenders and the Participants on the date and in the manner set forth below,calculated based on outstandings as of the Third Amendment Effective Date as setforth on Schedule IV hereto (the "Closing Date Fees"). The Closing Date Fees arepayable as follows: (a) on the Third Amendment Effective Date, fees not toexceed $2,000,000 allocated on a pro rata basis among the Noteholders, theReceivables Group, the Lenders and the Participants and (b) any amount of theClosing Date Fees which exceed $2,000,000 may at the Guarantor's election bedeferred (the "Deferred Fee Amount") and shall be paid to the Noteholders, theReceivables Group, the Lenders and the Participants pro rata and on anequivalent basis as to timing, and shall accrue at a rate per annum equal to thesum of (A) the rate of interest applicable to Base Rate Loan(s)/EquityInvestments(s) plus (B) (i) 2.00% from the Third Amendment Effective Date untilthe date such Deferred Fee Amount has been reduced to $0 plus (ii) 1.00% fromthe date such Deferred Fee Amount has been reduced to $0 until January 15, 2004. (d) The Guarantor agrees to pay an additional fee (the"Additional Fee"), as set forth below, for each and every calendar month inwhich the Lessee does not have: (i) a 65% minimum utilization for each of (a)all the trailers owned, leased or otherwise controlled by the Lessee, includingthe Equipment and (b) for all Units of Equipment (as reflected in the EquipmentSpreadsheet for such month, the "Minimum Utilization Requirement") and (ii) atwo hundred dollar ($200.00) minimum average revenue for each of (a) all thetrailers owned, leased or otherwise controlled by the Lessee, including theEquipment and (b) for all Units of 3Equipment (as reflected in the Equipment Spreadsheet for such month, the"Minimum Average Revenue Requirement"). The Additional Fee is an amount, whichis payable in the aggregate on January 15, 2004, and which shall be calculatedas follows: with respect to each calendar month in which the Minimum AverageUtilization Requirement or the Minimum Average Revenue Requirement are not metby the Lessee (as reflected in the applicable Equipment Spreadsheet) at a rateof 0.20% of the Participant Balance outstanding on the last day of such calendarmonth. Each calculation of the Additional Fee will be determined without givingeffect to, and shall not be additive of, the Additional Fee in any previousmonth. (e) The Guarantor agrees to pay to the Participants on January15, 2004, a Lease amendment fee (the "Lease Amendment Fee") in an amount equalto .25% of the Participant Balance outstanding on January 15, 2004. (e) Amendment to Financial Covenants. The financial covenants in theParticipation Agreement are amended in their entirety and replaced with thefinancial covenants in Schedule II hereto. (f) Amendment to Exhibit A. Exhibit A, referred to in Section6.1(e)(vi), is hereby replaced in its entirety with the Exhibit A (ComplianceCertificate) attached hereto. SECTION 2.2 Amendments to Appendix A to the Participation Agreement. Appendix A to the Participation Agreement is amended by addingor amending the definitions of "Additional Fee", "Applicable Margin", "ClosingDate Fees", "Consolidated EBITDA", "Consolidated Equity", "Deferred Fee Amount","Eligible Asset Disposition Charges", "Eligible Asset Impairment Charges","Eligible Miscellaneous Non-Cash Charges", "Eligible Restructuring Charges","Equipment Spreadsheets", "Lease Amendment Fee", "Minimum Average RevenueRequirement", "Minimum Utilization Requirement", "Note Purchase Agreement","Targeted Consolidated EBITDA Amount", "Third Amendment", "Third AmendmentClosing Fees", "Third Amendment Effective Date" and "Unadjusted ConsolidatedEBITDA" as described in Schedule III hereto. SECTION 2.3 Amendments to the Lease. (a) Amendment to Section 17.1(b). Section 17.1(b) is hereby replaced inits entirety to read as follows: (b) For purposes of this Section 17.1, "Early TerminationPayment" means an amount equal to (i) for each Unit or Units of Equipment, asthe case may be, computed as of the Early Termination Date, the greater of netbook value of each such Unit or Units and the sale proceeds from the sale ofeach such Unit or Units, plus (ii) all Basic Rent then due and owing withrespect to each such Unit or all Units of Equipment, as the case may be, plus(iii) all other Rent due for each such Unit or all Units of Equipment, as thecase may be, on the Early Termination Date, plus (iv) all accrued and unpaidRent owing for periods prior to the Early Termination Date, plus (v) any BreakCosts associated with such early termination. 4 ARTICLE III CONDITIONS TO EFFECTIVENESS SECTION 3.1 Conditions Precedent. The effectiveness of this Amendmentis subject to the following conditions precedent: (a) Closing Proceedings. All proceedings taken in connection with thisAmendment and all documents and instruments to be delivered thereon or relatingthereto shall be reasonably satisfactory to each of the Participants and itscounsel, and each of the Participants and its counsel shall have received copiesof such documents as each of the Participants or its counsel may reasonablyrequest in connection therewith, all in form and substance reasonablysatisfactory to each of the Participants and its counsel. (b) Amendments to Credit Agreement and Note Purchase Agreements. Theamendments to the Credit Agreement and Note Purchase Agreements, providing forcovenants of the Guarantor no more restrictive than the covenants set forthherein and entered into by the Guarantor, the Bank Group and the Noteholders,shall have been duly executed and delivered by the parties thereto and suchamendments shall be in full force and effect and no default shall exist in theperformance by any party of any of its obligations under such agreements. (c) Fees, Costs and Expenses. The Lessee shall have paid to theParticipants all fees, costs and expenses due under the Operative Documents,including, but not limited to, the Closing Date Fees payable to the Participantsin an aggregate amount equal to 0.375% of aggregate Participant Balancecalculated in accordance with Section 2.1(d) above. (d) Representations and Warranties. The Lessee and the Guarantor herebyrepresent and warrant that (i) this Amendment and the Participation Agreement asamended hereby constitute legal, valid and binding obligations of each of theLessee and the Guarantor and are enforceable against each of the Lessor and theGuarantor in accordance with their terms; and (ii) the representations andwarranties of the Lessee and the Guarantor set forth in the Operative Documents(or in certificates delivered pursuant thereto) executed by any thereof shall betrue and correct in all respects as though made on and as of such date, exceptto the extent such representations or warranties relate solely to an earlierdate, in which case such representations and warranties shall have been true andcorrect in all respects on and as of such earlier date. (e) Fees and Expenses. The Lessee shall have paid all the reasonablefees, costs and expenses incurred by Mayer, Brown, Rowe & Maw, as counsel to theParticipants, the Collateral Agent and the Administrative Agent hereunder, inconnection with the execution and delivery of this Amendment. ARTICLE IV MISCELLANEOUS PROVISIONS SECTION 4.1 Waiver. The execution, delivery and effectiveness of thisAmendment shall not, except as expressly provided herein, operate as a waiver ofany right, power or remedy of the Participants, the Collateral Agent or theAdministrative Agent, nor constitute a waiver of any provision of theParticipation Agreement or any other documents, instruments and agreementsexecuted and/or delivered in connection therewith. 5 SECTION 4.2 Ratification of and References to the Operative Documents.This Amendment shall be deemed to be an amendment to the Participation Agreementand as such agreement is amended hereby, is hereby ratified, approved andconfirmed in each and every respect. All references to any such OperativeDocument in any other document, instrument, agreement or writing shall hereafterbe deemed to refer to such Operative Document as amended hereby. SECTION 4.3 Headings, Etc. The Table of Contents and headings of thevarious Articles, Sections and clauses of this Amendment are for convenience ofreference only and shall not modify, define, expand or limit any of the terms orprovisions hereof. SECTION 4.4 Counterparts. This Amendment may be executed by the partieshereto in separate counterparts, each of which when so executed and deliveredshall be deemed to be an original, but all such counterparts shall togetherconstitute but one and the same instrument. SECTION 4.5 Governing Law; Entire Agreement. THIS AMENDMENT AND EACHOTHER OPERATIVE DOCUMENT EXECUTED IN CONNECTION HEREWITH SHALL EACH BE DEEMED TOBE A CONTRACT MADE UNDER AND GOVERNED BY THE LAW OF THE COMMONWEALTH OFMASSACHUSETTS (EXCLUDING ANY CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHTLEAD TO THE APPLICATION OF THE INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TOALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Amendment and theother Operative Documents constitute the entire understanding among the partieshereto with respect to the subject matter hereof and supersede any prioragreements, written or oral, with respect thereto. SECTION 4.6 Instructions to the Trustee. The undersigned Participants,Collateral Agent and Administrative Agent hereby authorize and direct theTrustee to enter into, execute and deliver this Amendment and perform all of theobligations of the Trustee and Lessor hereunder. 6 IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT to beexecuted by their respective officers thereunto duly authorized as of the dateand year first above written. APEX TRAILER LEASING & RENTALS, L.P., as Lessee By: Wabash National Corporation, General Partner By:_______________________________________ Name: Title: WABASH NATIONAL CORPORATION, as Guarantor By:________________________________________________ Name: Title: WABASH STATUTORY TRUST -- 2000 By: U.S. BANK NATIONAL ASSOCIATION (as successor to the corporate trust business of State Street Bank and Trust Company), not in its individual capacity but solely in its capacity as Trustee By:________________________________________________ Name: Title: U.S. BANK NATIONAL ASSOCIATION (as successor to the corporate trust business of State Street Bank and Trust Company), not in its individual capacity, except as provided herein, but solely as Trustee By:________________________________________________ Name: Title: U.S. BANK, NATIONAL ASSOCIATION (formerly known as FIRSTAR BANK, N.A.) as Tranche A Lender By:________________________________________________ Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION, as Tranche A Lender By:________________________________________________ Name: Title: NATIONAL CITY BANK OF INDIANA, as Tranche A Lender By:________________________________________________ Name: Title: FLEET CAPITAL CORPORATION, as Tranche B Lender By:________________________________________________ Name: Title: FLEET CAPITAL CORPORATION, as Owner Participant By:________________________________________________ Name: Title: FLEET CAPITAL CORPORATION, as Administrative Agent By:________________________________________________ Name: Title: FLEET CAPITAL CORPORATION, as Collateral Agent By:________________________________________________ Name: Title: SCHEDULE I TO THIRD MASTER AMENDMENT AGREEMENT INSTITUTIONS PARTICIPATING AS TRANCHE A LENDERSTRANCHE A LENDERS:U.S. Bank, National Association(formerly known as Firstar Bank, N.A.)7th & Washington, 7th FloorSt. Louis, MO 63101Attention: Alan R. Milster Vice PresidentPhone: (314) 418-2468Fax: (314) 418-2135Email: alan.r.milster@usbank.comNational City Bank of IndianaOne National City CenterSuite 200EIndianapolis, IN 46255Attention: Lex CurryPhone: (317) 267-3668Fax: (317) 267-8899Email: lex.curry@national-city.comGeneral Electrical Capital-Capital Funding Inc.301 Merritt 7Suite 23Norwalk, CT 06851Attention: Howard NorowitzPhone: (203) 229-1821Fax: (203) 229-1922Email: howard.norowitz@ge.comAttention: Ben FaustiniPhone: (203) 229-1836Fax: (203) 229-1922Email: sebastian.faustini@ge.com I-i SCHEDULE II TO THIRD MASTER AMENDMENT AGREEMENT FINANCIAL COVENANTSFor purposes of this Schedule II to the Third Master Amendment Agreement,capitalized terms used herein and not otherwise defined shall have (a) themeanings set forth in Schedule III, or (b) to the extent such term is notdefined in such Schedule III, the meanings set forth in Appendix A to theParticipation Agreement.Financial Covenants. The Lessee or the Guarantor, as the case may be, shallcomply with the following: 1. Minimum Consolidated Equity. The Guarantor shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated Equity at an amount not less than the applicable "Minimum Consolidated Equity" specified below:Fiscal Quarter Ending Minimum Consolidated--------------------- -------------------- Equity ------ March 31, 2003 $40,000,000June 30, 2003 $35,000,000September 30, 2003 $30,000,000December 31, 2003 $25,000,000 2. Maximum Leverage Valuation Ratio. The Guarantor shall not permit, as of the last day of each of the fiscal quarters specified below, the Leverage Valuation Ratio to exceed the applicable "Maximum Leverage Valuation Ratio" specified below:Fiscal Quarter Ending Maximum Leverage Valuation--------------------- -------------------------- Ratio ----- March 31, 2003 0.95 to 1June 30, 2003 0.95 to 1September 30, 2003 0.95 to 1December 31, 2003 0.95 to 1 II-i 3. Minimum Consolidated EBITDA. The Guarantor shall, as of the last day of the calendar months specified below, maintain Consolidated EBITDA at an amount not less than the applicable "Minimum Cumulative Consolidated EBITDA" specified below for the period commencing on January 1, 2003 and ending on such last day:Month Ending Minimum Rolling 12 Month------------ ------------------------ Consolidated EBITDA ------------------- March 31, 2003 $0June 30, 2003 $5,000,000September 30, 2003 $15,000,000December 31, 2003 $20,000,000 4. Maximum Capital Expenditures. The Guarantor will not, and will not permit any Subsidiary to, expend for Capital Expenditures during any fiscal year of the Guarantor or its Subsidiaries, in excess of $4,000,000 in the aggregate for the Guarantor and its Subsidiaries. 5. Maximum Finance Contracts. The Lessee and the Guarantor will not, and will not permit any of their respective Subsidiaries to, enter into any new Finance Contract if and to the extent that the sum of such Finance Contract (a) when added to the aggregate amount of all Finance Contracts entered into by the Lessee or the Guarantor or such Subsidiaries during the twelve (12) month period that commences on the Amendment Closing Date exceeds $5,000,000 or (b) when added to the aggregate amount of all Finance Contracts entered into by the Lessee or the Guarantor or such Subsidiaries during the twelve (12) month period that commences on the first (1st) anniversary of the Amendment Closing Date exceeds $5,000,000. II-ii SCHEDULE III TO THIRD MASTER AMENDMENT AGREEMENT DEFINITIONS "Additional Fee" is defined in Section 10.1(d). "Applicable Margin" shall mean the sum of (x) the per annum ratesconstituting the Applicable Margin, as set forth in the chart below plus (y) the"Additional Fee" described in Section 10.1(d):*APPLICABLE MARGIN WITH APPLICABLE MARGIN WITH RESPECT TO APPLICABLE MARGIN WITHRESPECT TO TRANCHE A AND EURODOLLAR EQUITY INVESTMENTS RESPECT TO BASE RATETRANCHE B EURODOLLAR LOANS LOAN(S)/EQUITY INVESTMENT(s)-------------------------------------------------------------------------------------------------- 4.30% 5.25% 2.00%-------------------------------------------------------------------------------------------------- "Closing Date Fees" are defined in Section 10.1(c). "Consolidated EBITDA" means, for any period, on a consolidated basisfor the Guarantor and its consolidated Subsidiaries, the sum of the amounts forsuch period, without duplication, of (i) Consolidated Operating Income, plus(ii) charges against income for foreign taxes and U.S. income taxes to theextent deducted in computing Consolidated Operating Income, plus (iii) InterestExpense to the extent deducted in computing Consolidated Operating Income, plus(iv) depreciation expense to the extent deducted in computing ConsolidatedOperating Income, plus (v) amortization expense, including, without limitation,amortization of goodwill and other intangible assets to the extent deducted incomputing Consolidated Operating income, plus (vi) Eligible Asset DispositionCharges to the extent deducted in computing Consolidated Operating Income, plus(vii) Eligible Asset Impairment Charges to the extent deducted in computingConsolidated Operating Income, plus (viii) Eligible Miscellaneous Non-CashCharges to the extent deducted in computing Consolidated Operating Income, plus(ix) Eligible Restructuring Charges to the extent deducted in computingConsolidated Operating Income, minus (a) the total interest income of theGuarantor and its Subsidiaries to the extent included in computing ConsolidatedOperating Income minus (b) the total tax benefit reported by the Guarantor andits Subsidiaries to the extent included in computing Consolidated OperatingIncome. "Consolidated Equity" means as of the date of any determination thereoffor any relevant period, the total stockholders' equity of the Guarantor and itsSubsidiaries on a consolidated basis, as determined in accordance with AgreementAccounting Principles, plus the sum of the amounts for such period, withoutduplication, of (i) foreign currency translation and transaction gains andlosses, plus (ii) all charges against income for foreign taxes and U.S. incometaxes, III-iplus (iii) Eligible Asset Disposition Charges, plus (iv) Eligible AssetImpairment Charges, plus (v) Eligible Non-Cash Miscellaneous Charges, plus (vi)Eligible Restructuring Charges. "Deferred Fee Amount" is defined in Section 10.1(c). "Eligible Asset Disposition Charges" means charges, calculated inaccordance with Agreement Accounting Principles, incurred by the Guarantor inits fiscal year ending on December 31, 2003 but only to the extent (i) suchcharges relate solely and directly to the sales of assets and properties. "Eligible Asset Impairment Charges" means up to $35,000,000attributable to, without duplication, any charges incurred by the Guarantor inits fiscal year ending on December 31, 2003 but only to the extent such chargesrelate solely and directly to the impairment of long-lived assets, goodwill andother intangible assets, all in accordance with Agreement Accounting Principles. "Eligible Miscellaneous Non-Cash Charges" means non-cash charges(including but not limited to non-cash losses on finance contracts, severanceand other loss contingencies), calculated in accordance with AgreementAccounting Principles and, to the extent deducted in computing ConsolidatedOperating Income, incurred by the Guarantor in its fiscal year ending onDecember 31, 2003 but only to the extent the aggregate amount of EligibleMiscellaneous Non-Cash Charges do not exceed $10,000,000. "Eligible Restructuring Charges" means any charges incurred by theGuarantor in its fiscal year ending on December 31, 2003 but only to the extentsuch charges (i) are incurred in accordance with Agreement Accounting Principlesand (ii) relate solely and directly to the restructuring, waiving or amending ofthe instruments and documents evidencing any of the Secured Obligations andother lines of credit, leases or other extensions of credit, including anyamounts paid to any lenders, advisor fees and other related costs. "Equipment Spreadsheets" is defined in Section 6.1(e)(vii). "Lease Amendment Fee" is defined in Section 10.1(e). "Minimum Average Revenue Requirement" is defined in Section 10.1(d). "Minimum Utilization Requirement" is defined in Section 10.1(d). "Note Purchase Agreement" or "Note Purchase Agreements" means any ofthose certain Note Purchase Agreements dated as of December 1, 1996, January 31,1996 or September 29, 2000 among the Guarantor and the Noteholders thereunder assubsequently amended or restated. "Targeted Consolidated EBITDA Amount" means, for each relevant month,the cumulative Consolidated EBITDA amount (measured from and after January 1,2003) furnished on March 6, 2003 to the Lenders as part of the Guarantor's 2003budget minus that portion of such cumulative Consolidated EBITDA amount which isattributable to the sale of any assets or any Subsidiary to the extent permittedherein or otherwise approved by the Required Lenders. III-ii "Third Amendment" means that certain Third Amendment dated as of April11, 2003 among the Lessee, the Guarantor, the Lessor, the Trustee, the Lenders,the Owner Participant, the Administrative Agent and the Collateral Agent. "Third Amendment Closing Fees" are defined in Section 10.1(c). "Third Amendment Effective Date" means April 11, 2003. "Unadjusted Consolidated EBITDA" means, for any period, on aconsolidated basis for the Guarantor and its consolidated Subsidiaries, the sumof the amounts for such period, without duplication, of (i) ConsolidatedOperating Income, plus (ii) charges against income for foreign taxes and U.S.income taxes to the extent deducted in computing Consolidated Operating Income,plus (iii) Interest Expense to the extent deducted in computing ConsolidatedOperating Income, plus (iv) depreciation expense to the extent deducted incomputing Consolidated Operating Income, plus (v) amortization expense,including, without limitation, amortization of goodwill and other intangibleassets to the extent deducted in computing Consolidated Operating Income, plus(vi) Eligible Asset disposition Charges to the extent deducted in computingConsolidated Operating Income, minus (a) the total interest income of theGuarantor and its Subsidiaries to the extent included in computing ConsolidatedOperating Income minus (b) the total tax benefit reported by the Guarantor andits Subsidiaries to the extent included in computing Consolidated OperatingIncome. III-iii SCHEDULE IV TO THIRD MASTER AMENDMENT AGREEMENT CLOSING DATE FEES* ----------------- (Payable in part on the Third Amendment Effective Date and in part on a deferred basis)PARTY TO RECEIVE FEE FEE RATE THIRD AMENDMENT EFFECTIVE DATE-------------------- -------- ------------------------------ AGGREGATE OUTSTANDINGS ---------------------- Lenders .625% $_____________Noteholders .625% $_____________Receivables Group .375% $_____________Participants .375% $_____________ Fees are calculated for each Person by multiplying the applicable FeeRate by the amount of outstandings, as set forth above opposite such Person'sname. III-i EXHIBIT A TO THIRD MASTER AMENDMENT AGREEMENT FORM OF AUTHORIZED OFFICER'S CERTIFICATE OF COMPLIANCETo: The Participants, Lessor, Collateral Agent and Administrative Agent to the Third Master Amendment Agreement Described Below This Compliance Certificate is furnished pursuant to thatcertain Third Master Amendment Agreement dated as of April 11, 2003 (as amended,modified, renewed or extended from time to time, the "Agreement") among APEXTRAILER LEASING & RENTALS, L.P., a Delaware limited partnership, as the Lessee(in such capacity, together with its permitted successors, the "Lessee"); WABASHNATIONAL CORPORATION, a Delaware corporation, as guarantor (the "Guarantor");WABASH STATUTORY TRUST - 2000, a Connecticut statutory trust, as Lessor(together with its permitted successors and assigns, the "Lessor"); U.S. BANKNATIONAL ASSOCIATION (as successor to the corporate trust business of StateStreet Bank and Trust Company), not in its individual capacity, except as setforth therein, but solely as Trustee (the "Trustee" and in its individualcapacity, the "Trust Company"); the Institutions indicated in Schedule I theretoas "Tranche A Lenders" (each, together with its permitted successors andassigns, a "Tranche A Lender," and together with the other Tranche A Lenders,the "Tranche A Lenders"), FLEET CAPITAL CORPORATION, a Rhode Island corporation("Fleet Capital"), as the Tranche B Lender (in such capacity, together with itspermitted successors and assigns, the "Tranche B Lender", and together with theTranche A Lenders, the "Lenders"); FLEET CAPITAL, as the Owner Participant (insuch capacity, together with its permitted successors and permitted assigns, the"Owner Participant", and together with the Lenders, the "Participants"); FLEETCAPITAL, as administrative agent for the Lenders (in such capacity, togetherwith its permitted successors and assigns, the "Administrative Agent"); andFLEET CAPITAL, as collateral agent for the Lenders (in such capacity, togetherwith its permitted successors and assigns, the "Collateral Agent"). Unlessotherwise defined herein, capitalized terms used in this Compliance Certificatehave the meanings ascribed thereto in the Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected _________________ of the [Lessee][Guarantor] and the [Chief Financial Officer] [Treasurer]; 2. I have reviewed the terms of the Agreement and I have made,or have caused to be made under my supervision, a detailed review of thetransactions and conditions of the [Lessee] [Guarantor] and its Subsidiariesduring the accounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose,and I have no knowledge of, the existence of any condition or event whichconstitutes a Lease Event of Default -i-or Unmatured Lease Default during or at the end of the accounting period coveredby the attached financial statements or as of the date of this Certificate,except as set forth below; and 4. Schedule I and Schedule II attached hereto set forthfinancial data and computations evidencing the [Lessee] [Guarantor]'s compliancewith certain covenants of the Agreement during the accounting period covered bythe attached financial statements, all of which data and computations are true,complete and correct. Described below are the exceptions, if any, to paragraph 3,listing, in detail, the nature of the condition or event, the period duringwhich it has existed and the action which the [Lessee] [Guarantor] has taken, istaking, or proposes to take with respect to each such condition or event:---------------------------------------------------------------------------------------------------------------------------------- -ii- The foregoing certifications, together with the computationsset forth in Schedule I and Schedule II hereto and the financial statementsdelivered with this Certificate in support hereof, are made and delivered this_____ day of __________, ____. -------------------------------- [Insert Name of Officer] -iii- SCHEDULE I TO COMPLIANCE CERTIFICATE[Wabash National Corporation] [Apex Trailer Leasing & Rentals, L.P.]Quarterly Compliance Certificate Worksheet COMPLIANCE CERTIFICATE QUARTERLY SCHEDULE OF COMPLIANCE AS OF _______________, 2003 (DOLLARS IN THOUSANDS) A. MAXIMUM LEVERAGE VALUATION RATIO 1. Actual Amount: a. Term Debt (Notes & Bank Debt) b. Revolver (Super Revolver) ----------- c. Total Debt (a+b) $ - d. Cash and Cash Equivalents e. Net Inventory f. Net Prepaid and Other Expenses g. Net PP&E ----------- h. Total Assets (d+e+f+g) $ - i. Leveraged Ratio (c/h) x 2. Minimum Required Amount xB. MAXIMUM CAPITAL EXPENDITURES 1. Actual Amount: a. Capital Expenditures (Year-to-Date) $ - 2. Maximum Annual Allowed Amount $ 4,000C. MAXIMUM FINANCE CONTRACTS 1. Actual Amount: a. Finance Contracts (Year-To-Date) $ - 2. Maximum Annual Allowed Amount $ 5,000D. MINIMUM CONSOLIDATED CUMULATIVE (SINCE 1/1/2003) EBITDA 1. Actual Amount: a. Consolidated Operating Income $ - b. Foreign and Domestic Taxes Deducted in Operating Income $ - c. Interest Expense Deducted in Operating Income $ - d. Eligible Asset Disposition Charges $ - e. Eligible Asset Impairment Charges $ - f. Eligible Miscellaneous Non-Cash Charges $ - g. Eligible Restructuring Charges $ - -iv- h. Depreciation Expense Deducted in Operating Income $ - i. Amortization Expense Deducted in Operating Income $ - j. Interest Income Included in Operating Income $ - k. Total Tax Benefit Included in Operating Income $ - l. Consolidated EBITDA (a+b+c+d+e+f-g-h) $ - 2. Minimum Required Amount $ -E. MINIMUM CONSOLIDATED EQUITY 1. Actual Amount: a. Consolidated Equity $ - b. Minimum Required Amount $ - -v- A. MAXIMUM OTHER UNSECURED INDEBTEDNESS 1. Actual Amount $_____________ 2. Maximum Permitted Amount: $3,000,000B. SALES OF ASSETS 1. Actual Amount: a. Total amount of sales of assets in current fiscal year to date (See Schedule II for detail) $_____________ 2. Maximum Permitted Amount: $5,000,000C. INVESTMENTS For each new Investment pursuant to Section 6.3(D)(vii) of the Credit Agreement during the most recent fiscal quarter covered by this Certificate, complete the following: 1. Date and brief description of nature of new Investment: ------------------------------------------------------- ------------------------------------------------------- 2. Actual Amount: a. Amount of new Investment $_____________ b. Amount of existing Investments +_____________ c. Total Investments =$____________ 3. Maximum Permitted Amount: $5,000,000D. LEASES 1. Actual Amount of Leases: $__________ 2. Maximum Permitted Amount: $5,000,000 -vi- SCHEDULE II TO COMPLIANCE CERTIFICATE Schedule of Compliance as of __________, ____ (Dollars in Thousands)A. Sales of Assets [List separate sales and amounts] $_____________ ______________ ______________ ______________ ______________ Total $_____________ -vii- EXHIBIT 10.45================================================================================ WABASH NATIONAL CORPORATION _________________ SECOND AMENDMENT Dated as of April 11, 2003 To AMENDED AND RESTATED NOTE PURCHASE AGREEMENT Dated as of April 12, 2002 _________________ Re: $50,000,000 Adjusting Rate Senior Secured Notes, Series A, due March 30, 2004================================================================================ SECOND AMENDMENT TO AMENDED AND RESTATED NOTE PURCHASE AGREEMENT This Second Amendment dated as of April 11, 2003 ("SecondAmendment") to the Amended and Restated Note Purchase Agreement, dated as ofApril 12, 2002 and as amended on December 13, 2002, is among Wabash NationalCorporation, a Delaware corporation ("Company"), and the several Purchasersparty to the Note Agreement (collectively, the "Noteholders"). RECITALS: A. The Company and the Noteholders have heretofore enteredinto that certain Amended and Restated Note Purchase Agreement dated as of April12, 2002 (the "Note Agreement"). The Company has heretofore issued its$50,000,000 9.66% Senior Secured Notes, Series A, due March 30, 2004 bearing PPN929566 F# 9 (the "Notes"), dated April 12, 2002, its Senior Secured PIK Notes,due March 30, 2004 bearing PPN 929566 G* 2 (the "Deferral Fee Notes") and itsSenior Secured PIK Grid Notes, due March 30, 2004 bearing PPN 929566 H* 1 (the"Make-Whole Notes"), pursuant to the Note Agreement. The Noteholders are theholders of 100% of the principal amount of the Notes presently outstanding. B. Apex Trailer Leasing & Rentals, L.P., a Delaware limitedpartnership ("Apex"), Cloud Oak Flooring Company, Inc., an Arkansas corporation("Cloud"), Continental Transit Corporation, an Indiana corporation("Continental"), FTSI Distribution Company, L.P., a Delaware limited partnership("FTSI"), National Trailer Funding, L.L.C., a Delaware limited liability company("National"), Wabash National Trailer Centers, Inc. (formerly known as NOAMTC,Inc.), a Delaware corporation ("Trailer"), Wabash Financing LLC, a Delawarelimited liability company ("Wabash Financing"), Wabash National, L.P., aDelaware limited partnership ("Wabash National"), Wabash National Services,L.P., a Delaware limited partnership ("Services"), Wabash Technology Corp., aDelaware corporation ("Technology"), WNC Cloud Merger Sub, Inc., an Arkansascorporation ("WNC Cloud"), WNC Receivables Management Corp., a Delawarecorporation ("Receivables"), and WTSI Technology Corp., a Delaware corporation("WTSI") (Apex, Cloud, Continental, FTSI, National, Trailer, Wabash Financing,Wabash National, Services, Technology, WNC Cloud, Receivables and WTSI arehereinafter collectively referred to as the "Guarantors") have heretoforeentered into that certain Amended and Restated Subsidiary Guarantee Agreement,dated as of April 12, 2002 (the "Subsidiary Guarantee Agreement") under andpursuant to which each of the Guarantors guaranteed the payment of the Notes andthe performance by the Company of its obligations under the Note Agreement. C. The Company and the Noteholders now desire to (i) modifythe Note Agreement by amending certain provisions of the Note Agreement andprovide that the amendment to the Note Agreement be effective as of the datehereof (the "Second Amendment Effective Date") and (ii) amend and restate theNotes, the Make-Whole Notes and the Deferral Fee Notes (provided that in lieu ofreceiving an amended and restated Note, Make-Whole Note, or Defferal Fee Note,each Noteholder may elect to receive an allonge to be attached to the Notes,Make-Whole Notes and Deferral Fee Notes originally issued to such Noteholderpursuant to the Note Agreement), such amended and restated notes together withsuch allonges are collectively referred to herein as the "Amended and RestatedNotes"). D. The Guarantors in connection with this Second Amendmentdesire to reaffirm their respective obligations under the Subsidiary GuaranteeAgreement. E. All requirements of law have been fully complied with andall other acts and things necessary to make this Second Amendment a valid, legaland binding instrument according to its terms for the purposes herein expressedhave been done or performed. NOW, THEREFORE, upon the full and complete satisfaction of theconditions precedent to the effectiveness of this Second Amendment set forth inSection 5 hereof, the Company and the Noteholders, for good and valuableconsideration the receipt and sufficiency of which are hereby acknowledged, dohereby agree as follows: SECTION 1 Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Note Agreement shall have the meaning assigned to such term in the Note Agreement. Each reference to "hereof," "hereunder," "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Note Agreement shall from and after the date hereof refer to the Note Agreement as amended hereby. SECTION 2 Amendments. The Company and the Noteholders agree that theNote Agreement shall be amended as follows: 2.1 Section 8.1(b) of the Note Agreement shall be and hereby is amendedin its entirety to read as follows: "(b) The Company will prepay the Notes as follows, provided that no portion of such prepayments shall be applied to any Deferral Fee Note or Make-Whole Note: (i) on the last Business Day of each month commencing with January 31, 2003 through April 30, 2003, the Company will prepay the Notes in an aggregate principal amount equal to the product of the Series A Note Principal Allocation times $4,958,833, together with the Make-Whole Amount payable with respect thereto; (ii) on the last Business Day of each month commencing with May 31, 2003 through December 31, 2003, the Company will prepay the Notes in an aggregate principal amount equal to the product of the Series A Note Principal Allocation times $2,479,167, together with the Make-Whole Amount payable with respect thereto; (iii) on January 15, 2004, the Company shall prepay the Notes in an aggregate principal amount equal to the Series A Note Principal Allocation times the sum of $19,833,332 minus the aggregate amount of principal prepayments in excess, if any, of $19,833,332 made by the Company on the Amortization Debt from the Second Amendment Effective Date to December, 31, 2003, together with the Make-Whole Amount payable with respect thereto; provided, however, 2 that the amount required to be prepaid on the Notes pursuant to this clause (iii) shall in no event be less than zero; and (iv) on the last Business Day of each month commencing with January 31, 2004 through March 30, 2004, the Company will prepay the Notes in an aggregate principal amount equal to the product of the Series A Note Principal Allocation times $4,958,333, together with the Make-Whole Amount payable with respect thereto." 2.2 Section 8.1(c) of the Note Agreement shall be and hereby is amendedby deleting the reference to "June 30, 2002" therein and inserting "March 31,2004" in lieu thereof. 2.3 Section 8 to the Note Agreement shall be and hereby is amended byinserting the following new paragraph at the end of such paragraph 4: "Section 8.7 Deferred Amounts. (a) In addition to the rate of interest otherwise payable with respect to the Notes and all other amounts payable hereunder or in connection herewith, the Company shall pay, by no later than January 15, 2004, additional interest to the Noteholders in accordance with their respective pro rata principal amount in an amount equal to the aggregate of (i) each Series A Deferred Principal Amount multiplied by a rate per annum equal to 2.00% per annum from the date such Series A Deferred Principal Amount is created and determined hereunder until the date such Series A Deferred Principal Amount has been paid in full plus (ii) each Series A Deferred Principal Amount multiplied by a rate per annum equal to 1.00% per annum from the date such Series A Deferred Principal Amount has been paid in full (through voluntary prepayments pursuant to Section 8.2 hereof) to (but not including) January 15, 2004 (the amounts referred to in clauses (i) and (ii) hereof are collectively referred to as "Deferred Principal Amount Fees"). Each such voluntary prepayment shall be applied to the earliest occurring Series A Deferred Principal Amount and, after the same has been paid in full, thereafter to each immediately succeeding Series A Deferred Principal Amount until all Series A Deferred Principal Amounts have been paid in full. On January 15, 2004, the Company shall pay all Series A Deferred Principal Amounts. As used in this Section 8.7(a), "Deferred Principal Amount" means, with respect to each monthly repayment of the Amortization Debt occurring on or after the Second Amendment Effective Date but prior to January 1, 2004, the excess, if any, of (x) $4,958,333 minus (y) the actual amount of such repayment; it being understood and agreed that each occurrence of such an excess will create a new and independent Deferred Principal Amount. As used in this Section 8.7(a), "Series A Deferred Principal Amount" means the Series A Note Principal Allocation times each Deferred Principal Amount. The Company agrees that in connection with any payment of fees payable to the Specified Holders similar to the Deferred Principal Amount Fees, the Company shall pay to the Noteholders a pro rata amount of such payment. (b) The Company acknowledges that it is required to pay certain amendment/closing fees (in addition to and not including the 0.25% fee described in subsection (c) below and reimbursement for out of pocket costs and expenses) to the Noteholders and the Specified Holders in connection with, and as required by, the Second 3 Amendment and the amendments to the Specified Agreements in form and substance substantially similar to the Second Amendment (the "Second Amendment Closing Fees"). In lieu of paying the entire balance of the Second Amendment Closing Fees on the Second Amendment Effective Date, the Company shall pay (i) on the Second Amendment Effective Date, at least $2,000,000 of such Second Amendment Closing Fees and the portion of the Second Amendment Closing Fees paid to the Noteholders on the Second Amendment Effective Date shall not be less than the Series A Deferred Fee Allocation multiplied by the actual amount of the Second Amendment Closing Fees paid to the Noteholders and the Specified Holders on the Second Amendment Effective Date and (ii) by no later than January 15, 2004, (A) the then unpaid balance of the Second Amendment Closing Fees multiplied by the Series A Deferred Fee Allocation and (B) a deferral fee to the Noteholders in accordance with their pro rata portion of the Deferred Fee Amount multiplied by the Series A Deferred Fee Allocation at a rate per annum equal to the sum of (x) the Series A Applicable Rate plus (y) (i) 2.00% from the Second Amendment Effective Date until the date such Deferred Fee Amount has been paid in full plus (z) 1.00% on the date immediately prior to the day such Deferred Fee Amount balance has been paid in full and for the period from the date such Deferred Fee Amount has been paid in full until January 15, 2004. As used in this Section 8.7(b), "Deferred Fee Amount" means, with respect to the Second Amendment Closing Fees, the excess of (a) the actual amount of the Second Amendment Closing Fees minus (b) the amount of the Second Amendment Closing Fees paid on the Second Amendment Effective Date. The Company agrees that in connection with any payment on any date of the Deferred Fee Amount or the deferral fee referred to above (or a similar deferral fee to any Specified Holder) to any Specified Holder, the Company, on the same date, shall pay to each Noteholder pro rata in accordance with the unpaid principal amount of Notes (other than the Deferral Fee Notes and the Make-Whole Notes) held by such Noteholder an amount equal to the Series A Deferred Fee Allocation times the amount of such payment. (c) The Company shall pay, on January 15, 2004, a restructuring fee pro rata to each Noteholder, in an amount equal to 0.25% of the then outstanding principal amount of the Notes (other than the Make-Whole Notes and the Deferral Fee Notes) held by such Noteholder (it being understood and agreed that such restructuring fee shall be non-refundable and is deemed to be fully earned on the Second Amendment Effective Date)." 2.4 Section 7.1(a) to the Note Agreement shall be and hereby is amendedby inserting new subsections (vii) and (viii) immediately following subsection(vi) thereto which shall read as follows: "(vii) Cash Sources. By no later than fifteen (15) days after the end of each monthly accounting period of the Company, the following (prepared in such format and detail as is required by the Required Holder(s)): (a) a statement of projected cash sources and uses of the Company and its Subsidiaries for the 13 calendar weeks following the end of such monthly accounting period and a report (to the extent requested by the Required Holder(s) from time to time) containing management's discussion and analysis of such projections and (b) a statement of cash sources and uses for the immediately preceding 4 monthly accounting period of the Company and for such historical period as is reasonably required by the Required Holder(s), in comparative form against the figures and for the corresponding date and period in the projected cash flow statements required under the foregoing subsection (a); the foregoing statements required under subsections (a) and (b) being duly certified by the chief financial officer or treasurer of the Company. (viii) Fleet Equivalent Increase. Concurrently with the delivery of each monthly report and information under the Fleet Participation Agreement (including without limitation under Section 6.1(e)(vii) thereof), the Company shall deliver to each Noteholder copies of such reports and information and any other information relevant to the calculation and determination of the Fleet Equivalent Increase." 2.5 Section 9 of the Note Agreement shall be and hereby is amended byinserting a new Section 9.18 immediately following Section 9.17 thereto whichshall read as follows: "Section 9.18. Canadian Guaranty and Collateral. By no later than May 31, 2003, the Company shall (a) cause its Canadian Subsidiary to execute and deliver to each holder of a Note, a guarantee of the Obligations pursuant to a guaranty agreement, or supplement thereto, in form and substance satisfactory to the Required Holder(s) and their counsel, (b) cause its Canadian Subsidiary to execute and deliver to the Collateral Agent a general security agreement, or supplement thereto, with a copy to each Noteholder, in form and substance satisfactory to the Collateral Agent and its counsel, (c) execute and deliver a Pledge Agreement, or supplement thereto, pledging 100% of the capital stock of its Canadian Subsidiary and (d) deliver to the Required Holder(s) corporate resolutions and other documentation (including legal opinions, Personal Property Security Act financing statements and such other instruments and documents as are requested by, and in form and substance satisfactory to, the Required Holder(s) and their counsel) related to the delivery of the foregoing agreements; provided that the Company shall not be required to provide that portion or amount of collateral described above and evidenced by any of the foregoing instruments and documents to the extent but only to the extent that delivery of such collateral would cause its Canadian Subsidiary's accumulated and undistributed earnings and profits to be deemed to be repatriated to the Company or a Domestic Subsidiary for U.S. federal income tax purposes and the effect of such repatriation would be to cause materially adverse tax consequences for the Company." 2.6 Section 10.3 of the Note Agreement shall be and hereby is amended and restated as follows: "(a) Intentionally Omitted. (b) Minimum Consolidated Equity. The Company shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated Equity at an amount not less than the applicable "Minimum Consolidated Equity" specified below: Fiscal Quarter Ending Minimum Consolidated 5 Equity March 31, 2003 $40,000,000 June 30, 2003 $35,000,000 September 30, 2003 $30,000,000 December 31, 2003 $25,000,000 (c) Maximum Leverage Valuation Ratio. The Company shall not permit, as of the last day of each of the fiscal quarters specified below, the Leverage Valuation Ratio to exceed the applicable "Maximum Leverage Valuation Ratio" specified below: Maximum Leverage Fiscal Quarter Ending Valuation Ratio March 31, 2003 0.95 to 1 June 30, 2003 0.95 to 1 September 30, 2003 0.95 to 1 December 31, 2003 0.95 to 1 (d) Minimum Consolidated EBITDA. The Company shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated EBITDA, at an amount not less than the applicable "Minimum Cumulative Consolidated EBITDA" specified below for the period commencing on January 1, 2003 and ending on such last day: Minimum Cumulative Consolidated Month Ending EBITDA March 31, 2003 $0 June 30, 2003 $5,000,000 September 30, 2003 $15,000,000 December 31, 2003 $20,000,000 (e) Minimum Interest Coverage Cash Collateral. The Company shall, by no later than December 31, 2002, enter into a Cash Collateral Agreement and, by no later than one (1) Business Day prior to the first day of each fiscal quarter of the Company ending on or after March 31, 2003, deposit funds ("Cash Collateral Funds") with the Collateral Agent in an amount not less than the aggregate amount of interest required to be paid, through the end of the immediately succeeding fiscal quarter, under this Agreement and under the Specified Agreements; provided that (i) in the case of interest required to be paid through the end of the fiscal quarter ending on March 31, 2004, the Company may deposit Cash Collateral Funds on or before (but not after) January 15, 2004 and (ii) it being understood and agreed that if, at any time subsequent to the date Cash Collateral Funds are deposited, the aggregate amount of interest required to be so paid increases, the Company shall promptly, and in any event within three (3) Business Days after demand by the holders of the Senior Notes or the Administrative Agent, 6 deposit additional funds with the Collateral Agent in an aggregate amount not less than the amount of such increase)." 2.7 Section 10.3(f) of the Note Agreement shall be and hereby isamended by deleting the reference to "$6,000,000" contained therein andinserting "$4,000,000" in lieu thereof. 2.8 Section 11(b)(iv) of the Note Agreement shall be and hereby isamended by inserting "or Section 9.18" immediately after the reference to"Section 9.17" appearing therein. 2.9 Section 11 to the Note Agreement shall be and hereby is amended byinserting the following new subsections immediately following subsection (r)contained therein: "(s). Commitment Letter. The Company shall fail to deliver to the holders of Notes, by no later than January 31, 2004, one or more binding commitment letters (in form and substance satisfactory to the Required Secured Parties as defined in the Intercreditor Agreement) from a bank, institutional lender or other qualified lending source to pay in full, on or before March 30, 2004, the Secured Obligations as defined in the Intercreditor Agreement. (t) Fleet Cross-Default. A default or breach under the Fleet Participation Agreement shall occur, regardless of whether such default is waived or whether any right with respect to such default or breach is exercised (including, without limitation, any default or breach arising out of a failure by the Company to deliver a business plan as required by Section 6.1(o) thereof)." 2.10 Schedule B of the Note Agreement shall be and hereby is amended byinserting the following new defined terms and in the correct alphabetical orderto such schedule: "Amortization Debt" means, at any time the same is to be determined, the sum of (i) the outstanding principal amount of the Senior Secured Notes (other than the Deferral Fee Notes and the Make-Whole Notes) (as each such term is defined in the Intercreditor Agreement), as of such time plus (ii) the sum of (1) the outstanding principal amount of all of the Term Loans (other than the PIK Notes) plus (B) the amount then available for drawing under all Term Letters of Credit plus (C) the amount of unpaid reimbursement obligations with respect to drawings under all Term Letters of Credit (as each such term is defined in the Credit Agreement as in effect at the date of the Closing). "Applicable Margin" means, for each month the same is determined, the sum of (i) 0.50% for every 10% of negative variance from the Targeted Consolidated EBITDA Amount for such month, (ii) 0.50% for every quarterly occurrence of a Leverage Valuation Ratio above 0.85 to 1 as of the end of the Company's most recently ended fiscal quarter and to be paid in the quarter following such occurrence (it being understood and agreed that, once in effect, such Leverage Valuation Ratio-based increase (a "Leverage Increase") will remain in effect for each month prior to the Company's achievement of a Leverage Valuation Ratio of 0.85 to 1 or less but shall cease to apply (subject to subsequent quarterly occurrences of a Leverage Valuation Ratio above 0.85 to 1) during and after such month when the Company's quarterly-based Leverage Valuation 7 Ratio is equal to or less than 0.85 to 1), (iii) 0.50% for every monthly occurrence of a negative monthly Unadjusted Consolidated EBITDA and (iv) 0.20% for every month during which the "Additional Fee" (as identified and defined in Section 10.1(d) of the Fleet Participation Agreement) is payable under the Fleet Participation Agreement (a "Fleet Equivalent Increase"). Each calculation of the Applicable Margin (1) will be determined as of the end of each calendar month (or quarter in the case of the applicability of a Leverage Increase) and shall be in effect for the next succeeding calendar month (or quarter in the case of a Leverage Increase), (2) shall be determined without giving effect to, and shall not be additive of, the Applicable Margin determined in any previous month and (3) shall be subject to the limitation that the amount calculated by adding the sum of the increases specified in the foregoing subsections (i), (ii) and (iii) shall not exceed 5.00% for any month. "Canadian Subsidiary" means any subsidiary of the Company organized under the laws of Canada or any province thereof. "Deferred Fee Amount" is defined in Section 8.7(b). "Deferred Principal Amount" is defined in Section 8.7(a). "Eligible Asset Disposition Charges" means charges, calculated in accordance with GAAP, incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent (i) such charges relate solely and directly to the sales of assets and properties permitted under Section 10.2(b) (including, without limitation, charges composed of brokerage and investment banking fees, rental and used trailer disposition fees and charges and other disposition transaction costs) and (ii) the proceeds of such sales are used to prepay Indebtedness of the Company and its Subsidiaries to the extent permitted hereunder. "Eligible Asset Impairment Charges" means up to $35,000,000 in the aggregate attributable to, without duplication, any charges incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent such charges relate solely and directly to the impairment of long-lived assets, goodwill and other intangible assets, all in accordance with GAAP. "Eligible Miscellaneous Non-Cash Charges" means non-cash charges (including, without limitation, to non-cash losses on finance contracts, severance and other loss contingencies but excluding Eligible Asst Impairment Charges and Eligible Restructuring Charges), calculated in accordance with GAAP and, to the extent deducted in computing Consolidated Operating Income, incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent the aggregate amount of such non-cash charges do not exceed $10,000,000. "Eligible Restructuring Charges" means any charges incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent such charges (i) are incurred in accordance with GAAP and (ii) relate solely and directly to the restructuring, waiving or amending of the instruments and documents evidencing any of the Secured 8 Obligations and other lines of credit, leases or other extensions of credit, including any amounts paid to any lenders, advisor fees and other related costs. "Fleet Equivalent Increase" is defined in the definition of "Applicable Margin" contained in Schedule B hereof. "Fleet Participation Agreement" means that certain Amended and Restated Participation Agreement dated as of March 30, 2001 as currently in effect among Apex Trailer Leasing & Rentals, L.P., the Company, certain financial institutions from time to time party thereto, U.S. Bank National Association, as trustee and Fleet Capital Corporation individually and as owner participant, collateral agent and administrative agent, as such agreement may be amended, restated, supplemented or otherwise modified from time to time. "Second Amendment" means that certain Second Amendment to the Amended and Restated Note Purchase Agreement, dated as of April 12, 2002 and as amended on December 13, 2002, dated as of April 11, 2003 among the Company, and the Noteholders. "Second Amendment Closing Fees" is defined in Section 8.7(b). "Second Amendment Effective Date" means April 11, 2003. "Series I Applicable Rate" means, at any time, the sum of (i) a rate per annum equal to 10.16% plus (ii) the Applicable Margin at such time. "Series I Deferred Fee Allocation" means at any time, the percentage determined by dividing (a) the aggregate amount of the amendment fees in favor of the Noteholders as required by, and in connection with, the Second Amendment by (b) the sum of (i) the aggregate amount of the amendment fees in favor of the holders of the Senior Secured Notes (other than the Deferral Fee Notes and the Make-Whole Notes) (as each such term is defined in the Intercreditor Agreement) as required by, and in connection with, the Second Amendment and the amendments (comparable to the Second Amendment) to the Note Agreements (as such term is defined in the Intercreditor Agreement), (ii) the aggregate amount of the amendment fees in favor of the Administrative Agent and the Lenders as required by, and in connection with, the Second Amendment, (iii) the aggregate amount of the amendment fees in favor of General Electric Capital Corporation as required by, and in connection with, the amendments (comparable to the Second Amendment) to the Receivables Purchase Agreement and (iv) the aggregate amount of amendment fees in favor of Fleet Capital Corporation as required by, and in connection with, the Amendment (comparable to the Second Amendment) to the lease agreements evidencing the Fleet Lease Transaction. "Specified Agreements" means the Credit Agreement, the Receivables Purchase Documents, the Series I Note Purchase Agreement, the Series C-H Note Purchase Agreement and the lease agreements evidencing the Fleet Lease Transaction. 9 "Specified Holders" means the holders of the Obligations, under and as defined in the Credit Agreement, the financial institutions party to Receivables Purchase Documents, the holders of the Series I Notes, the holders of the Series C-H Notes and the financial institutions party to the lease agreements evidencing the Fleet Lease Transaction. "Targeted Consolidated EBITDA Amount" means, for each relevant month, the cumulative Consolidated EBITDA amount (measured from and after January 1, 2003) furnished on March 6, 2003 to the Noteholders as part of the Company's 2003 budget and as set forth on Schedule B attached hereto minus that portion of such cumulative Consolidated EBITDA amount which is attributable to the sale, from and after January 1, 2003, of any assets or any Subsidiary to the extent permitted herein or otherwise approved by the Required Holder(s). "Unadjusted Consolidated EBITDA" means, for any period, on a consolidated basis for the Company and its consolidated Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Consolidated Operating Income, plus (ii) charges against income for foreign taxes and U.S. income taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, minus (a) the total interest income of the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income minus (b) the total tax benefit reported by the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income. 2.11 Schedule B to the Note Agreement is further amended by amendingthe definitions of "Consolidated EBITDA," "Consolidated Equity" and "DefaultRate" in their entirety to read as follows: "Consolidated EBITDA" means, for any period, on a consolidated basis for the Company and its consolidated Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Consolidated Operating Income, plus (ii) charges against income for foreign taxes and U.S. income taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, plus (vii) Eligible Asset Impairment Charges to the extent deducted in computing Consolidated Operating Income, plus (viii) Eligible Miscellaneous Non-Cash Charges to the extent deducted in computing Consolidated Operating Income, plus (ix) Eligible Restructuring Charges to the extent deducted in computing Consolidated 10 Operating Income, minus (a) the total interest income of the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income minus (b) the total tax benefit reported by the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income. "Consolidated Equity" means as of the date of any determination thereof for any relevant period, the total stockholders' equity of the Company and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP, plus the sum of the amounts for such period, without duplication, of (i) foreign currency translation and transaction gains and losses, plus (ii) all charges against income for foreign taxes and U.S. income taxes, plus (iii) Eligible Asset Disposition Charges, plus (iv) Eligible Asset Impairment Charges, plus (v) Eligible Non-Cash Miscellaneous Charges, plus (vi) Eligible Restructuring Charges. "Default Rate" means the greater of (i) 2.00% over the then applicable Series I Applicable Rate or (ii) 2.00% over the rate of interest publicly announced by Morgan Guaranty Trust Company of New York from time to time in New York, New York as its "base" or "prime" rate. 2.12 The Note Purchase Agreement shall be and hereby is amended byinserting a new Schedule C in the form of Schedule C attached to this SecondAmendment. 2.13 Exhibit 1 to the Note Purchase Agreement is amended in itsentirety by substituting therefor Amended Exhibit 1 attached to this Amendment. 2.14 Exhibit 2 to the Note Purchase Agreement is amended in itsentirety by substituting therefor Amended Exhibit 2 attached to this Amendment. 2.15 Exhibit 7.1(b) to the Note Purchase Agreement is amended in itsentirety by substituting therefor Amended Exhibit 7.1(b) attached to thisAmendment. SECTION 3 Representations and Warranties of the Company. To induce the Noteholders to execute and deliver this Second Amendment (which representations shall survive the execution and delivery of this Second Amendment), each of the Company and the Guarantors represent and warrant to the Noteholders that: (a) since December 31, 2002, there has been no change in the condition, financial or otherwise, of the Company and its Subsidiaries as shown on the consolidated balance sheet as of such date except changes in the ordinary course of business, none of which individually or in the aggregate has had, or reasonably could be expected to have, a Material Adverse Effect; (b) this Second Amendment has been duly authorized, executed and delivered by it and this Second Amendment constitutes the legal, valid and binding obligation, contract and agreement of the Company and Guarantors enforceable against each of them in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, 11 moratorium or similar laws relating to or limiting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or in law); (c) the Note Agreement, as amended by this Second Amendment, constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or in law); (d) the Amended and Restated Notes have been duly authorized by all necessary corporate action on the part of the Company and the Amended and Restated Notes being delivered on the Effective Date have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or in law); (e) the execution, delivery and performance by the Company of this Second Amendment and the Amended and Restated Notes and by the Guarantors of this Second Amendment (i) have been duly authorized by all requisite corporate action and, if required, shareholder action, (ii) do not require the consent or approval of any governmental or regulatory body or agency, and (iii) do not and will not (A) violate (1) any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) any provision of any material indenture, agreement or other instrument to which it is a party or by which its properties or assets are or may be bound, including, without limitation, the Note Agreement, or (B) result in a breach or constitute (along or with due notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in clause (iii)(A)(3) of this Section 3(e); (f) except as set forth in Sections 5(d) and (e) and as set forth in the description of the 0.25% restructuring fee contained in Section 2.3 of this Second Amendment and comparable fees as set forth in the separate amendments dated as of the date hereof to each of the Specified Agreements, the Company has not paid or agreed to pay any fee or other compensation to any party to the Specified Agreements in connection with the amendment of the Note Agreement or the Notes; 12 (g) as of the date hereof and after giving effect to this Second Amendment, no Default or Event of Default has occurred which is continuing; and (h) all the representations and warranties contained in Section 5 of the Note Agreement are true and correct in all material respects with the same force and effect as if made by the Company on and as of the date hereof. SECTION 4 Reaffirmation of Subsidiary Guarantee Agreement. Each of the Guarantors hereby reaffirms each of their obligations under the Subsidiary Guarantee Agreement after giving effect to this Second Amendment. SECTION 5 Conditions to Effectiveness of this Amendment. Subject to the proviso below, this Second Amendment shall be deemed effective as of April 11, 2003, provided that each and every one of the following conditions shall have been satisfied: (a) each Amended and Restated Note or, if requested by any Noteholder, each Allonge shall have been duly executed by the Company and shall have been delivered to the Noteholders or their special counsel; (b) executed counterparts of this Second Amendment, duly executed by the Company, the Guarantors and the holders of 100% of the outstanding principal amount of the Notes, shall have been delivered to the Noteholders; (c) the representations and warranties of the Company and the Guarantors set forth in Section 3 hereof are true and correct on and with respect to the date hereof; (d) subject to Section 8.7(b) of the Note Purchase Agreement, the Company shall have paid in cash an amendment fee to each Noteholder in an amount equal to 0.625% of the outstanding principal amount of the Notes (other than the Deferral Fee Notes and Make-Whole Notes) held by such Noteholder (each as calculated on the Second Amendment Effective Date); (e) the Company shall have paid to each Noteholder the aggregate amount of interest, accrued and unpaid up to and including the Second Amendment Effective Date, on the Notes, including, without limitation as a result of the effectiveness of the 0.50% increase in the Series A Applicable Rate effective as of February 27, 2003 pursuant hereto; (f) the Company shall have paid the reasonable fees and expenses of Schiff Hardin & Waite, special counsel to the Noteholders, in connection with the negotiation, preparation, approval, execution and delivery of this Second Amendment; (g) the Noteholders shall have received similar executed amendments to the Specified Agreements in form and substance satisfactory to the Noteholders; 13 provided that upon the satisfaction of the foregoing conditions precedent, the amendments set forth in this Second Amendment relating to the Series A Applicable Rate shall be effective as of February 27, 2003 and the amounts added to the Make-Whole Notes for February 28, 2003 and March 31, 2003 shall be adjusted accordingly. SECTION 6 Consents and Waivers. Upon and by virtue of this Second Amendment becoming effective as herein contemplated, the Noteholders hereby consent to the amendments specified herein, including the amendment of the Specified Agreements, in each case in a manner similar to the amendments hereunder. SECTION 7 Miscellaneous. (a) This Second Amendment shall be construed in connection with and as part of the Note Agreement, and except as modified and expressly amended by this Second Amendment, all terms, conditions and covenants contained in the Note Agreement are hereby ratified and shall be and remain in full force and effect. (b) Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Second Amendment may refer to the Note Agreement without making specific reference to this Second Amendment, but nevertheless all such references shall include this Second Amendment unless the context otherwise requires. (c) The descriptive headings of the various Sections or parts of this Second Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof. (d) This Second Amendment shall be governed by and construed in accordance with Illinois law, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. (e) The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Second Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement. 14 IN WITNESS WHEREOF, the parties hereto have caused this SecondAmendment to be duly executed by their respective authorized officers as of theday and year first above written. WABASH NATIONAL CORPORATION By:___________________________________ Christopher A. Black, Vice President & TreasurerAccepted and Agreed: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: ------------------------------- Name: ----------------------------- Title: ----------------------------Accepted and Agreed: NATIONWIDE LIFE INSURANCE COMPANY By: ------------------------------- Name: ----------------------------- Title: ----------------------------Accepted and Agreed: WEST COAST LIFE INSURANCE COMPANY By: ------------------------------- Name: ----------------------------- Title: ----------------------------Accepted and Agreed: NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY By: ------------------------------- Name: ----------------------------- Title: ----------------------------Accepted and Agreed: GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY By: ------------------------------- Name: ----------------------------- Title: ---------------------------- By: ------------------------------- Name: ----------------------------- Title: ---------------------------- CONSENT AND REAFFIRMATION Each of the undersigned hereby acknowledges receipt of a copyof the foregoing Second Amendment dated as of April 11, 2003 ("SecondAmendment") to the Amended and Restated Note Purchase Agreement, dated as ofApril 12, 2002 and as amended on December 13, 2002 by and among Wabash NationalCorporation, a Delaware corporation ("Company"), and the several Noteholdersparty to the Note Agreement (collectively, the "Noteholders"). Capitalized termsused in this Consent and Reaffirmation and not defined herein shall have themeanings given to them in the Note Purchase Agreement. Without in any wayestablishing a course of dealing by the Noteholders, each of the undersignedconsents to the Second Amendment and reaffirms the terms and conditions of theGuaranty, the Note Purchase Agreement and any other Note Document executed by itand acknowledges and agrees that such agreement and each and every such NoteDocument executed by the undersigned in connection with the Note PurchaseAgreement remains in full force and effect and is hereby reaffirmed, ratifiedand confirmed. All references to the Note Purchase Agreement contained in theabove-referenced documents shall be a reference to the Note Purchase Agreementas so modified by the Second Amendment and as the same may from time to timehereafter be amended, modified or restated.Dated: April 11, 2003 APEX TRAILER LEASING & RENTALS, L.P. By: Wabash National Corporation, its general partner By: _______________________________________________ Christopher A. Black, Vice President & Treasurer CLOUD OAK FLOORING COMPANY, INC. By: _______________________________________________ Christopher A. Black, Authorized Representative CONTINENTAL TRANSIT CORPORATION By: _______________________________________________ Christopher A. Black, Authorized Representative FTSI DISTRIBUTION COMPANY, L.P. By: Wabash National Trailer Centers, Inc., formerly known as NOAMTC, Inc., its general partner By: _______________________________________________ Christopher A. Black, Authorized Representative NATIONAL TRAILER FUNDING, L.L.C. By: Wabash National Trailer Centers, Inc., formerly known as NOAMTC, Inc., its Member By: _______________________________________________ Christopher A. Black, Authorized Representative WABASH NATIONAL TRAILER CENTERS, INC., formerly known as NOAMTC, Inc. By: _______________________________________________ Christopher A. Black, Authorized Representative WABASH FINANCING LLC By: _______________________________________________ Christopher A. Black, Authorized Representative WABASH NATIONAL L.P. By: Wabash National Trailer Centers, Inc., formerly known as NOAMTC, Inc., its general partner By: _______________________________________________ Christopher A. Black, Authorized Representative WABASH NATIONAL SERVICES, L.P. By: Wabash National Trailer Centers, Inc., formerly known as NOAMTC, Inc., its general partner By: _______________________________________________ Christopher A. Black, Authorized Representative WABASH TECHNOLOGY CORP. By: _______________________________________________ Christopher A. Black, Authorized Representative WNC CLOUD MERGER SUB, INC. By: _______________________________________________ Christopher A. Black, Authorized Representative WNC RECEIVABLES MANAGEMENT CORP. By: _______________________________________________ Christopher A. Black, Secretary WTSI TECHNOLOGY CORP. By: _______________________________________________ Christopher A. Black, Authorized Representative [FORM OF NOTE] AMENDED AND RESTATED WABASH NATIONAL CORPORATION SERIES A ADJUSTING RATE SENIOR SECURED NOTE DUE MARCH 30, 2004No. [_____] [Date]$[_______] PPN: [________] FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to[___________________________], or registered assigns, the principal sum of[___________________________] DOLLARS on March 30, 2004, with interest (computedon the basis of a 360-day year of twelve 30-day months) (a) on the unpaidbalance thereof at the rate equal to the Series A Applicable Rate (as definedbelow) from the date hereof, payable monthly, on the last Business Day of eachcalendar month in each year, commencing with the last Business Day of thecalendar month next succeeding the date hereof, until the principal hereof shallhave become due and payable, and (b) to the extent permitted by law on anyoverdue payment (including any overdue prepayment) of principal, any overduepayment of interest and any overdue payment of any Make-Whole Amount (as definedin the Note Purchase Agreement referred to below), payable monthly as aforesaid(or, at the option of the registered holder hereof, on demand), at a rate perannum from time to time equal to the greater of (i) 2.00% over the Series AApplicable Rate or (ii) 2.00% over the rate of interest publicly announced byMorgan Guaranty Trust Company of New York from time to time in New York, NewYork as its "base" or "prime" rate. As used herein, "Series A Applicable Rate"means, at any time, the sum of (i) 10.16% per annum plus (ii) the ApplicableMargin (as defined in the Note Purchase Agreement) at such time. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreements referred to below. This Note is one of a series of Series A Senior Secured Notes (hereincalled the "Notes") issued pursuant to separate Amended and Restated NotePurchase Agreements, each dated as of April 12, 2002 (as from time to timeamended, the "Note Purchase Agreements"), between the Company and the respectivePurchasers named therein and is entitled to the benefits thereof. Each holder ofthis Note will be deemed, by its acceptance hereof, (i) to have agreed to theconfidentiality provisions set forth in Section 20 of the Note PurchaseAgreements and (ii) to have made the representation set forth in Section 6.2 ofthe Note Purchase Agreements.This Note is a registered Note and, as provided in the Note Purchase Agreements,upon surrender of this Note for registration of transfer, duly endorsed, oraccompanied by a written instrument of transfer duly executed, by the registeredholder hereof or such holder's attorney duly authorized in writing, a new Notefor a like principal amount will be issued to, and EXHIBIT 1 (to Note Purchase Agreement)registered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. This Note is subject to mandatory and optional prepayment, in whole orfrom time to time in part, at the times and on the terms specified in the NotePurchase Agreements, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreements,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Make-Whole Amount) and with the effect provided in the Note PurchaseAgreements. This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreements). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreements) in respect of such security and otherwise. The payment of the principal amount of, premium, if any, and intereston this Note has been unconditionally guaranteed by the Guarantors (as definedin the Note Purchase Agreements) pursuant to the Note Guaranty (as defined inthe Note Purchase Agreements). Reference is hereby made thereto for a statementof the rights and benefits accorded thereby. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOISEXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By: __________________________________ Title:____________________________ E-1-2 [FORM OF MAKE-WHOLE NOTE] AMENDED AND RESTATED WABASH NATIONAL CORPORATION SERIES A ADJUSTING RATE SENIOR SECURED PIK NOTE DUE MARCH 30, 2004No. [_______] [_____________]$[__________] PPN: [________] FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to[____________________________], or registered assigns, the [____] Note AccretedPrincipal Amount on March 30, 2004. The outstanding principal amount of thisSenior Secured PIK Note shall accrete at the Series A Applicable Rate on amonthly basis on the last Business Day of each calendar month in each yearcommencing with the last Business Day of the calendar month next succeeding thedate hereof (computed on the basis of a year of 360 days and twelve 30-daymonths) from January 31, 2003 and shall cease to accrete on the date on whichthis Senior Secured PIK Note shall have been paid in full; provided that in thecase of any prepayment or other payment of this Senior Secured PIK Note on anydate other than the last Business Day of any calendar month, the outstandingprincipal amount of this Senior Secured PIK Note shall accrete at the Series AApplicable Rate on a daily basis from the date of the last Business Day of suchcalendar month to the date of such prepayment; provided further that upon theoccurrence of an Event of Default (as defined in the Note Purchase Agreementsreferred to below and until such Event of Default has been cured or waived inwriting (such period constituting a "Default Interest Period"), the outstandingprincipal amount of this Senior Secured PIK Note shall accrete, to the extentpermitted by law, at a rate per annum from time to time equal to the greater of(i) 2% over the Series A Applicable Rate or (ii) 2% over the rate of interestpublicly announced by Morgan Guaranty Bank of New York from time to time in NewYork, New York as its "base" or "prime" rate. It is understood and agreed thatany reference in this Senior Secured PIK Note to the "principal amount" of thisSenior Secured PIK Note shall include a reference to the [____] Note AccretedPrincipal Amount thereof whether or not specifically set forth. As used herein,"Series A Applicable Rate" means, at any time, the sum of (i) 10.16% per annumplus (ii) the Applicable Margin (as defined in the Note Purchase Agreement) atsuch time. "[____] Note Accreted Principal Amount" shall mean with reference tothis Senior Secured PIK Note, as of any date of determination, the sum of (a)[__________] and (b) the outstanding principal amount of this Senior Secured PIKNote which shall have been accreted thereon from January 31, 2003 through suchdate, such amount shall accrete at the Series A Applicable Rate on a monthlybasis on the last Business Day of each calendar month in each year commencingwith the last Business Day of the calendar month next succeeding the date hereof(computed on the basis of a year of 360 days and twelve 30-day months) and shallcease to accrete on the date on which this Senior Secured PIK Note shall havebeen paid in full; provided that in the case of any prepayment or other paymentof this Senior Secured PIK Note EXHIBIT 2 to Note Purchase Agreement)on any date other than the last Business Day of any calendar month, theoutstanding principal amount of this Senior Secured PIK Note shall accrete atthe Series A Applicable Rate on a daily basis from the date of the last BusinessDay of such calendar month to the date of such prepayment. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreements referred to below. This Note is one of the Series A Applicable Rate Senior Secured PIKNotes, due March 30, 2004 (the "Deferral Fee Notes") of the Company in theaggregate original principal amount of [_________] which, together with theCompany's Notes and Make-Whole Notes (as each is defined in the Note PurchaseAgreements described below) are hereinafter referred to collectively as the"Notes", are issued and outstanding pursuant to separate Amended and RestatedNote Purchase Agreements, each dated as of April 12, 2002 (as from time to timeamended, the "Note Purchase Agreements"), between the Company and the respectivePurchasers named therein and is entitled to the benefits thereof. Each holder ofthis Note will be deemed, by its acceptance hereof, (i) to have agreed to theconfidentiality provisions set forth in SECTION 20 of the Note PurchaseAgreements and (ii) to have made the representation set forth in SECTION 6.2 ofthe Note Purchase Agreements. This Note is a registered Note and, as provided in the Note PurchaseAgreements, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. The Company will make a required prepayment of principal on the dateand in the amount specified in the Note Purchase Agreements. This Note is alsosubject to optional prepayment, in whole or from time to time in part, at thetimes and on the terms specified in the Note Purchase Agreements, but nototherwise. If an Event of Default, as defined in the Note Purchase Agreements,occurs and is continuing, the [____] Note Accreted Principal Amount of this Notemay be declared or otherwise become due and payable in the manner, at the price(including any applicable Make-Whole Amount) and with the effect provided in theNote Purchase Agreements.This Note is equally and ratably secured by the Collateral Documents (as definedin the Note Purchase Agreements). Reference is hereby made to the CollateralDocuments for a description of the collateral thereby mortgaged, warranted,bargained, sold, released, conveyed, assigned, transferred, pledged andhypothecated, the nature and extent of the security for the E-2-2Notes, the rights of the holders of the Notes, the Collateral Agent (as definedin the Note Purchase Agreements) in respect of such security and otherwise. The payment of all [____] Note Accreted Principal Amount of, premium,if any, and interest on this Note has been unconditionally guaranteed by theGuarantors (as defined in the Note Purchase Agreements) pursuant to the NoteGuaranty (as defined in the Note Purchase Agreements). Reference is hereby madethereto for a statement of the rights and benefits accorded thereby. This Note shall be construed and enforced in accordance with, and therights and parties shall be governed by, the law of the State of Illinois,excluding choice-of-law principles of the law of such State that would requirethe application of the laws of a jurisdiction other than such State. WABASH NATIONAL CORPORATION By: ________________________________ Title:__________________________ E-2-3 [FORM OF PIK GRID NOTE] AMENDED AND RESTATED WABASH NATIONAL CORPORATION SENIOR SECURED PIK GRID NOTE DUE MARCH 30, 2004No. [____] [_____________] PPN: [________] FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to [___________________],or registered assigns, the [____] Note Accreted Principal Amount on March 30,2004. The outstanding principal amount of this Senior Secured PIK Grid Noteshall accrete at the Series A Applicable Rate per annum on a monthly basis onthe last Business Day of each calendar month in each year commencing with thelast Business Day of the calendar month next succeeding the date hereof(computed on the basis of a year of 360 days and twelve 30-day months) from thedate of issuance hereof and shall cease to accrete on the date on which thisSenior Secured PIK Grid Note shall have been paid in full; provided that in thecase of any prepayment or other payment of this Senior Secured PIK Grid Note onany date other than the last Business Day of any calendar month, the outstandingprincipal amount of this Senior Secured PIK Grid Note shall accrete at theSeries A Applicable Rate per annum on a daily basis from the date of the lastBusiness Day of such calendar month to the date of such prepayment; provided,further that upon the occurrence of an Event of Default (as defined in the NotePurchase Agreement referred to below and until such Event of Default has beencured or waived in writing (such period constituting a "Default InterestPeriod"), the outstanding principal amount of this Senior Secured PIK Grid Noteshall accrete, to the extent permitted by law, at a rate per annum from time totime equal to the greater of (i) 2.00% over the Series A Applicable Rate or (ii)2.00% over the rate of interest publicly announced by Morgan Guaranty Bank ofNew York from time to time in New York, New York as its "base" or "prime" rate.It is understood and agreed that any reference in this Senior Secured PIK GridNote to the "principal amount" of this Senior Secured PIK Grid Note shallinclude a reference to the [____] Note Accreted Principal Amount thereof whetheror not specifically set forth. As used herein, "Series A Applicable Rate" means,at any time, the sum of (i) 10.16% per annum plus (ii) the Applicable Margin (asdefined in the Note Purchase Agreement) at such time. "[____] Note Accreted Principal Amount" shall mean with reference tothis Senior Secured PIK Grid Note, as of any date of determination, the sum of(a) the Make-Whole Amounts which shall become payable to the holder of this Notewith respect to such holder's Series A Notes, from time to time upon payment bythe Company of portions of the principal amount of such Notes pursuant toSection 8.1(b) of the Note Purchase Agreement and (b) the outstanding principalamount of this Senior Secured PIK Grid Note which shall have been accretedthereon from the date of issuance through such date, such amount shall accreteat the Series A Applicable Rate per annum on a monthly basis on the lastBusiness Day of each calendar month in each year commencing with the lastBusiness Day of the calendar month next succeeding the date hereof (computed onthe basis of a year of 360 days and twelve 30-day EXHIBIT 3 (to Note Purchase Agreement)months) and shall cease to accrete on the date on which this Senior Secured PIKGrid Note shall have been paid in full; provided that in the case of anyprepayment or other payment of this Senior Secured PIK Grid Note on any dateother than the last Business Day of any calendar month, the outstandingprincipal amount of this Senior Secured PIK Grid Note shall accrete at theSeries A Applicable Rate per annum on a daily basis from the date of the lastBusiness Day of such calendar month to the date of such prepayment. The amountsof the Make-Whole Amounts payable from time to time may for the convenience ofthe parties be recorded by the holder hereof on the attached Grid however thebooks and records of the holder shall, in the absence of manifest error, beconclusive as to the determination of the Make-Whole Amounts evidenced by thisNote. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of the Senior Secured PIK Grid Notes due March 30,2004 (the "Make-Whole Notes") of the Company which, together with the Company'sNotes and Deferral Fee Notes (as each is defined in the Note Purchase Agreementdescribed below) are hereinafter referred to collectively as the "Notes", areissued and outstanding pursuant to that certain Amended and Restated NotePurchase Agreement, dated as of April 12, 2002 (as from time to time amended,the "Note Purchase Agreement"), between the Company and the respectivePurchasers named therein and is entitled to the benefits thereof. Each holder ofthis Note will be deemed, by its acceptance hereof, (i) to have agreed to theconfidentiality provisions set forth in Section 20 of the Note PurchaseAgreement and (ii) to have made the representation set forth in Section 6.2 ofthe Note Purchase Agreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. The Company will make a required prepayment of principal on the dateand in the amount specified in the Note Purchase Agreement. This Note is alsosubject to optional prepayment, in whole or from time to time in part, at thetimes and on the terms specified in the Note Purchase Agreement, but nototherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Make-Whole Amount) and with the effect provided in the Note PurchaseAgreement. E-3-2 This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreement) in respect of such security and otherwise. The payment of all [____] Note Accreted Principal Amount of, premium,if any, and interest on this Note has been unconditionally guaranteed by theGuarantors (as defined in the Note Purchase Agreement) pursuant to the NoteGuaranty (as defined in the Note Purchase Agreement). Reference is hereby madethereto for a statement of the rights and benefits accorded thereby. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS,EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By: ______________________________ Title: ______________________________ E-3-3 WABASH NATIONAL CORPORATION SCHEDULE OF MAKE-WHOLE AMOUNTS DUE UNDER THE SENIOR SECURED PIK GRID NOTE DUE MARCH 30, 2004 Total Accreted Principal, Accreted Accreted Interest and Make-Whole Principal Applicable Interest Deferral Fee Date Amount Amount Interest Rate Payable Payable 4/30/025/31/026/30/027/31/028/31/029/30/0210/31/0211/30/0212/31/021/31/032/28/033/31/034/30/035/31/036/30/037/31/038/31/039/30/0310/31/0311/30/0312/31/031/31/042/28/04 E-2-4 Amended Exhibit 7.1(b) FORM OF COMPLIANCE CERTIFICATETo: The Parties to the Note Agreements Described Below This Compliance Certificate is furnished pursuant to that certain Amended and Restated Note Purchase Agreement dated as of April 12, 2002 (as amended, modified, renewed or extended from time to time, the "Agreement") between Wabash National Corporation (the "Company"), and each of the Purchasers named therein. Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected ________________ of the Company and the [Chief Financial Officer] [Treasurer]; 2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Company and its Subsidiaries during the accounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and 4. Schedule I and Schedule II attached hereto set forth financial data and computations evidencing the Company's compliance with certain covenants of the Agreement and the Excess Cash Flow during the accounting period covered by the attached financial statements, all of which data and computations are true, complete and correct. Exhibit 7/1(b) (to Note Purchase Agreement) Described below are the exceptions, if any, to paragraph 3, listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Company has taken, is taking, or proposes to take with respect to each such condition or event: ______________________________________________________________ ______________________________________________________________ E-7.1(b)-2 The foregoing certifications, together with the computationsset forth in Schedule I and Schedule II hereto and the financial statementsdelivered with this Certificate in support hereof, are made and delivered this_____ day of __________, ____. ________________________________ [Insert Name of Officer]Wabash National CorporationQuarterly Compliance Certificate Worksheet COMPLIANCE CERTIFICATE QUARTERLY SCHEDULE OF COMPLIANCE AS OF _______________, 2002 (DOLLARS IN THOUSANDS)A. EXCESS CASH FLOW (PARAGRAPH 4B(c)) 1. Actual Amount: a. Sum of Cash & Cash Equivalents $ - b. Quarterly Average Available Liquidity $ - ----------- c. Total Available Liquidity (a+b) $ - 2. Projected Amount: a. Liquidity Amount (Schedule B-19) $ - b. Cash Basket $ 5,000 ----------- c. Total Projected Liquidity Amount (a+b) $ 5,000 3. Cash Flow Available for Debt Paydown (1c - 2c) $ (5,000)B. MAXIMUM LEVERAGE VALUATION RATIO (PARAGRAPH 6C(c)) 1. Actual Amount: a. Senior Notes b. Indebtedness under Credit Agreement (excluding L/C Obligations) ----------- c. Total Debt (a+b) $ - d. Cash and Cash Equivalents e. Net Inventory f. Net Prepaid and Other Expenses g. Net PP&E ----------- h. Total Assets (d+e+f+g) $ - i. Leveraged Ratio (c/h) 0.00x 2. Maximum Permitted Ratio xC. MAXIMUM CAPITAL EXPENDITURES (PARAGRAPH 6C(f)) 1. Actual Amount: a. Capital Expenditures (Fiscal Year-to-Date) $ - 2. Maximum Annual Allowed Amount $ 6,000D. MAXIMUM FINANCE CONTRACTS (PARAGRAPH 6C(g)) 1. Actual Amount: a. Finance Contracts (12 mth period 4/12/02-4/11/03) $ - 2. Maximum Annual Allowed Amount $ 5,000Wabash National CorporationMonthly Compliance Certificate Worksheet COMPLIANCE CERTIFICATE MONTHLY SCHEDULE OF COMPLIANCE AS OF _________, 2003 (DOLLARS IN THOUSANDS) A. MINIMUM ROLLING 12 MONTH CONSOLIDATED EBITDA (PARAGRAPH 6C(d)) 1. Actual Amount: a. Consolidated Operating Income $ - b. Foreign and Domestic Taxes Deducted in Operating Income $ - c. Interest Expense Deducted in Operating Income $ - d. Other Non-Cash Charges Deducted in Operating Income $ - (Aggregate Annual Amount not in Excess of $15,000,000) e. Depreciation Expense Deducted in Operating Income $ - f. Amortization Expense Deducted in Operating Income $ - g. Interest Income Included in Operating Income $ - h. Total Tax Benefit Included in Operating Income $ - i. Consolidated EBITDA (a+b+c+d+e+f-g-h) $ - 2. Minimum Required Amount $ -Wabash National CorporationQuarterly Compliance Certificate Worksheet COMPLIANCE CERTIFICATE QUARTERLY SCHEDULE OF COMPLIANCE AS OF _________, 2003 (DOLLARS IN THOUSANDS)A. EXCESS CASH FLOW (PARAGRAPH 4B(c)) 1. Actual Amount: a. Sum of Cash & Cash Equivalents $ - b. Available Liquidity $ - ----------- c. Total Available Liquidity (a+b) $ - 2. Deduction $ 50,000 3. Gross Excess Cash Flow ----------- 4. Excess Cash Flow (lesser of $20,000 and item 3) -----------B. MINIMUM CONSOLIDATED TAX ADJUSTED EQUITY (PARAGRAPH 6C(a)) 1. Actual Amount: a. Consolidated Equity $ - b. Cumulative Federal, State and Local Income Tax Benefit $ - ----------- c. Consolidated Tax Adjusted Equity(a+b) $ - 2. Minimum Required Amount $ - C. MINIMUM CONSOLIDATED EQUITY (PARAGRAPH 6C(b)) 1. Actual Amount: a. Consolidated Equity $ - b. Minimum Required Amount $ - D. MAXIMUM LEVERAGE VALUATION RATIO (PARAGRAPH 6C(c)) 1. Actual Amount: a. Senior Notes $ - a. Senior Notes $ - b. Indebtedness under Credit Agreement (excluding L/C Obligations) $ - ----------- c. Total Debt (a+b) $ - d. Cash and Cash Equivalents $ - e. Net Inventory $ - f. Net Prepaid and Other Expenses $ - g. Net PP&E $ - ------- h. Total Assets (d+e+f+g) $ - i. Leverage Ratio (c/h) x ------ 2. Maximum Permitted Ratio x ------E. MINIMUM INTEREST COVERAGE RATIO (PARAGRAPH 6C(e)) 1. Actual Amount: a. Cumulative Consolidated EBITDA $ - b. Cumulative Interest Expense $ - c. Interest Coverage Ratio (a/b) x ------ 2. Minimum Ratio Allowed -F. MAXIMUM CAPITAL EXPENDITURES (PARAGRAPH 6C(f)) 1. Actual Amount: a. Capital Expenditures (Fiscal Year-to-Date) $ - 2. Maximum Annual Allowed Amount $ 6,000G. MAXIMUM FINANCE CONTRACTS (PARAGRAPH 6C(g)) 1. Actual Amount: a. Finance Contracts (12 month period 4/12/02-4/11/03) $ - (12 month period 4/12/03-4/11/04) $ 2. Maximum Annual Allowed Amount $ 5,000H. MAXIMUM OTHER UNSECURED INDEBTEDNESS (PARAGRAPH 6B(a)(ix)) 1. Actual Amount: $_______ 2. Maximum Permitted Amount: $3,000I. SALES OF ASSETS (PARAGRAPH 6B(b) [IF APPLICABLE]) 1. Actual Amount: a. Total amount of sales of assets in current fiscal year to date (See Schedule II for detail) $_______ 2. Maximum Permitted Amount: $5,000J. SALES OF ASSETS BY APEX TRAILER LEASING & RENTALS, L.P. ("APEX") (PARAGRAPH 6B(b)(iv)) 1. Actual Amount: a. Total amount of sales of assets in current fiscal year to date (See Schedule II for detail) $________ 2. Maximum Permitted Amount: a. Total Assets of APEX at end of prior fiscal year $________ b. Intangible assets -________ c. Tangible Assets of APEX at end of prior fiscal year =$________ x 0.50 d. Maximum Permitted Amount =$_______K. INVESTMENTS (PARAGRAPH 6B(d)(vii)) For each new Investment pursuant to Paragraph 6B(d)(vii) of the Agreement during the most recent fiscal quarter covered by this Certificate, complete the following: 1. Date and brief description of nature of new Investment: ------------------------------------------------------- ------------------------------------------------------- 2. Actual Amount: a. Amount of new Investment $_______ b. Amount of existing Investments under Paragraph 6B(d)(vii) +_______ c. Total Investments under Paragraph 6B(d)(vii) =$______ 3. Maximum Permitted Amount: $5,000L. LEASES (PARAGRAPH 6B(n)) 1. Actual Amount of Leases: $______ 2. Maximum Permitted Amount: $3,500 SCHEDULE II TO COMPLIANCE CERTIFICATE Schedule of Compliance as of __________, ____ (Dollars in Thousands)A. Sales of Assets [List separate sales and amounts] $_____________ ______________ ______________ ______________ ______________ Total $_____________ EXHIBIT 10.46================================================================================ WABASH NATIONAL CORPORATION ---------- SECOND AMENDMENT Dated as of April 11, 2003 To AMENDED AND RESTATED NOTE PURCHASE AGREEMENT Dated as of April 12, 2002 ---------- Re: $22,000,000 Adjustable Rate Senior Secured Notes, Series C, due March 30, 2004$9,000,000 Adjustable Rate Senior Secured Notes, Series D, due December 17, 2004$3,000,000 Adjustable Rate Senior Secured Notes, Series E, due March 13, 2005 $13,000,000 Adjustable Rate Senior Secured Notes, Series F, due December 17, 2006 $20,000,000 Adjustable Rate Senior Secured Notes, Series G, due December 30, 2008 and $25,000,000 Adjustable Rate Senior Secured Notes, Series H, due December 17, 2008================================================================================ SECOND AMENDMENT TO AMENDED AND RESTATED NOTE PURCHASE AGREEMENT This Second Amendment dated as of April 11, 2003 (the or this"Second Amendment") to the Amended and Restated Note Purchase Agreement dated asof April 12, 2002 is among Wabash National Corporation, a Delaware corporation(the "Company"), the Subsidiary Guarantors (as defined below) and the severalPurchasers party to the Note Agreement (collectively, the "Noteholders"). RECITALS: A. The Company and the Noteholders have heretofore enteredinto that certain Amended and Restated Note Purchase Agreement dated as of April12, 2002 as amended by that certain First Amendment dated as of December 13,2002 (as so amended, the "Note Agreement"). The Company has heretofore issuedits $22,000,000 10.41% Senior Secured Notes, Series C, due March 30, 2004bearing PPN 929566 D* 5 (the "Original Series C Notes"), dated April 12, 2002,its $9,000,000 10.56% Senior Secured Notes, Series D, due December 17, 2004bearing PPN 929566 D@ 3 (the "Original Series D Notes"), dated April 12, 2002,its $3,000,000 10.61% Senior Secured Notes, Series E, due March 13, 2005 bearingPPN 929566 D# 1 (the "Original Series E Notes"), dated April 12, 2002, its$13,000,000 10.72% Senior Secured Notes, Series F, due December 17, 2006 bearingPPN 929566 E* 4 (the "Original Series F Notes"), dated April 12, 2002, its$20,000,000 10.78% Senior Secured Notes, Series G, due December 30, 2008 bearingPPN 929566 E@ 2 (the "Original Series G Notes"), dated April 12, 2002, and its$25,000,000 10.80% Senior Secured Notes, Series H, due December 17, 2008 bearingPPN 929566 E# 0 and dated April 12, 2002 (the "Original Series H Notes"; theOriginal Series C Notes, the Original Series D Notes, the Original Series ENotes, the Original Series F Notes, the Series G Notes and the Original Series HNotes are hereinafter collectively referred to as the "Original Notes") pursuantto the Note Agreement. The Noteholders are the holders of 100% of the principalamount of the Notes presently outstanding. B. Apex Trailer Leasing & Rentals, L.P., a Delaware limitedpartnership ("Apex"), Cloud Oak Flooring Company, Inc., an Arkansas corporation("Cloud"), Continental Transit Corporation, an Indiana corporation("Continental"), FTSI Distribution Company, L.P., a Delaware limited partnership("FTSI"), National Trailer Funding, L.L.C., a Delaware limited liability company("National"), NOAMTC, Inc., a Delaware corporation ("NOAMTC"), Wabash FinancingLLC, a Delaware limited liability company ("Wabash Financing"), Wabash National,L.P., a Delaware limited partnership ("Wabash National"), Wabash NationalServices, L.P., a Delaware limited partnership ("Services"), Wabash TechnologyCorp., a Delaware corporation ("Technology"), WNC Cloud Merger Sub, Inc., anArkansas corporation ("WNC Cloud"), WNC Receivables Management Corp., a Delawarecorporation ("Receivables"), and WTSI Technology Corp., a Delaware corporation("WTSI") (Apex, Cloud, Continental, FTSI, National, NOAMTC, Wabash Financing,Wabash National, Services, Technology, WNC Cloud, Receivables and WTSI arehereinafter collectively referred to as the "Subsidiary Guarantors") haveheretofore entered into that certain Amended and Restated Subsidiary GuaranteeAgreement, dated as of April 12, 2002 (the "Subsidiary Guarantee Agreement")under and pursuant to which each of the Subsidiary Guarantors guaranteed thepayment of the Original Notes and the performance by the Company of itsobligations under the Note Agreement. C. The Company and the Noteholders desire to further modifythe Note Agreement and to amend and restate the Notes to, among other things,(i) amend certain covenants and related definitions, (ii) provide for additionalcollateral to secure the obligations represented by the Notes and the NoteGuaranty, (iii) amend certain other provisions of the Note Agreement and (iv)provide that the amendment to the Note Agreement be effective as of the datehereof (the "Effective Date") in the respects, but only in the respects,hereinafter set forth. The Subsidiary Guarantors in connection with this SecondAmendment desire to affirm their respective obligations under the SubsidiaryGuarantee Agreement. D. All requirements of law have been fully complied with andall other acts and things necessary to make this Second Amendment a valid, legaland binding instrument according to its terms for the purposes herein expressedhave been done or performed. NOW, THEREFORE, upon the full and complete satisfaction of theconditions precedent to the effectiveness of this Second Amendment set forth inSS.5 hereof, the Company, the Subsidiary Guarantors and the Noteholders, forgood and valuable consideration the receipt and sufficiency of which are herebyacknowledged, do hereby agree as follows: Section 1 Definitions; References. Unless otherwise specificallydefined herein, each term used herein which is defined in the Note Agreementshall have the meaning assigned to such term in the Note Agreement. Eachreference to "hereof", "hereunder", "herein" and "hereby" and each other similarreference and each reference to "this Agreement" and each other similarreference contained in the Note Agreement shall from and after the date hereofrefer to the Note Agreement as amended hereby. Section 2 Amendments. 2.1. Schedule B of the Note Agreement is amended by adding thefollowing new defined terms in alphabetical order: "Applicable Margin" shall mean the sum of (i) an amount equal to 0.50% for every 10% of negative variance from the Targeted Consolidated EBITDA Amount, (ii) 0.50% after the occurrence and during the continuation of the Leverage Valuation Ratio being determined at greater than 0.85 to 1 (which such Leverage Valuation Ratio is determined on a quarterly basis), (iii) 0.50% for every monthly occurrence of a negative Unadjusted Consolidated EBITDA and (iv) 0.20% for every month during which the "Additional Fee" (as identified and defined in Section 10.1(d) of the Fleet Participation Agreement) is payable under the Fleet Participation Agreement (a "Fleet Equivalent Increase"); provided that the amount calculated by adding the sum of the amounts set forth in clauses (i), (ii) and (iii) above shall not exceed 5.00% in the aggregate. Each calculation of the Applicable Margin will be determined and notice of the Company's determination will be provided to the Noteholders of the determination (with supporting financial information) as at the end of each calendar month and shall be applicable for the next succeeding calendar month and shall be determined without giving effect to, and shall not be additive of, the Applicable Margin determined in any previous month. "Aggregate Closing Fees" shall be as defined in Section 3 of the Second Amendment. -2- "Deferred Principal Amount" means, with respect to each monthly repayment by the Company of principal in accordance with Section 8.1(b)(iii) and Section 8.2 hereof occurring on or after the Second Amendment Effective Date, but prior to January 1, 2004, the Series C-H Note Principal Allocation multiplied by the excess of (x) $4,958,333 minus (y) the actual amount of such repayment of the Notes made by the Company on the last day of each month pursuant to either Section 8.1(b)(ii) or Section 8.2; it being understood and agreed that each occurrence of such an excess will create a new and independent Deferred Principal Amount. "Eligible Asset Impairment Charges" means up to $35,000,000 in the aggregate attributable to, without duplication, any charges incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent such charges relate solely and directly to the impairment of long-lived assets, goodwill and other intangible assets, all in accordance with GAAP. "Eligible Miscellaneous Non-Cash Charges" means non-cash charges (including but not limited to non-cash losses on finance contracts, severance and other loss contingencies but excluding Eligible Asset Impairment Charges and Eligible Restructuring Charges), calculated in accordance with GAAP and, to the extent deducted in computing Consolidated Operating Income, incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent the aggregate amount of such non-cash charges do not exceed $10,000,000 in the aggregate. "Eligible Restructuring Charges" means any charges incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent such charges (i) are incurred in accordance with GAAP and (ii) relate solely and directly to the restructuring, waiving or amending of the instruments and documents evidencing any of the Secured Obligations and other lines of credit, leases or other extensions of credit, including any amounts paid to any lenders, advisor fees and other related costs. "Fleet Equivalent Increase" shall have the meaning assigned thereto in the definition of "Applicable Margin" herein. "Fleet Participation Agreement" means that certain Amended and Restated Participation Agreement dated as of March 30, 2001 as currently in effect among Apex Trailer Leasing & Rentals, L.P., the Company, certain financial institutions from time to time party thereto, U.S. Bank National Association, as trustee and Fleet Capital Corporation individually and as owner participant, collateral agent and administrative agent, as such agreement may be amended, restated, supplemented or otherwise modified from time to time. "Restructuring Fee" shall have the meaning assigned thereto in the Second Amendment. "Second Amendment" means the Second Amendment to the Note Agreement dated as of April 11, 2003. "Second Amendment Effective Date" means the "Effective Date" as defined in Recital C to this Second Amendment. -3- "Series C Adjustable Rate" means the rate per annum to be borne by the Series C Notes which shall be the sum of (i) the Applicable Margin plus (ii) 10.91%. "Series C-H Second Amendment Closing Fee" means an amount equal to 0.625% of the current principal balance of the Notes on the Second Amendment Effective Date. "Series D Adjustable Rate" means the rate per annum to be borne by the Series D Notes which shall be the sum of (i) the Applicable Margin plus (ii) 11.06%. "Series E Adjustable Rate" means the rate per annum to be borne by the Series E Notes which shall be the sum of (i) the Applicable Margin plus (ii) 11.11%. "Series F Adjustable Rate" means the rate per annum to be borne by the Series F Notes which shall be the sum of (i) the Applicable Margin plus (ii) 11.22%. "Series G Adjustable Rate" means the rate per annum to be borne by the Series G Notes which shall be the sum of (i) the Applicable Margin plus (ii) 11.28%. "Series H Adjustable Rate" means the rate per annum to be borne by the Series H Notes which shall be the sum of (i) the Applicable Margin plus (ii) 11.30%. "Targeted Consolidated EBITDA Amount" means, for any period, the cumulative Consolidated EBITDA amount (measured from and after January 1, 2003) furnished on March 6, 2003 to the Holders as part of the Company's 2003 budget minus that portion of such cumulative Consolidated EBITDA amount which is attributable to the sale, from and after January 1, 2003, of any assets or any Subsidiary, to the extent permitted herein or otherwise approved by the Required Holders. "Unadjusted Consolidated EBITDA" means, for any period, on a consolidated basis for the Company and its consolidated Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Consolidated Operating Income, plus (ii) charges against income for foreign taxes and U.S. income taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, minus (a) the total interest income of the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income and minus (b) the total tax benefit reported by the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income. 2.2. Schedule B of the Note Agreement is further amended byamending and restating the following definitions in their entirety to read asfollows: "Consolidated EBITDA" means, for any period, on a consolidated basis for the Company and its consolidated Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Consolidated Operating Income, plus (ii) charges against -4- income for foreign taxes and U.S. income taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, plus (vii) Eligible Asset Impairment Charges to the extent deducted in computing Consolidated Operating Income, plus (viii) Eligible Miscellaneous Non-Cash Charges to the extent deducted in computing Consolidated Operating Income, plus (ix) Eligible Restructuring Charges to the extent deducted in computing Consolidated Operating Income, minus (a) the total interest income of the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income and minus (b) the total tax benefit reported by the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income. "Consolidated Equity" means as of the date of any determination thereof for any relevant period, the total stockholders' equity of the Company and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP, plus the sum of the amounts for such period, without duplication, of (i) foreign currency translation and transaction gains and losses, (ii) all charges against income for foreign taxes and U.S. income taxes, (iii) Eligible Asset Disposition Charges, (iv) Eligible Asset Impairment Charges, (v) Eligible Non-Cash Miscellaneous Charges, and (vi) Eligible Restructuring Charges. "Default Rate" means that rate of interest that is the greater of (a) the Series C Adjustable Rate plus 2% per annum in case of the Series C Notes, the Series D Adjustable Rate plus 2% per annum in case of the Series D Notes, the Series E Adjustable Rate plus 2% per annum in case of the Series E Notes, the Series F Adjustable Rate plus 2% per annum in case of the Series F Notes, the Series G Adjustable Rate plus 2% per annum in case of the Series G Notes, the Series H Adjustable Rate plus 2% per annum in case of the Series H Notes, or (b) 2% over the rate of interest publicly announced by JP Morgan Chase Bank of New York in New York City, New York as its "base" or "prime" rate. "Eligible Asset Disposition Charges" means charges, calculated in accordance with GAAP, incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent (i) such charges relate solely and directly to the sales of assets and properties permitted under SECTION 10.2(B) (including without limitation charges composed of brokerage and investment banking fees, rental and used trailer disposition fees and charges and other disposition transaction costs) and (ii) the proceeds of such sales are used to prepay Indebtedness of the Company and its Subsidiaries to the extent permitted hereunder. 2.3. The second and third full paragraphs of SECTION 1.1 ofthe Note Agreement are hereby amended and restated as follows: "Upon the Second Amendment Effective Date the Company will amend and restate the Notes (other than the Original Series B Notes) in the forms of EXHIBITS 1-6 -5- attached to the Second Amendment. Reference in this Agreement to the "Series C Notes" shall be a reference to the Series C Notes as amended and restated in the form of EXHIBIT 1 together with the applicable PIK Notes related thereto. Reference in this Agreement to the "Series D Notes" shall be a reference to the Series D Notes as amended and restated in the form of EXHIBIT 2 together with the applicable PIK Notes related thereto. Reference in this Agreement to the "Series E Notes" shall be a reference to the Series E Notes as amended and restated in the form of EXHIBIT 3 together with the applicable PIK Notes related thereto. Reference in this Agreement to the "Series F Notes" shall be a reference to the Series F Notes as amended and restated in the form of EXHIBIT 4 together with the applicable PIK Notes related thereto. Reference in this Agreement to the "Series G Notes" shall be a reference to the Series G Notes as amended and restated in the form of EXHIBIT 5 together with the applicable PIK Notes related thereto. Reference in this Agreement to the "Series H Notes" shall be a reference to the Series H Notes as amended and restated in the form of EXHIBIT 6 together with the applicable PIK Notes related thereto. Upon the Second Amendment Effective Date the Company will amend and restate the PIK Notes in the forms of EXHIBIT 7 and 8 attached to the Second Amendment. Reference in this Agreement to the "Notes" shall be a reference to the Notes and PIK Notes as so amended and restated in EXHIBITS 1-8 attached to the Second Amendment with such changes therefrom, if any, as may be approved by you and the Company. The Notes shall be substantially in the form set out in EXHIBITS 1-8, respectively, to the Second Amendment, with such changes therefrom, if any, as may be approved by you and the Company. Certain capitalized terms used in this Agreement are defined in Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or Exhibit to this Agreement. Each of the Notes shall bear interest from the date thereof until such note shall become due and payable in accordance with the terms thereof and hereof (whether at maturity by acceleration or otherwise) at the applicable adjustable rate. Interest on each note shall be computed on the basis of a 360-day year of twelve 30-day months. Notwithstanding the foregoing, the Company shall pay interest on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount at the applicable Default Rate in accordance with the Notes and the terms hereof." 2.4. SECTION 4.11(B) of the Note Agreement shall be amendedand restated in its entirety as follows: "(b) The Company shall have issued to each Holder (other than to the Series C Holders) a promissory grid note in substantially the form of EXHIBIT 8 (each a "Make-Whole Note" and collectively, the "Make-Whole Notes") which shall evidence the payment by the Company to each such Holder of the applicable Make-Whole Amount upon the prepayment of the Notes (other than the Series C Notes) in accordance with the terms and provisions of SECTION 8.1(B). Interest on the Make-Whole Notes shall accrue monthly, shall be computed at a rate equal to (i) in the case of the Make-Whole Notes held by the Series D Holders, at the Series D Adjustable Rate per annum, (ii) in the case of the Make-Whole Notes held by the Series E Holders, at the Series E Adjustable Rate per annum, (iii) in the case of the Make-Whole Notes held by the Series F Holders, at the -6- Series F Adjustable Rate per annum, (iv) in the case of the Make-Whole Notes held by the Series G Holders, at the Series G Adjustable Rate per annum, and (v) in the case of the Make-Whole Notes held by the Series H Holders, at the Series H Adjustable Rate per annum, and shall be added to the interest-bearing principal amount of the Make-Whole Notes." 2.5. SECTION 7.1(A)(I) of the Note Agreement is amended toinsert the following immediately after the reference to "As soon as practicableand in any event" appearing therein: "(A) By no later than fifteen (15) days after the end of each monthly accounting period of the Company, the following (prepared in such format and detail as is required by the Holders): (1) a statement of projected cash sources and uses of the Company and its Subsidiaries for the 13 calendar weeks following such monthly accounting period and a report (to the extent requested by the Holders from time to time) containing management's discussion and analysis of such projections and (2) a statement of cash sources and uses for the immediately preceding monthly accounting period of the Company and for such historical period as is reasonably required by the Holders, in comparative form against the figures and for the corresponding date and period in the projected cash flow statements required under the foregoing subsection (1); the foregoing statements required under subsections (1) and (2) being duly certified by the chief financial officer or treasurer of the Company, (B) Concurrently with the delivery of each monthly report and information under the Fleet Participation Agreement (including without limitation under Section 6.1(e)(vii) thereof), the Company shall deliver to the Noteholders copies of such reports and information and any other information relevant to the calculation and determination of the Fleet Equivalent Increase and (C)" 2.6. SECTION 8.1(B) of the Note Agreement is amended andrestated in its entirety as follows: "(b) With Make-Whole Premium. (i) On the last day of each month commencing with April 30, 2002 through and including December 31, 2002, the Company will prepay the Notes in an aggregate principal amount equal to the product of the Series C-H Note Principal Allocation times $1,166,667, together with the Make-Whole Amount payable with respect thereto; provided that no portion of such prepayment shall be applied to any Deferral Fee Note or Make-Whole Note. (ii) On the last day of each month commencing with January 31, 2003 through April 30, 2003, the Company will prepay the Notes in an aggregate principal amount equal to the product of the Series C-H Note Principal Allocation times $4,958,333, together with the Make-Whole Amount payable with respect thereto; provided that no portion of such prepayment shall be applied to any Deferral Fee Note or Make-Whole Note. (iii) On the last day of each month commencing with May 31, 2003 through December 31, 2003, the Company will prepay the Notes in an aggregate -7- principal amount equal to the product of the Series C-H Note Principal Allocation times $2,479,167, together with the Make-Whole Amount payable with respect thereto; provided that no portion of such prepayment shall be applied to any Deferral Fee Note or Make-Whole Note; further provided however that the Company will prepay the Notes in an aggregate principal amount equal to the aggregate amount of the Deferred Principal Amounts on January 15, 2004, together with the Make-Whole Amount payable with respect thereto. (iv) On the last day of each month commencing with January 31, 2004 through March 30, 2004, the Company will prepay the Notes in an aggregate principal amount equal to the product of the Series C-H Note Principal Allocation times $4,958,333, together with the Make-Whole Amount payable with respect thereto; provided that no portion of such prepayment shall be applied to any Deferral Fee Note or Make-Whole Note. (v) Within three Business Days after the end of each fiscal quarter of the Company (commencing with the fiscal quarter ending on March 31, 2004), the Company will prepay the Notes in an aggregate principal amount equal to the product of the Series C-H Note Principal Allocation times the Excess Cash Flow if positive, for such quarter, together with the Make-Whole Amount payable with respect thereto; provided that no portion of such prepayment shall be applied to any Deferral Fee Note or Make-Whole Note. (vi) All prepayments made under and pursuant to this SECTION 8.1(B) shall be applied in accordance with the terms and provisions of SECTION 8.3. All amounts of Make-Whole Amount due and payable with respect to such prepayments shall be added to the outstanding principal amount of the Make-Whole Notes and an appropriate entry on the grid attached thereto shall be made by each holder of such Make-Whole Notes." 2.7. Section 8 of the Note Agreement is amended to insert newSECTION 8.7 thereto which shall read as follows: "8.7 Deferral Fee; Restructuring Fee. In addition to all other amounts otherwise payable under the Notes (as amended and restated in accordance herewith), the Company shall pay, by no later than January 15, 2004, (x) the Restructuring Fee and (y) a fee to the Holders of the Notes in accordance with their Pro Rata Shares in an amount equal to the aggregate of (i) interest on each Deferred Principal Amount at a rate per annum equal to 2.00% above the rate of interest otherwise payable under each respective series of Notes (as amended and restated in accordance herewith) of the Deferred Principal Amount from the date such Deferred Principal Amount is determined under this Agreement until the date such Deferred Principal Amount has been paid in full and (ii) interest on each Deferred Principal Amount at a rate per annum equal to 1.00% above the rate of interest otherwise payable under each respective series of Notes (as amended and restated in accordance herewith) of such Deferred Principal Amount on the day before the Deferred Principal Amount has been paid in full and from the date such Deferred Principal Amount has been paid in full (through voluntary prepayments pursuant to SECTION 8.2 hereof) to, but not including January 15, 2004. Each such voluntary prepayment shall be -8- applied to the earliest occurring Deferred Principal Amount and, after the same has been paid in full, thereafter to each immediately succeeding Deferred Principal Amount until all outstanding Deferred Principal Amounts have been paid in full. On January 15, 2004, the Company shall pay all outstanding Deferred Principal Amounts. The Company agrees that in connection with any payment of fees payable to (a) the Lenders under the Credit Agreement, or (b) the holders under the Series A Note Purchase Agreements or the Series I Note Purchase Agreement, that is similar to the interest payable to the Noteholders on Deferred Principal Amount and set forth in this Section 8.7, the Company shall concurrently pay to the Noteholders a pro rata amount of such payment." 2.8. SECTION 9 of the Note Agreement is amended to insert anew SECTION 9.18 thereto which shall read as follows: "9.18 Canadian Guaranty and Collateral. By no later than May 31, 2003, the Company shall (i) cause its Canadian Subsidiary to execute and deliver to the Holders, a guarantee of the Obligations pursuant to a guaranty agreement, or supplement thereto, in form and substance satisfactory to the Holders and their counsel, (ii) cause its Canadian Subsidiary to execute and deliver to the Collateral Agent a general security agreement, or supplement thereto, in form and substance satisfactory to the Collateral Agent and its counsel, (iii) execute and deliver a Pledge Agreement, or supplement thereto, pledging 100% of the capital stock of its Canadian Subsidiary and (iv) deliver to the Holders corporate resolutions and other documentation (including legal opinions, Personal Property Security Act financing statements and such other instruments and documents as are requested by, and in form and substance satisfactory to, the Holders and their counsel) related to the delivery of the foregoing agreements; provided that the Company may elect not to provide that portion or amount of the collateral described above and evidenced by any of the foregoing instruments and documents to the extent but only to the extent that delivery of such collateral would cause its Canadian Subsidiary's accumulated and undistributed earnings and profits to be deemed to be repatriated to the Company or a Domestic Subsidiary for U.S. federal income tax purposes and the effect of such repatriation would be to cause materially adverse tax consequences for the Company." 2.9. SECTIONS 10.3(A), (B), (C), (D), (E) and (F) of the NoteAgreement are amended and restated in their entireties as follows: "(a) Intentionally Omitted. (b) Minimum Consolidated Equity. The Company shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated Equity at an amount not less than the applicable "Minimum Consolidated Equity" specified below: Fiscal Quarter Ending Minimum Consolidated Equity --------------------- --------------------------- March 31, 2003 $40,000,000 June 30, 2003 $35,000,000 September 30, 2003 $30,000,000 December 31, 2003 $25,000,000 -9- (c) Maximum Leverage Valuation Ratio. The Company shall not permit, as of the last day of each of the fiscal quarters specified below, the Leverage Valuation Ratio to exceed the applicable "Maximum Leverage Valuation Ratio" specified below: Fiscal Quarter Ending Maximum Leverage Valuation Ratio --------------------- -------------------------------- March 31, 2003 0.95 to 1 June 30, 2003 0.95 to 1 September 30, 2003 0.95 to 1 December 31, 2003 0.95 to 1 (d) Minimum Consolidated EBITDA. The Company shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated EBITDA, determined on a cumulative basis from January 1, 2003 through each determination set forth below, at an amount equal to or greater than the respective amounts set forth below: Minimum Cumulative Quarter Ending Consolidated EBITDA -------------- ------------------- March 31, 2003 $ 0 June 30, 2003 $ 5,000,000 September 30, 2003 $15,000,000 December 31, 2003 $20,000,000 (e) Minimum Interest Coverage Cash Collateral. The Company shall, by no later than December 31, 2002, enter into a Cash Collateral Agreement and, by no later than one (1) Business Day prior to the first day of each fiscal quarter of the Company ending on or after March 31, 2003, deposit funds (the "Cash Collateral Funds") with the Collateral Agent in an amount not less than the aggregate amount of interest required to be paid, through the end of the immediately succeeding fiscal quarter, under the Note Agreement, the Series A Note Purchase Agreements, the Series I Note Purchase Agreements, and under the Credit Agreement; provided that (i) in the case of interest required to be paid through the end of the fiscal quarter ending on March 31, 2004, the Company may deposit Cash Collateral Funds on or before (but not after) January 15, 2004 and (ii) it being understood and agreed that if, at any time subsequent to the date Cash Collateral Funds are deposited, the aggregate amount of interest required to be so paid increases, the Company shall promptly, and in any event within three (3) Business Days after demand by the Agent under the Credit Agreement or by the holders of the Senior Notes, deposit additional funds with the Collateral Agent in an aggregate amount not less than the amount of such increase. (f) Maximum Capital Expenditures. The Company will not, and will not permit any Subsidiary to, expend for Capital Expenditures during any fiscal year of the Company and its Subsidiaries, in excess of $4,000,000 in the aggregate for the Company and its Subsidiaries." -10- 2.10. SECTION 11(B)(II) of the Note Agreement is amended byinserting "or SECTION 9.18" immediately after the reference to "SECTION 9.16"appearing therein. 2.11. SECTION 11 of the Note Agreement is amended to add a newsubsections (s) and (t) which shall read as follows: "(s) Failure to Deliver Refinancing Commitment Letter. The Company shall fail to deliver, by no later than January 31, 2004, a binding commitment evidenced by a commitment letter (which terms shall be in form and substance satisfactory to the Required Secured Parties as defined in the Intercreditor Agreement) from a bank, institutional lender or other qualified lending source to pay in full on or before March 30, 2004, the Secured Obligations as defined in the Intercreditor Agreement. (t) Fleet Cross Default. A default or breach under the Fleet Participation Agreement shall occur, regardless of whether such default is waived or whether any right with respect to such default or breach is exercised (including, without limitation, any default or breach arising out of a failure by the Company to deliver a business plan as required by Section 6.1(o) thereof." 2.12. EXHIBIT 7.1(B) to the Note Agreement is amended in itsentirety by substituting therefor AMENDED EXHIBIT 7.1(B) attached to this SecondAmendment. 2.13. EXHIBITS 1 through 8 of the Note Agreement are amendedin their entirety by substituting therefor AMENDED EXHIBITS 1 through 8 attachedto this Second Amendment. SECTION 3 Payment of Second Amendment Closing Fees and RestructuringFee. (a) The Company acknowledges that upon the Effective Date and as acondition to the effectiveness of this Second Amendment it is required to pay(i) the Series C-H Second Amendment Closing Fee (plus any reimbursement for outof pocket costs and expenses) to the Holders of the Notes in connection with,and as required by, this Second Amendment, and (ii) the closing fees to (a) theLenders in connection with and as required by, comparable amendments to theCredit Agreement, (b) the holders in connection with and as required by,comparable amendments to the Series A Note Purchase Agreements and the Series INote Purchase Agreement, (c) General Electric Capital Corporation in connectionwith and as required by, comparable amendments to the Receivables PurchaseDocuments, and (d) Fleet Capital Corporation in connection with, and as requiredby, comparable amendments to the Lease Agreements evidencing the Fleet LeaseTransaction (collectively, the "Aggregate Closing Fees"). In lieu of paying theentire balance of the Aggregate Closing Fees on the Effective Date, the Companymay defer a portion of the Series C-H Second Amendment Closing Fee in an amountequal to the amount obtained by multiplying (x) the Series C-H Deferred FeeAllocation by (y) the Aggregate Closing Fees in excess of $2,000,000 payment ofwhich is deferred on the Effective Date; provided, however, that the Companyshall pay, by no later than January 15, 2004 (a) the then unpaid balance of theSeries C-H Second Amendment Closing Fee and (b) a deferral fee to the Holders inaccordance with their Pro Rata Shares on the Deferred Fee Amount at a rate perannum equal to the sum of (A) the rate of interest applicable to each respectiveSeries of Notes plus (B) (1) 2.00% from the Effective Date until the date suchDeferred Fee Amount has been paid in full plus (2) 1.00% per annum of theDeferred Fee Amount balance on -11-the day immediately prior to the date the Deferred Fee Amount is paid in fulland for the period from the date such Deferred Fee Amount has been paid in fulluntil January 15, 2004. For purposes of this SECTION 3, "Deferred Fee Amount"means, with respect to the Series C-H Second Amendment Closing Fee, the SeriesC-H Note Principal Allocation multiplied by the excess of (x) the actual amountof the Aggregate Closing Fees minus (y) the actual amount of the AggregateClosing Fees paid by the Company on the Effective Date, which amount shall notbe less than $2,000,000 and "Series C-H Deferred Fee Allocation" means at anytime, the percentage determined by dividing (a) the amount of the Series C-HSecond Amendment Closing Fees payable to the Noteholders as required by, and inconnection with, this Second Amendment by (b) the Aggregate Closing Fees. (b) The Company hereby covenants and agrees to pay, on January15, 2004, a restructuring fee to the Noteholders in an amount equal to 0.25% ofthe outstanding principal balance of the Notes (excluding the Make-Whole Notesand the Deferral Fee Notes) as of January 15, 2004 (the "Restructuring Fee").The Restructuring Fee shall be payable to the Noteholders pro rata in proportionto the Notes held by each Noteholder and shall be non-refundable and is deemedto be fully earned on the Second Amendment Effective Date. SECTION 4 Representations and Warranties of the Company. To induce theNoteholders to execute and deliver this Second Amendment (which representationsshall survive the execution and delivery of this Second Amendment), each of theCompany and the Subsidiary Guarantors represent and warrant to the Noteholdersthat: (a) since December 31, 2002, there has been no change in thecondition, financial or otherwise, of the Company and its Subsidiaries as shownon the consolidated balance sheet as of such date except changes in the ordinarycourse of business, none of which individually or in the aggregate has had, orreasonably could be expected to have, a Material Adverse Effect; (b) this Second Amendment and the Notes have been dulyauthorized, executed and delivered by it and this Second Amendment and the Notesconstitute the legal, valid and binding obligation, contract and agreement ofthe Company and Subsidiary Guarantors enforceable against each of them inaccordance with its terms, except as enforcement may be limited by bankruptcy,insolvency, reorganization, moratorium or similar laws relating to or limitingcreditors' rights generally and general principles of equity (regardless ofwhether such enforceability is considered in a proceeding in equity or in law); (c) the Note Agreement, as amended by this Second Amendment,constitutes, and upon execution and delivery thereof each Note will constitute,a legal, valid and binding obligation, contract and agreement of the Companyenforceable against the Company in accordance with its terms, except asenforcement may be limited by bankruptcy, insolvency, reorganization, moratoriumor similar laws relating to or limiting creditors' rights generally and generalprinciples of equity (regardless of whether such enforceability is considered ina proceeding in equity or in law); (d) the execution, delivery and performance by the Company andthe Subsidiary Guarantors of this Second Amendment and the Notes (i) have beenduly authorized by all requisite corporate action and, if required, shareholderaction, (ii) do not require the consent or approval of any governmental orregulatory body or agency, and (iii) do not and will not (A) -12-violate (1) any provision of law, statute, rule or regulation or its certificateof incorporation or bylaws, (2) any order of any court or any rule, regulationor order of any other agency or government binding upon it, or (3) any provisionof any material indenture, agreement or other instrument to which it is a partyor by which its properties or assets are or may be bound, including, withoutlimitation, the Note Agreement, or (B) result in a breach or constitute (alongor with due notice or lapse of time or both) a default under any indenture,agreement or other instrument referred to in clause (iii)(A)(3) of this SS.4(D); (e) as of the date hereof and after giving effect to thisSecond Amendment, no Default or Event of Default has occurred which iscontinuing; (f) all the representations and warranties contained inSECTION 5 of the Note Agreement are true and correct in all material respectswith the same force and effect as if made by the Company on and as of the datehereof; and (g) except as specifically set forth herein and comparablefees as set forth in the separate amendments dated as of the date hereof to eachof the Specified Agreement, the Company has not paid or agreed to pay any fee orother compensation to any party to the Specified Agreements in connection withthe amendment of the Note Agreement or the Notes. SECTION 5 Affirmation of Subsidiary Guarantee Agreement. Each of theSubsidiary Guarantors hereby affirm each of their obligations under theSubsidiary Guarantee Agreement after giving effect to this Second Amendment. SECTION 6 Conditions to Effectiveness of this Second Amendment. Subjectto the proviso below, this Second Amendment shall not become effective until,and shall become effective when, each and every one of the following conditionsshall have been satisfied: (a) executed counterparts of this Second Amendment, dulyexecuted by the Company, the Subsidiary Guarantors and the holders of 100% ofthe outstanding principal amount of the Notes, shall have been delivered to theNoteholders; (b) the Company shall have issued the amended and restatedNotes in accordance with this Second Amendment to each Purchaser upon surrenderby it of the Original Notes (other than the Original Series B Notes) forcancellation by the Company and all accrued and unpaid interest through theSecond Amendment Effective Date shall have been paid in full (including, withoutlimitation, interest due and payable at the Series C through H Adjustable Rates,respectively, on the Notes for the period from and after February 27, 2003 tothe Second Amendment Effective Date); provided that upon the satisfaction of theforegoing conditions precedent, the amendments set forth in this SecondAmendment relating to the respective Adjustable Rates shall be effective as ofFebruary 27, 2003 and the amounts added to the Make-Whole Notes for February 28,2003 and March 31, 2003 shall be adjusted accordingly; (c) the representations and warranties of the Company and theSubsidiary Guarantors set forth in SS.4 hereof are true and correct on and withrespect to the date hereof; (d) subject only to the allowable deferral under SECTION 3hereof, the Company shall have paid the Aggregate Closing Fees; -13- (e) the Company shall have paid the reasonable fees andexpenses of McDermott, Will & Emery, special counsel to the Noteholders, andMayer, Brown, Rowe & Maw, special counsel to a Noteholder, in each case inconnection with the negotiation, preparation, approval, execution and deliveryof this Second Amendment; and (f) the Noteholders shall have received similar executedamendments to the Credit Agreement, the Series A Note Purchase Agreements, theSeries I Note Purchase Agreement, the Receivables Purchase Agreement and theReceivables Sale Agreement and the lease agreements evidencing the Fleet LeaseTransaction (collectively, the "Specified Agreements") in form and substancesatisfactory to the Noteholders and all conditions precedent to theeffectiveness of each such amendment shall have been satisfied. SECTION 7 Consent to Amendments to Documents. In connection with theamendments specified herein, the Company has informed the Noteholders of itsintention to amend the Series A Note Agreements, the Series I Note Agreement,the Credit Agreement, the Receivables Purchase Agreement and the ReceivablesSale Agreement and the lease agreements evidencing the Fleet Lease Transactions,in each case in a manner similar to the amendments hereunder. At the Company'srequest, the Noteholders consent to such amendments. SECTION 8 Miscellaneous. (a) This Second Amendment shall be construed in connectionwith and as part of the Note Agreement, and except as modified and expresslyamended by this Second Amendment, all terms, conditions and covenants containedin the Note Agreement are hereby ratified and shall be and remain in full forceand effect. (b) Any and all notices, requests, certificates and otherinstruments executed and delivered after the execution and delivery of thisSecond Amendment may refer to the Note Agreement without making specificreference to this Second Amendment, but nevertheless all such references shallinclude this Second Amendment unless the context otherwise requires. (c) The descriptive headings of the various Sections or partsof this Second Amendment are for convenience only and shall not affect themeaning or construction of any of the provisions hereof. (d) This Second Amendment shall be governed by and construedin accordance with Illinois law, excluding choice-of-law principles of the lawof such State that would require the application of the laws of a jurisdictionother than such State. (e) The execution hereof by you shall constitute a contractbetween us for the uses and purposes hereinabove set forth, and this SecondAmendment may be executed in any number of counterparts, each executedcounterpart constituting an original, but all together only one agreement. -14- IN WITNESS WHEREOF, the parties hereto have caused this SecondAmendment to be duly executed by their respective authorized officers as of theday and year first above written. WABASH NATIONAL CORPORATION By: ____________________________________ Christopher A. Black, Vice President & Treasurer APEX TRAILER LEASING & RENTALS, L.P. By: Wabash National Corporation, its general partner By: ____________________________________ Christopher A. Black, Vice President & Treasurer CLOUD OAK FLOORING COMPANY, INC. By: ____________________________________ Christopher A. Black, Authorized Representative CONTINENTAL TRANSIT CORPORATION By: ____________________________________ Christopher A. Black, Authorized Representative FTSI DISTRIBUTION COMPANY, L.P. By: NOAMTC, Inc., its general partner By: ____________________________________ Christopher A. Black, Authorized Representative NATIONAL TRAILER FUNDING, L.L.C. By: NOAMTC, INC., its Member By: ____________________________________ Christopher A. Black, Authorized Representative NOAMTC, INC. By: ____________________________________ Christopher A. Black, Authorized Representative WNC CLOUD MERGER SUB, INC. By: ____________________________________ Christopher A. Black, Authorized Representative WNC RECEIVABLES MANAGEMENT CORP. By: ____________________________________ Christopher A. Black, Secretary WTSI TECHNOLOGY CORP. By: ____________________________________ Christopher A. Black, Authorized Representative WABASH FINANCING LLC By: ____________________________________ Christopher A. Black, Authorized Representative WABASH NATIONAL SERVICES, L.P. By: Wabash National Trailor Centers, Inc., its general partner By: ____________________________________ Christopher A. Black, Authorized Representative WABASH TECHNOLOGY CORP. By: ____________________________________ Christopher A. Black, Authorized RepresentativeAccepted and Agreed: THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: PRINCIPAL LIFE INSURANCE COMPANY By: Principal Global Investors, LLC, a Delaware limited liability company, its authorized signatory By: ________________________________________ Name: ______________________________________ Title: _____________________________________ By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY By: ________________________________________ Name: ______________________________________ Title: _____________________________________ By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: THE GREAT-WEST LIFE ASSURANCE COMPANY By: ________________________________________ Name: ______________________________________ Title: _____________________________________ By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: AMERICAN FAMILY LIFE INSURANCE COMPANY By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: MODERN WOODMEN OF AMERICA By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: STATE FARM LIFE INSURANCE COMPANY By: ________________________________________ Name: ______________________________________ Title: _____________________________________ By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: THE STANDARD INSURANCE COMPANY By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: AMERICAN STATES LIFE INSURANCE COMPANY By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: SECURITY CONNECTICUT LIFE INSURANCE COMPANY By: ING Investment Management, LLC, as Agent By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By: Delaware Lincoln Investment Advisers, a Series of Delaware Management Business Trust, Its Attorney-in-Fact By: ________________________________________ Name: Bradley S. Ritter Title: VPAccepted and Agreed: LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK By: Delaware Lincoln Investment Advisers, a Series of Delaware Management Business Trust, Its Attorney-in-Fact By: ________________________________________ Name: Bradley S. Ritter Title: VPAccepted and Agreed: LINCOLN NATIONAL HEALTH & CASUALTY INSURANCE COMPANY By: Swiss Re Asset Management (Americas), Inc., Its Attorney-in-Fact By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: LINCOLN NATIONAL REASSURANCE COMPANY By: Swiss Re Asset Management (Americas), Inc., Its Attorney-in-Fact By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Accepted and Agreed: SONS OF NORWAY By: Delaware Lincoln Investment Advisers, a Series of Delaware Management Business Trust, Its Attorney-in-Fact By: ________________________________________ Name: Bradley S. Ritter Title: VP [FORM OF NOTE] WABASH NATIONAL CORPORATION ADJUSTABLE RATE SENIOR SECURED NOTE, SERIES C, DUE March 30, 2004No. _________ April 11, 2003$____________ PPN _______________ FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to ________________, orregistered assigns, the principal sum of ________________ DOLLARS on March 30,2004, with interest (computed on the basis of a 360-day year of twelve 30-daymonths) (a) on the unpaid balance thereof at the Series C Adjustable Rate (asdefined in the Note Purchase Agreement referred to below) per annum from thedate hereof, payable monthly, on the last day of each calendar month in eachyear, commencing with the last day of April, 2003, until the principal hereofshall have become due and payable, and (b) to the extent permitted by law on anyoverdue payment (including any overdue prepayment) of principal, any overduepayment of interest and any overdue payment of any Make-Whole Amount (as definedin the Note Purchase Agreement referred to below), payable monthly as aforesaid(or, at the option of the registered holder hereof, on demand), at a rate perannum from time to time equal to the greater of (i) the Default Rate (as definedin the Note Purchase Agreement referred to below) or (ii) 2% over the rate ofinterest publicly announced by JP Morgan Chase Bank of New York from time totime in New York, New York as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of the Adjustable Rate Senior Secured Notes, Series C,due March 30, 2004 (the "Series C Notes") of the Company in the aggregateprincipal amount of $22,000,000 which, together with the Company's $9,000,000aggregate principal amount of Adjustable Rate Senior Secured Notes, Series D,due December 17, 2004 (the "Series D Notes"), the Company's $3,000,000 aggregateprincipal amount of Adjustable Rate Senior Secured Notes, Series E, due March13, 2005 (the "Series E Notes"), the Company's $13,000,000 aggregate principalamount of Adjustable Rate Senior Secured Notes, Series F, due December 17, 2006(the "Series F Notes"), the Company's $20,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series G, due December 30, 2008 (the"Series G Notes") and the Company's $25,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series H, due December 17, 2008 (the"Series H Notes", said Series H Notes, together with the Series C Notes, theSeries D Notes, the Series E Notes, the Series F Notes and the Series G Notesbeing hereinafter referred to collectively as the "Notes"), are issued andoutstanding pursuant to the AMENDED EXHIBIT 1 (to Second Amendment)Amended and Restated Note Purchase Agreement, dated as of April 12, 2002 (asfrom time to time amended, the "Note Purchase Agreement"), among the Company andthe respective Purchasers named therein and is entitled to the benefits thereof.Each holder of this Note will be deemed, by its acceptance hereof, (i) to haveagreed to the confidentiality provisions set forth in SECTION 20 of the NotePurchase Agreement and (ii) to have made the representation set forth in SECTION6.2 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. This Note is subject to optional prepayment, in whole or from time totime in part, at the times and on the terms specified in the Note PurchaseAgreement, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Make-Whole Amount) and with the effect provided in the Note PurchaseAgreement. This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreement) in respect of such security and otherwise. The payment of the principal amount of, premium, if any, and intereston this Note has been unconditionally guaranteed by the Guarantors (as definedin the Note Purchase Agreement) pursuant to the Note Guaranty (as defined in theNote Purchase Agreement). Reference is hereby made thereto for a statement ofthe rights and benefits accorded thereby. 1-2 THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS,EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By ------------------------------------------ Title ------------------------------------ 1-3 [FORM OF NOTE] WABASH NATIONAL CORPORATION ADJUSTABLE RATE SENIOR SECURED NOTE, SERIES D, DUE December 17, 2004No. _________ April 11, 2003$____________ PPN _______________ FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to ________________, orregistered assigns, the principal sum of ________________ DOLLARS on December17, 2004, with interest (computed on the basis of a 360-day year of twelve30-day months) (a) on the unpaid balance thereof at the Series D Adjustable Rate(as defined in the Note Purchase Agreement referred to below) per annum from thedate hereof, payable monthly, on the last day of each calendar month in eachyear, commencing with the last day of April, 2003, until the principal hereofshall have become due and payable, and (b) to the extent permitted by law on anyoverdue payment (including any overdue prepayment) of principal, any overduepayment of interest and any overdue payment of any Make-Whole Amount (as definedin the Note Purchase Agreement referred to below), payable monthly as aforesaid(or, at the option of the registered holder hereof, on demand), at a rate perannum from time to time equal to the greater of (i) the Default Rate (as definedin the Note Purchase Agreement referred to below) or (ii) 2% over the rate ofinterest publicly announced by JP Morgan Chase Bank of New York from time totime in New York, New York as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of the Adjustable Rate Senior Secured Notes, Series D,due December 17, 2004 (the "Series D Notes") of the Company in the aggregateprincipal amount of $9,000,000 which, together with the Company's $22,000,000aggregate principal amount of Adjustable Rate Senior Secured Notes, Series C,due March 30, 2004 (the "Series C Notes"), the Company's $3,000,000 aggregateprincipal amount of Adjustable Rate Senior Secured Notes, Series E, due March13, 2005 (the "Series E Notes"), the Company's $13,000,000 aggregate principalamount of Adjustable Rate Senior Secured Notes, Series F, due December 17, 2006(the "Series F Notes"), the Company's $20,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series G, due December 30, 2008 (the"Series G Notes") and the Company's $25,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series H, due December 17, 2008 (the"Series H Notes", said Series H Notes, together with the Series C Notes, theSeries D Notes, the Series E Notes, the Series F Notes and the Series G Notesbeing hereinafter referred to collectively as the "Notes"), are issued andoutstanding pursuant to AMENDED EXHIBIT 2 (to Second Amendment)the Amended and Restated Note Purchase Agreement, dated as of April 12, 2002 (asfrom time to time amended, the "Note Purchase Agreement"), among the Company andthe respective Purchasers named therein and is entitled to the benefits thereof.Each holder of this Note will be deemed, by its acceptance hereof, (i) to haveagreed to the confidentiality provisions set forth in SECTION 20 of the NotePurchase Agreement and (ii) to have made the representation set forth in SECTION6.2 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. This Note is subject to optional prepayment, in whole or from time totime in part, at the times and on the terms specified in the Note PurchaseAgreement, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Make-Whole Amount) and with the effect provided in the Note PurchaseAgreement. This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreement) in respect of such security and otherwise. The payment of the principal amount of, premium, if any, and intereston this Note has been unconditionally guaranteed by the Guarantors (as definedin the Note Purchase Agreement) pursuant to the Note Guaranty (as defined in theNote Purchase Agreement). Reference is hereby made thereto for a statement ofthe rights and benefits accorded thereby. 2-2 THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS,EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By --------------------------------------- Title --------------------------------- 2-3 [FORM OF NOTE] WABASH NATIONAL CORPORATION ADJUSTABLE RATE SENIOR SECURED NOTE, SERIES E, DUE March 13, 2005No. _________ April 11, 2003$____________ PPN _______________ FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to ________________, orregistered assigns, the principal sum of ________________ DOLLARS on March 13,2005, with interest (computed on the basis of a 360-day year of twelve 30-daymonths) (a) on the unpaid balance thereof at the Series E Adjustable Rate (asdefined in the Note Purchase Agreement referred to below) per annum from thedate hereof, payable monthly, on the last day of each calendar month in eachyear, commencing with the last day of April, 2003, until the principal hereofshall have become due and payable, and (b) to the extent permitted by law on anyoverdue payment (including any overdue prepayment) of principal, any overduepayment of interest and any overdue payment of any Make-Whole Amount (as definedin the Note Purchase Agreement referred to below), payable monthly as aforesaid(or, at the option of the registered holder hereof, on demand), at a rate perannum from time to time equal to the greater of (i) the Default Rate (as definedin the Note Purchase Agreement referred to below) or (ii) 2% over the rate ofinterest publicly announced by JP Morgan Chase Bank of New York from time totime in New York, New York as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of the Adjustable Rate Senior Secured Notes, Series E,due March 13, 2005 (the "Series E Notes") of the Company in the aggregateprincipal amount of $3,000,000 which, together with the Company's $22,000,000aggregate principal amount of Adjustable Rate Senior Secured Notes, Series C,due March 30, 2004 (the "Series C Notes"), the Company's $9,000,000 aggregateprincipal amount of Adjustable Rate Senior Secured Notes, Series D, due December17, 2004 (the "Series D Notes"), the Company's $13,000,000 aggregate principalamount of Adjustable Rate Senior Secured Notes, Series F, due December 17, 2006(the "Series F Notes"), the Company's $20,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series G, due December 30, 2008 (the"Series G Notes") and the Company's $25,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series H, due December 17, 2008 (the"Series H Notes", said Series H Notes, together with the Series C Notes, theSeries D Notes, the Series E Notes, the Series F Notes and the Series G Notesare hereinafter referred to collectively as the "Notes"), are issued andoutstanding pursuant to the AMENDED EXHIBIT 3 (to Second Amendment)Amended and Restated Note Purchase Agreement, dated as of April 12, 2002 (asfrom time to time amended, the "Note Purchase Agreement"), among the Company andthe respective Purchasers named therein and is entitled to the benefits thereof.Each holder of this Note will be deemed, by its acceptance hereof, (i) to haveagreed to the confidentiality provisions set forth in SECTION 20 of the NotePurchase Agreement and (ii) to have made the representation set forth in Section6.2 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. This Note is subject to optional prepayment, in whole or from time totime in part, at the times and on the terms specified in the Note PurchaseAgreement, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Make-Whole Amount) and with the effect provided in the Note PurchaseAgreement. This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreement) in respect of such security and otherwise. The payment of the principal amount of, premium, if any, and intereston this Note has been unconditionally guaranteed by the Guarantors (as definedin the Note Purchase Agreement) pursuant to the Note Guaranty (as defined in theNote Purchase Agreement). Reference is hereby made thereto for a statement ofthe rights and benefits accorded thereby. 3-2 THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS,EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By ----------------------------------------- Title ----------------------------------- 3-3 [FORM OF NOTE] WABASH NATIONAL CORPORATION ADJUSTABLE RATE SENIOR SECURED NOTE, SERIES F, DUE December 17, 2006No. _________ April 11, 2003$____________ PPN _______________ FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to ________________, orregistered assigns, the principal sum of ________________ DOLLARS on December17, 2006, with interest (computed on the basis of a 360-day year of twelve30-day months) (a) on the unpaid balance thereof at the Series F Adjustable Rate(as defined in the Note Purchase Agreement referred to below) per annum from thedate hereof, payable monthly, on the last day of each calendar month in eachyear, commencing with the last day of April, 2003, until the principal hereofshall have become due and payable, and (b) to the extent permitted by law on anyoverdue payment (including any overdue prepayment) of principal, any overduepayment of interest and any overdue payment of any Make-Whole Amount (as definedin the Note Purchase Agreement referred to below), payable monthly as aforesaid(or, at the option of the registered holder hereof, on demand), at a rate perannum from time to time equal to the greater of (i) the Default Rate (as definedin the Note Purchase Agreement referred to below) or (ii) 2% over the rate ofinterest publicly announced by JP Morgan Chase Bank of New York from time totime in New York, New York as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of the Adjustable Rate Senior Secured Notes, Series F,due December 17, 2006 (the "Series F Notes") of the Company in the aggregateprincipal amount of $13,000,000 which, together with the Company's $22,000,000aggregate principal amount of Adjustable Rate Senior Secured Notes, Series C,due March 30, 2004 (the "Series C Notes"), the Company's $9,000,000 aggregateprincipal amount of Adjustable Rate Senior Secured Notes, Series D, due December17, 2004 (the "Series D Notes"), the Company's $3,000,000 aggregate principalamount of Adjustable Rate Senior Secured Notes, Series E, due March 13, 2005(the "Series E Notes"), the Company's $20,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series G, due December 30, 2008 (the"Series G Notes") and the Company's $25,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series H, due December 17, 2008 (the"Series H Notes", said Series H Notes, together with the Series C Notes, theSeries D Notes, the Series E Notes, the Series F Notes and the Series G Notesare hereinafter referred to collectively as the "Notes"), are issued andoutstanding pursuant to the AMENDED EXHIBIT 4 (to Second Amendment)Amended and Restated Note Purchase Agreement, dated as of April 12, 2002 (asfrom time to time amended, the "Note Purchase Agreement"), among the Company andthe respective Purchasers named therein and is entitled to the benefits thereof.Each holder of this Note will be deemed, by its acceptance hereof, (i) to haveagreed to the confidentiality provisions set forth in SECTION 20 of the NotePurchase Agreement and (ii) to have made the representation set forth in SECTION6.2 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. This Note is subject to optional prepayment, in whole or from time totime in part, at the times and on the terms specified in the Note PurchaseAgreement, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Make-Whole Amount) and with the effect provided in the Note PurchaseAgreement. This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreement) in respect of such security and otherwise. The payment of the principal amount of, premium, if any, and intereston this Note has been unconditionally guaranteed by the Guarantors (as definedin the Note Purchase Agreement) pursuant to the Note Guaranty (as defined in theNote Purchase Agreement). Reference is hereby made thereto for a statement ofthe rights and benefits accorded thereby. 4-2 THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS,EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By -------------------------------------- Title -------------------------------- 4-3 [FORM OF NOTE] WABASH NATIONAL CORPORATION ADJUSTABLE RATE SENIOR SECURED NOTE, SERIES G, DUE December 30, 2008No. _________ April 11, 2003$____________ PPN _______________ FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to ________________, orregistered assigns, the principal sum of ________________ DOLLARS on December30, 2008, with interest (computed on the basis of a 360-day year of twelve30-day months) (a) on the unpaid balance thereof at the Series G Adjustable Rate(as defined in the Note Purchase Agreement referred to below) per annum from thedate hereof, payable monthly, on the last day of each calendar month in eachyear, commencing with the last day of April, 2003, until the principal hereofshall have become due and payable, and (b) to the extent permitted by law on anyoverdue payment (including any overdue prepayment) of principal, any overduepayment of interest and any overdue payment of any Make-Whole Amount (as definedin the Note Purchase Agreement referred to below), payable monthly as aforesaid(or, at the option of the registered holder hereof, on demand), at a rate perannum from time to time equal to the greater of (i) the Default Rate (as definedin the Note Purchase Agreement referred to below) or (ii) 2% over the rate ofinterest publicly announced by JP Morgan Chase Bank of New York from time totime in New York, New York as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of the Adjustable Rate Senior Secured Notes, Series G,due December 30, 2008 (the "Series G Notes") of the Company in the aggregateprincipal amount of $20,000,000 which, together with the Company's $22,000,000aggregate principal amount of Adjustable Rate Senior Secured Notes, Series C,due March 30, 2004 (the "Series C Notes"), the Company's $9,000,000 aggregateprincipal amount of Adjustable Rate Senior Secured Notes, Series D, due December17, 2004 (the "Series D Notes"), the Company's $3,000,000 aggregate principalamount of Adjustable Rate Senior Secured Notes, Series E, due March 13, 2005(the "Series E Notes"), the Company's $13,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series F, due December 17, 2006 (the"Series F Notes") and the Company's $25,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series H, due December 17, 2008 (the"Series H Notes", said Series H Notes, together with the Series C Notes, theSeries D Notes, the Series E Notes, the Series F Notes and the Series G Notesare hereinafter referred to collectively as the "Notes"), are issued andoutstanding pursuant to the Amended and Restated Note Purchase Agreement, datedas of April 12, 2002 (as from time to AMENDED EXHIBIT 5 (to Second Amendment)time amended, the "Note Purchase Agreement"), among the Company and therespective Purchasers named therein and is entitled to the benefits thereof.Each holder of this Note will be deemed, by its acceptance hereof, (i) to haveagreed to the confidentiality provisions set forth in SECTION 20 of the NotePurchase Agreement and (ii) to have made the representation set forth in SECTION6.2 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. The Company will make required prepayments of principal on the datesand in the amounts specified in the Note Purchase Agreement. This Note is alsosubject to optional prepayment, in whole or from time to time in part, at thetimes and on the terms specified in the Note Purchase Agreement, but nototherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Make-Whole Amount) and with the effect provided in the Note PurchaseAgreement. This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreement) in respect of such security and otherwise. The payment of the principal amount of, premium, if any, and intereston this Note has been unconditionally guaranteed by the Guarantors (as definedin the Note Purchase Agreement) pursuant to the Note Guaranty (as defined in theNote Purchase Agreement). Reference is hereby made thereto for a statement ofthe rights and benefits accorded thereby. 5-2 THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS,EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By ------------------------------------ Title ------------------------------ 5-3 [FORM OF NOTE] WABASH NATIONAL CORPORATION ADJUSTABLE RATE SENIOR SECURED NOTE, SERIES H, DUE December 17, 2008No. _________ April 11, 2003$____________ PPN _______________ FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to ________________, orregistered assigns, the principal sum of ________________ DOLLARS on December17, 2008, with interest (computed on the basis of a 360-day year of twelve30-day months) (a) on the unpaid balance thereof at the Series H Adjustable Rate(as defined in the Note Purchase Agreement referred to below) per annum from thedate hereof, payable monthly, on the last day of each calendar month in eachyear, commencing with the last day of April, 2003, until the principal hereofshall have become due and payable, and (b) to the extent permitted by law on anyoverdue payment (including any overdue prepayment) of principal, any overduepayment of interest and any overdue payment of any Make-Whole Amount (as definedin the Note Purchase Agreement referred to below), payable monthly as aforesaid(or, at the option of the registered holder hereof, on demand), at a rate perannum from time to time equal to the greater of (i) the Default Rate (as definedin the Note Purchase Agreement referred to below) or (ii) 2% over the rate ofinterest publicly announced by JP Morgan Chase Bank of New York from time totime in New York, New York as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of the Adjustable Rate Senior Secured Notes, Series H,due December 17, 2008 (the "Series H Notes") of the Company in the aggregateprincipal amount of $25,000,000 which, together with the Company's $22,000,000aggregate principal amount of Adjustable Rate Senior Secured Notes, Series C,due March 30, 2004 (the "Series C Notes"), the Company's $9,000,000 aggregateprincipal amount of Adjustable Rate Senior Secured Notes, Series D, due December17, 2004 (the "Series D Notes"), the Company's $3,000,000 aggregate principalamount of Adjustable Rate Senior Secured Notes, Series E, due March 13, 2005(the "Series E Notes"), the Company's $13,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series F, due December 17, 2006 (the"Series F Notes") and the Company's $20,000,000 aggregate principal amount ofAdjustable Rate Senior Secured Notes, Series G, due December 30, 2008 (the"Series G Notes", said Series G Notes, together with the Series C Notes, theSeries D Notes, the Series E Notes, the Series F Notes and the Series H Notesare hereinafter referred to collectively as the "Notes"), are issued andoutstanding pursuant to the Amended and Restated Note Purchase Agreement, datedas of April 12, 2002 (as from time to AMENDED EXHIBIT 6 (to Second Amendment)time amended, the "Note Purchase Agreement"), among the Company and therespective Purchasers named therein and is entitled to the benefits thereof.Each holder of this Note will be deemed, by its acceptance hereof, (i) to haveagreed to the confidentiality provisions set forth in SECTION 20 of the NotePurchase Agreement and (ii) to have made the representation set forth in SECTION6.2 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. The Company will make a required prepayment of principal on the dateand in the amount specified in the Note Purchase Agreement. This Note is alsosubject to optional prepayment, in whole or from time to time in part, at thetimes and on the terms specified in the Note Purchase Agreement, but nototherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Make-Whole Amount) and with the effect provided in the Note PurchaseAgreement. This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreement) in respect of such security and otherwise. The payment of the principal amount of, premium, if any, and intereston this Note has been unconditionally guaranteed by the Guarantors (as definedin the Note Purchase Agreement) pursuant to the Note Guaranty (as defined in theNote Purchase Agreement). Reference is hereby made thereto for a statement ofthe rights and benefits accorded thereby. 6-2 THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS,EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By ----------------------------------------------- Title ---------------------------------------- 6-3 [FORM OF DEFERRAL FEE NOTE] WABASH NATIONAL CORPORATION ADJUSTABLE RATE SENIOR SECURED PIK NOTE, DUE March 30, 2004No. DFR-_________ April 11, 2003$____________ Original Principal Amount PPN _______________ FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to ________________, orregistered assigns, the DFR-__ Note Accreted Principal Amount on March 30, 2004.The outstanding principal amount of this Senior Secured PIK Note shall accreteat the Series C Adjustable Rate (as defined in the Note Purchase Agreementreferred to below) per annum on a monthly basis on the last day of each calendarmonth in each year commencing with the last day of April, 2003 (computed on thebasis of a year of 360 days and twelve 30-day months) from the date of issuancehereof and shall cease to accrete on the date on which this Senior Secured PIKNote shall have been paid in full; provided that in the case of any prepaymentor other payment of this Senior Secured PIK Note on any date other than the lastday of any calendar month, the outstanding principal amount of this SeniorSecured PIK Note shall accrete at the Series C Adjustable Rate per annum on adaily basis from the date of the last day of such calendar month to the date ofsuch prepayment; provided further that upon the occurrence of an Event ofDefault (as defined in the Note Purchase Agreement referred to below and untilsuch Event of Default has been cured or waived in writing (such periodconstituting a "Default Interest Period"), the outstanding principal amount ofthis Senior Secured PIK Note shall accrete, to the extent permitted by law, at arate per annum from time to time equal to the greater of (i) the Default Rate(as defined in the Note Purchase Agreement referred to below) or (ii) 2% overthe rate of interest publicly announced by JP Morgan Chase Bank of New York fromtime to time in New York, New York as its "base" or "prime" rate. It isunderstood and agreed that any reference in this Senior Secured PIK Note to the"principal amount" of this Senior Secured PIK Note shall include a reference tothe R-___ Note Accreted Principal Amount thereof whether or not specifically setforth. "DFR-__ Note Accreted Principal Amount" shall mean with reference tothis Senior Secured PIK Note, as of any date of determination, the sum of (a)[$117,500.00 for Principal Life/$97,916.67 for the two Great West accounts] and(b) the outstanding principal amount of this Senior Secured PIK Note which shallhave been accreted thereon from the date of issuance through such date, suchamount shall accrete at the Series C Adjustable Rate per annum on a monthlybasis on the last day of each calendar month in each year commencing with thelast day of April, 2003 (computed on the basis of a year of 360 days and twelve30-day months) and shall cease to accrete on the date on which this SeniorSecured PIK Note shall have been paid in full; provided that in the case of anyprepayment or other payment of this Senior Secured PIK Note on any date otherthan the last day of any calendar month, the outstanding principal amount of AMENDED EXHIBIT 7 (to Second Amendment)this Senior Secured PIK Note shall accrete at the Series C Adjustable Rate perannum on a daily basis from the date of the last day of such calendar month tothe date of such prepayment. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of the Senior Secured PIK Notes, due March 30, 2004(the "Deferral Fee Notes") of the Company in the aggregate principal amount of$215,415.67 which, together with the Company's Series C Notes, Series D Notes,Series E Notes, Series F Notes, Series H Notes and Make-Whole Notes (as each isdefined in the Note Purchase Agreement described below) are hereinafter referredto collectively as the "Notes", are issued and outstanding pursuant to theAmended and Restated Note Purchase Agreement, dated as of April 12, 2002 (asfrom time to time amended, the "Note Purchase Agreement"), among the Company andthe respective Purchasers named therein and is entitled to the benefits thereof.Each holder of this Note will be deemed, by its acceptance hereof, (i) to haveagreed to the confidentiality provisions set forth in SECTION 20 of the NotePurchase Agreement and (ii) to have made the representation set forth in SECTION6.2 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. The Company will make a required prepayment of principal on the dateand in the amount specified in the Note Purchase Agreement. This Note is alsosubject to optional prepayment, in whole or from time to time in part, at thetimes and on the terms specified in the Note Purchase Agreement, but nototherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the DFR-__ Note Accreted Principal Amount of this Notemay be declared or otherwise become due and payable in the manner, at the price(including any applicable Make-Whole Amount) and with the effect provided in theNote Purchase Agreement. This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreement) in respect of such security and otherwise. 7-2 The payment of all DFR-__ Note Accreted Principal Amount of, premium,if any, and interest on this Note has been unconditionally guaranteed by theGuarantors (as defined in the Note Purchase Agreement) pursuant to the NoteGuaranty (as defined in the Note Purchase Agreement). Reference is hereby madethereto for a statement of the rights and benefits accorded thereby. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS,EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By ----------------------------------------------- Title ---------------------------------------- 7-3 [FORM OF NOTE] WABASH NATIONAL CORPORATION SENIOR SECURED PIK GRID NOTE, DUE March 30, 2004No. _________ April 11, 2003$____________ PPN _______________ FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to ________________, orregistered assigns, the MWR-__ Note Accreted Principal Amount on March 30, 2004.The outstanding principal amount of this Senior Secured PIK Grid Note shallaccrete at the [Series ___ Adjustable Rate] (as defined in the Note PurchaseAgreement referred to below) per annum on a monthly basis on the last day ofeach calendar month in each year commencing April , 2003 (computed on the basisof a year of 360 days and twelve 30-day months) from the date of issuance hereofand shall cease to accrete on the date on which this Senior Secured PIK GridNote shall have been paid in full; provided that in the case of any prepaymentor other payment of this Senior Secured PIK Grid Note on any date other than thelast day of any calendar month, the outstanding principal amount of this SeniorSecured PIK Grid Note shall accrete at the [Series ___ Adjustable Rate] (asdefined in the Note Purchase Agreement referred to below) per annum on a dailybasis from the date of the last day of such calendar month to the date of suchprepayment; provided further that upon the occurrence of an Event of Default (asdefined in the Note Purchase Agreement referred to below and until such Event ofDefault has been cured or waived in writing (such period constituting a "DefaultInterest Period"), the outstanding principal amount of this Senior Secured PIKGrid Note shall accrete, to the extent permitted by law, at a rate per annumfrom time to time equal to the greater of (i) [the Default Rate (as defined inthe Note Purchase Agreement referred to below)] or (ii) 2% over the rate ofinterest publicly announced by JP Morgan Chase Bank of New York from time totime in New York, New York as its "base" or "prime" rate. It is understood andagreed that any reference in this Senior Secured PIK Grid Note to the "principalamount" of this Senior Secured PIK Grid Note shall include a reference to theMWR-___ Note Accreted Principal Amount thereof whether or not specifically setforth. "MWR-__ Note Accreted Principal Amount" shall mean with reference tothis Senior Secured PIK Grid Note, as of any date of determination, the sum of(a) the Make-Whole Amounts which shall become payable to the holder of this Notewith respect to such holder's Series D Notes, Series E Notes, Series F Notes,Series G Notes or Series H Notes, as the case may be, from time to time uponpayment by the Company of portions of the principal amount of such Notespursuant to SECTION 8.1(B) of the Note Purchase Agreement and (b) theoutstanding principal amount of this Senior Secured PIK Grid Note which shallhave been accreted thereon from the date of issuance through such date, suchamount shall accrete at the [Series ___ Adjustable Rate] per annum on a monthlybasis on the last day of each calendar month in each year commencing with thelast day of the calendar month next succeeding the date hereof (computed on thebasis of a year of 360 days and twelve 30-day months) and shall cease to AMENDED EXHIBIT 8 (to Second Amendment)accrete on the date on which this Senior Secured PIK Grid Note shall have beenpaid in full; provided that in the case of any prepayment or other payment ofthis Senior Secured PIK Grid Note on any date other than the last day of anycalendar month, the outstanding principal amount of this Senior Secured PIK GridNote shall accrete at the [Series ___ Adjustable Rate] per annum on a dailybasis from the date of the last day of such calendar month to the date of suchprepayment. The amounts of the Make-Whole Amounts payable from time to time mayfor the convenience of the parties be recorded by the holder hereof on theattached Grid however the books and records of the holder shall, in the absenceof manifest error, be conclusive as to the determination of the Make-WholeAmounts evidenced by this Note. Payments of principal of, interest on and any Make-Whole Amount withrespect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of the Senior Secured PIK Grid Notes, due March 30,2004 (the "Make-Whole Notes") of the Company which, together with the Company'sSeries C Notes, Series D Notes, Series E Notes, Series F Notes, Series H Notesand Deferral Fee Notes (as each is defined in the Note Purchase Agreementdescribed below) are hereinafter referred to collectively as the "Notes", areissued and outstanding pursuant to the Amended and Restated Note PurchaseAgreement, dated as of April 12, 2002 (as from time to time amended, the "NotePurchase Agreement"), among the Company and the respective Purchasers namedtherein and is entitled to the benefits thereof. Each holder of this Note willbe deemed, by its acceptance hereof, (i) to have agreed to the confidentialityprovisions set forth in SECTION 20 of the Note Purchase Agreement and (ii) tohave made the representation set forth in SECTION 6.2 of the Note PurchaseAgreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. The Company will make a required prepayment of principal on the dateand in the amount specified in the Note Purchase Agreement. This Note is alsosubject to optional prepayment, in whole or from time to time in part, at thetimes and on the terms specified in the Note Purchase Agreement, but nototherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Make-Whole Amount) and with the effect provided in the Note PurchaseAgreement. 8-2 This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreement) in respect of such security and otherwise. The payment of all MWR-__ Note Accreted Principal Amount of, premium,if any, and interest on this Note has been unconditionally guaranteed by theGuarantors (as defined in the Note Purchase Agreement) pursuant to the NoteGuaranty (as defined in the Note Purchase Agreement). Reference is hereby madethereto for a statement of the rights and benefits accorded thereby. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS,EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By ----------------------------------------------- Title ----------------------------------------* Insert the following interest rates and overdue rates for the PIK Grid Notesissued as follows: Notes Issued to: Series D Holders Series D Adjustable Rate Series D Default Rate Series E Holders Series E Adjustable Rate Series E Default RateSeries F Holders Series F Adjustable Rate Series F Default Rate Series G Holders Series G Adjustable Rate Series G Default Rate Series H Holders Series H Adjustable Rate Series H Default Rate 8-3 WABASH NATIONAL CORPORATION SCHEDULE OF MAKE-WHOLE AMOUNTS DUE UNDER THE SENIOR SECURED PIK GRID NOTE DUE MARCH 30, 2004Date Make-Whole Accreted Applicable Accreted Total Accreted Amount Principal Interest Rate Interest Principal and Amount Payable Interest Payable 4/30/025/31/026/30/027/31/028/31/029/30/0210/31/0211/30/0212/31/021/31/032/28/033/31/034/30/035/31/036/30/037/31/038/31/039/30/0310/31/0311/30/0312/31/031/31/042/28/043/31/04 8-4 AMENDED EXHIBIT 7.1(B) EXHIBIT 7.1(b) FORM OF COMPLIANCE CERTIFICATETo: The Parties to the Note Agreements Described Below This Compliance Certificate is furnished pursuant to thatcertain Amended and Restated Note Purchase Agreement dated as of April 12, 2002(as amended, modified, renewed or extended from time to time, the "Agreement")among Wabash National Corporation (the "Company"), and each of the Purchasersnamed therein. Unless otherwise defined herein, capitalized terms used in thisCompliance Certificate have the meanings ascribed thereto in the Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected __________ of the Company and the[Chief Financial Officer] [Treasurer]; 2. I have reviewed the terms of the Agreement and I have made,or have caused to be made under my supervision, a detailed review of thetransactions and conditions of the Company and its Subsidiaries during theaccounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose,and I have no knowledge of, the existence of any condition or event whichconstitutes a Default or Unmatured Default during or at the end of theaccounting period covered by the attached financial statements or as of the dateof this Certificate, except as set forth below; and 4. Schedule I and Schedule II attached hereto set forthfinancial data and computations evidencing the Company's compliance with certaincovenants of the Agreement and the Excess Cash Flow during the accounting periodcovered by the attached financial statements, all of which data and computationsare true, complete and correct. Described below are the exceptions, if any, to paragraph 3,listing, in detail, the nature of the condition or event, the period duringwhich it has existed and the action which the Company has taken, is taking, orproposes to take with respect to each such condition or event:---------------------------------------------------------------------------------------------------------------------------------- AMENDED EXHIBIT 7.1(B) (to Second Amendment) The foregoing certifications, together with the computationsset forth in Schedule I and Schedule II hereto and the financial statementsdelivered with this Certificate in support hereof, are made and delivered this_____ day of __________, ____. -------------------------------- [Insert Name of Officer] 7.1(B)-2Wabash National CorporationQuarterly Compliance Certificate Worksheet COMPLIANCE CERTIFICATE QUARTERLY SCHEDULE OF COMPLIANCE AS OF _________, 2003 A. INTENTIONALLY OMITTEDB. INTENTIONALLY OMITTEDC. MINIMUM CONSOLIDATED EQUITY (SECTION 10.3(B)) 1. Actual Amount: a. Consolidated Equity $ - b. Minimum Required Amount $ - D. MAXIMUM LEVERAGE VALUATION RATIO (SECTION 10.3(C)) 1. Actual Amount: a. Term Debt (Notes & Bank Debt) $ - b. Revolver (Super Revolver) $ - ----------- c. Total Debt (a+b) $ - d. Cash and Cash Equivalents $ - e. Net Inventory $ - f. Net Prepaid and Other Expenses $ - g. Net PP&E $ - ----------- h. Total Assets (d+e+f+g) $ - i. Leverage Ratio (c/h) x ----- 2. Minimum Required Amount x ----- 7.1(B)-3 E. MINIMUM CONSOLIDATED CUMULATIVE (SINCE 1/1/2003) EBITDA (SECTION 10.3(D)) 1. Actual Amount: a. Consolidated Operating Income $ - b. Foreign and Domestic Taxes Deducted in Operating Income $ - c. Interest Expense Deducted in Operating Income $ - d. Eligible Asset Disposition Charges $ - e. Eligible Asset Impairment Charges $ - f. Eligible Miscellaneous Non-Cash Charges $ - g. Eligible Restructuring Charges $ - h. Depreciation Expense Deducted in Operating Income $ - i. Amortization Expense Deducted in Operating Income $ - j. Interest Income Included in Operating Income $ - k. Total Tax Benefit Included in Operating Income $ - l. Consolidated EBITDA (a+b+c+d+e+f+g+h+i-j-k) $ - 2. Minimum Required Amount $ - F. INTENTIONALLY OMITTEDG. MAXIMUM CAPITAL EXPENDITURES (SECTION 10.3(F)) 1. Actual Amount: a. Capital Expenditures (Year-to-Date) $ - 2. Maximum Annual Allowed Amount $ 4,000,000H. MAXIMUM FINANCE CONTRACTS (SECTION 10.3(G)) 1. Actual Amount: a. Finance Contracts (Year-To-Date) $ - 2. Maximum Annual Allowed Amount $ 5,000,000 7.1(B)-4 A. MAXIMUM OTHER UNSECURED INDEBTEDNESS (Section 10.2(a)) 1. Actual Amount: $ ____________ 2. Maximum Permitted Amount: $ 3,000,000B. SALES OF ASSETS (Section 10.2(b)(v)) ------------------ 1. Actual Amount: a. Total amount of sales of assets in current fiscal year to date (See Schedule II for detail) $ ____________ 2. Maximum Permitted Amount: $ 5,000,000C. INTENTIONALLY OMITTEDD. INVESTMENTS (Section 10.2(d)(vii)) For each new Investment pursuant to Section 10.2(d)(vii) of the Agreement during the most recent fiscal quarter covered by this Certificate, complete the following: 1. Date and brief description of nature of new Investment: -------------------------------------------------------------- -------------------------------------------------------------- 2. Actual Amount: a. Amount of new Investment $ ____________ b. Amount of existing Investments under Section 10.2(d)(vii) + ____________ c. Total Investments under Section10.2(d)(vii) =$ ____________ 3. Maximum Permitted Amount: $ 5,000,000E. LEASES (Section 10.2(n)) 1. Actual Amount of Leases: $ ____________ 2. Maximum Permitted Amount: $ 5,000,000 7.1(B)-5 SCHEDULE II TO COMPLIANCE CERTIFICATE Schedule of Compliance as of __________, ____ (Dollars in Thousands) A. Sales of Assets [List separate sales and amounts] $ ____________ ____________ ____________ Total $ ____________ 7(B)-6 EXHIBIT 10.47================================================================================ WABASH NATIONAL CORPORATION ___________________________ SECOND AMENDMENT Dated as of April 11, 2003 To AMENDED AND RESTATED NOTE PURCHASE AGREEMENT Dated as of April 12, 2002 ___________________________ Re: $50,000,000 Adjusting Rate Senior Secured Notes, Series I, due September 29, 2007================================================================================ SECOND AMENDMENT TO AMENDED AND RESTATED NOTE PURCHASE AGREEMENT This Second Amendment dated as of April 11, 2003 ("SecondAmendment") to the Amended and Restated Note Purchase Agreement, dated as ofApril 12, 2002 and as amended on December 13, 2002, is among Wabash NationalCorporation, a Delaware corporation ("Company"), and the several Purchasersparty to the Note Agreement (collectively, the "Noteholders"). RECITALS: A. The Company and the Noteholders have heretofore enteredinto that certain Amended and Restated Note Purchase Agreement dated as of April12, 2002 (the "Note Agreement"). The Company has heretofore issued its$50,000,000 11.29% Senior Secured Notes, Series I, due September 29, 2007bearing PPN 929556 G@ 8 (the "Notes"), dated April 12, 2002, and its SeniorSecured PIK Grid Notes, due March 30, 2004 bearing PPN 929556 G# 8 (the"Yield-Maintenance Notes"), dated April 12, 2002, pursuant to the NoteAgreement. The Noteholders are the holders of 100% of the principal amount ofthe Notes presently outstanding. B. Apex Trailer Leasing & Rentals, L.P., a Delaware limitedpartnership ("Apex"), Cloud Oak Flooring Company, Inc., an Arkansas corporation("Cloud"), Continental Transit Corporation, an Indiana corporation("Continental"), FTSI Distribution Company, L.P., a Delaware limited partnership("FTSI"), National Trailer Funding, L.L.C., a Delaware limited liability company("National"), Wabash National Trailer Centers, Inc. (formerly known as NOAMTC,Inc.), a Delaware corporation ("Trailer"), Wabash Financing LLC, a Delawarelimited liability company ("Wabash Financing"), Wabash National, L.P., aDelaware limited partnership ("Wabash National"), Wabash National Services,L.P., a Delaware limited partnership ("Services"), Wabash Technology Corp., aDelaware corporation ("Technology"), WNC Cloud Merger Sub, Inc., an Arkansascorporation ("WNC Cloud"), WNC Receivables Management Corp., a Delawarecorporation ("Receivables"), and WTSI Technology Corp., a Delaware corporation("WTSI") (Apex, Cloud, Continental, FTSI, National, Trailer, Wabash Financing,Wabash National, Services, Technology, WNC Cloud, Receivables and WTSI arehereinafter collectively referred to as the "Guarantors") have heretoforeentered into that certain Amended and Restated Subsidiary Guarantee Agreement,dated as of April 12, 2002 (the "Subsidiary Guarantee Agreement") under andpursuant to which each of the Guarantors guaranteed the payment of the Notes andthe performance by the Company of its obligations under the Note Agreement. C. The Company and the Noteholders now desire to (i) modifythe Note Agreement by amending certain provisions of the Note Agreement andprovide that the amendment to the Note Agreement be effective as of the datehereof (the "Second Amendment Effective Date") and (ii) amend and restate theNotes and the Yield-Maintenance Notes (provided that in lieu of receiving anamended and restated Note or Yield-Maintenance Note, each Noteholder may electto receive an allonge to be attached to the Notes and Yield-Maintenance Notesoriginally issued to such Noteholder pursuant to the Note Agreement), suchamended and restated notes together with such allonges are collectively referredto herein as the "Amended and Restated Notes"). D. The Guarantors in connection with this Second Amendmentdesire to reaffirm their respective obligations under the Subsidiary GuaranteeAgreement. E. All requirements of law have been fully complied with andall other acts and things necessary to make this Second Amendment a valid, legaland binding instrument according to its terms for the purposes herein expressedhave been done or performed. NOW, THEREFORE, upon the full and complete satisfaction of theconditions precedent to the effectiveness of this Second Amendment set forth inSection 5 hereof, the Company and the Noteholders, for good and valuableconsideration the receipt and sufficiency of which are hereby acknowledged, dohereby agree as follows: SECTION 1 Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Note Agreement shall have the meaning assigned to such term in the Note Agreement. Each reference to "hereof," "hereunder," "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Note Agreement shall from and after the date hereof refer to the Note Agreement as amended hereby. SECTION 2 Amendments. The Company and the Noteholders agree that theNote Agreement shall be amended as follows: 2.1 Paragraph 4B(b) of the Note Agreement shall be and hereby isamended in its entirety to read as follows: "(b) The Company will prepay the Notes as follows, provided that no portion of such prepayments shall be applied to any Yield-Maintenance Note: (i) on the last Business Day of each month commencing with January 31, 2003 through April 30, 2003, the Company will prepay the Notes in an aggregate principal amount equal to the product of the Series I Note Principal Allocation times $4,958,833, together with the Yield-Maintenance Amount payable with respect thereto; (ii) on the last Business Day of each month commencing with May 31, 2003 through December 31, 2003, the Company will prepay the Notes in an aggregate principal amount equal to the product of the Series I Note Principal Allocation times $2,479,167, together with the Yield-Maintenance Amount payable with respect thereto; (iii) on January 15, 2004, the Company shall prepay the Notes in an aggregate principal amount equal to the Series I Note Principal Allocation times the sum of $19,833,332 minus the aggregate amount of principal prepayments in excess, if any, of $19,833,332 made by the Company on the Amortization Debt from the Second Amendment Effective Date to December, 31, 2003, together with the Yield-Maintenance Amount payable with respect thereto; provided, 2 however, that the amount required to be prepaid on the Notes pursuant to this clause (iii) shall in no event be less than zero; and (iv) on the last Business Day of each month commencing with January 31, 2004 through March 30, 2004, the Company will prepay the Notes in an aggregate principal amount equal to the product of the Series I Note Principal Allocation times $4,958,333, together with the Yield-Maintenance Amount payable with respect thereto." 2.2 Paragraph 4B(c) of the Note Agreement shall be and hereby isamended by deleting the reference to "June 30, 2002" therein and inserting"March 31, 2004" in lieu thereof. 2.3 Paragraph 4 to the Note Agreement shall be and hereby is amended byinserting the following new paragraph at the end of such paragraph 4: "4G. DEFERRED AMOUNTS. (i) In addition to the rate of interest otherwise payable with respect to the Notes and all other amounts payable hereunder or in connection herewith, the Company shall pay, by no later than January 15, 2004, additional interest to the Noteholders in accordance with their respective pro rata principal amount in an amount equal to the aggregate of (a) each Series I Deferred Principal Amount multiplied by a rate per annum equal to 2.00% per annum from the date such Series I Deferred Principal Amount is created and determined hereunder until the date such Series I Deferred Principal Amount has been paid in full plus (b) each Series I Deferred Principal Amount multiplied by a rate per annum equal to 1.00% per annum from the date such Series I Deferred Principal Amount has been paid in full (through voluntary prepayments pursuant to paragraph 4C hereof) to (but not including) January 15, 2004 (the amounts referred to in clauses (a) and (b) hereof are collectively referred to as "Deferred Principal Amount Fees"). Each such voluntary prepayment shall be applied to the earliest occurring Series I Deferred Principal Amount and, after the same has been paid in full, thereafter to each immediately succeeding Series I Deferred Principal Amount until all Series I Deferred Principal Amounts have been paid in full. On January 15, 2004, the Company shall pay all Series I Deferred Principal Amounts. As used in this paragraph 4G(i), "Deferred Principal Amount" means, with respect to each monthly repayment of the Amortization Debt occurring on or after the Second Amendment Effective Date but prior to January 1, 2004, the excess, if any, of (x) $4,958,333 minus (y) the actual amount of such repayment; it being understood and agreed that each occurrence of such an excess will create a new and independent Deferred Principal Amount. As used in this paragraph 4G(i), "Series I Deferred Principal Amount" means the Series I Note Principal Allocation times each Deferred Principal Amount. The Company agrees that in connection with any payment of fees payable to the Specified Holders similar to the Deferred Principal Amount Fees, the Company shall pay to the Noteholders a pro rata amount of such payment. (ii) The Company acknowledges that it is required to pay certain amendment/closing fees (in addition to and not including the 0.25% fee described in section (iii) below and reimbursement for out of pocket costs and expenses) to the Noteholders and the Specified Holders in connection with, and as required by, the Second 3 Amendment and the amendments to the Specified Agreements in form and substance substantially similar to the Second Amendment (the "Second Amendment Closing Fees"). In lieu of paying the entire balance of the Second Amendment Closing Fees on the Second Amendment Effective Date, the Company shall pay (a) on the Second Amendment Effective Date, at least $2,000,000 of such Second Amendment Closing Fees and the portion of the Second Amendment Closing Fees paid to the Noteholders on the Second Amendment Effective Date shall not be less than the Series I Deferred Fee Allocation multiplied by the actual amount of the Second Amendment Closing Fees paid to the Noteholders and the Specified Holders on the Second Amendment Effective Date and (b) by no later than January 15, 2004, (1) the then unpaid balance of the Second Amendment Closing Fees multiplied by the Series I Deferred Fee Allocation and (2) a deferral fee to the Noteholders in accordance with their pro rata portion of the Deferred Fee Amount multiplied by the Series I Deferred Fee Allocation at a rate per annum equal to the sum of (x) the Series I Applicable Rate plus (y) (i) 2.00% from the Second Amendment Effective Date until the date such Deferred Fee Amount has been paid in full plus (z) 1.00% on the date immediately prior to the day such Deferred Fee Amount balance has been paid in full and for the period from the date such Deferred Fee Amount has been paid in full until January 15, 2004. As used in this paragraph 4G(ii), "Deferred Fee Amount" means, with respect to the Second Amendment Closing Fees, the excess of (a) the actual amount of the Second Amendment Closing Fees minus (b) the amount of the Second Amendment Closing Fees paid on the Second Amendment Effective Date. The Company agrees that in connection with any payment on any date of the Deferred Fee Amount or the deferral fee referred to above (or a similar deferral fee to any Specified Holder) to any Specified Holder, the Company, on the same date, shall pay to each Noteholder pro rata in accordance with the unpaid principal amount of Notes (other than the Yield-Maintenance Notes) held by such Noteholder an amount equal to the Series I Deferred Fee Allocation times the amount of such payment. (iii) The Company shall pay, on January 15, 2004, a restructuring fee pro rata to each Noteholder, in an amount equal to 0.25% of the then outstanding principal amount of the Notes (other than the Yield-Maintenance Notes) held by such Noteholder (it being understood and agreed that such restructuring fee shall be non-refundable and is deemed to be fully earned on the Second Amendment Effective Date)." 2.4 Paragraph 5A(a) to the Note Agreement shall be and hereby isamended by inserting new subparagraphs (vii) and (viii) immediately followingsubparagraph (vi) thereto which shall read as follows: "(vii) Cash Sources. By no later than fifteen (15) days after the end of each monthly accounting period of the Company, the following (prepared in such format and detail as is required by the Required Holder(s)): (a) a statement of projected cash sources and uses of the Company and its Subsidiaries for the 13 calendar weeks following the end of such monthly accounting period and a report (to the extent requested by the Required Holder(s) from time to time) containing management's discussion and analysis of such projections and (b) a statement of cash sources and uses for the immediately preceding monthly accounting period of the Company and for such historical period as is 4 reasonably required by the Required Holder(s), in comparative form against the figures and for the corresponding date and period in the projected cash flow statements required under the foregoing subsection (a); the foregoing statements required under subsections (a) and (b) being duly certified by the chief financial officer or treasurer of the Company. (viii) Fleet Equivalent Increase. Concurrently with the delivery of each monthly report and information under the Fleet Participation Agreement (including without limitation under Section 6.1(e)(vii) thereof), the Company shall deliver to the each Noteholder copies of such reports and information and any other information relevant to the calculation and determination of the Fleet Equivalent Increase." 2.5 Paragraph 5 of the Note Agreement shall be and hereby is amended byinserting a new paragraph 5T immediately following paragraph 5S thereto whichshall read as follows: "5T. CANADIAN GUARANTY AND COLLATERAL. By no later than May 31, 2003, the Company shall (i) cause its Canadian Subsidiary to execute and deliver to each holder of a Note, a guarantee of the Obligations pursuant to a guaranty agreement, or supplement thereto, in form and substance satisfactory to the Required Holder(s) and their counsel, (ii) cause its Canadian Subsidiary to execute and deliver to the Collateral Agent a general security agreement, or supplement thereto, with a copy to each Noteholder, in form and substance satisfactory to the Collateral Agent and its counsel, (iii) execute and deliver a Pledge Agreement, or supplement thereto, pledging 100% of the capital stock of its Canadian Subsidiary and (iv) deliver to the Required Holder(s) corporate resolutions and other documentation (including legal opinions, Personal Property Security Act financing statements and such other instruments and documents as are requested by, and in form and substance satisfactory to, the Required Holder(s) and their counsel) related to the delivery of the foregoing agreements; provided that the Company shall not be required to provide that portion or amount of collateral described above and evidenced by any of the foregoing instruments and documents to the extent but only to the extent that delivery of such collateral would cause its Canadian Subsidiary's accumulated and undistributed earnings and profits to be deemed to be repatriated to the Company or a Domestic Subsidiary for U.S. federal income tax purposes and the effect of such repatriation would be to cause materially adverse tax consequences for the Company." 2.6 Paragraph 6C of the Note Agreement shall be and hereby is amendedand restated as follows: "(a) Intentionally Omitted. (b) Minimum Consolidated Equity. The Company shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated Equity at an amount not less than the applicable "Minimum Consolidated Equity" specified below: Minimum Consolidated Fiscal Quarter Ending Equity --------------------- ------ March 31, 2003 $40,000,000 5 June 30, 2003 $35,000,000 September 30, 2003 $30,000,000 December 31, 2003 $25,000,000 (c) Maximum Leverage Valuation Ratio. The Company shall not permit, as of the last day of each of the fiscal quarters specified below, the Leverage Valuation Ratio to exceed the applicable "Maximum Leverage Valuation Ratio" specified below: Maximum Leverage Fiscal Quarter Ending Valuation Ratio --------------------- --------------- March 31, 2003 0.95 to 1 June 30, 2003 0.95 to 1 September 30, 2003 0.95 to 1 December 31, 2003 0.95 to 1 (d) Minimum Consolidated EBITDA. The Company shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated EBITDA, at an amount not less than the applicable "Minimum Cumulative Consolidated EBITDA" specified below, for the period commencing on January 1, 2003 and ending on such last day: Minimum Cumulative Consolidated Month Ending EBITDA ------------ ------ March 31, 2003 $0 June 30, 2003 $5,000,000 September 30, 2003 $15,000,000 December 31, 2003 $20,000,000 (e) Minimum Interest Coverage Cash Collateral. The Company shall, by no later than December 31, 2002, enter into a Cash Collateral Agreement and, by no later than one (1) Business Day prior to the first day of each fiscal quarter of the Company ending on or after March 31, 2003, deposit funds ("Cash Collateral Funds") with the Collateral Agent in an amount not less than the aggregate amount of interest required to be paid, through the end of the immediately succeeding fiscal quarter, under this Agreement and under the Specified Agreements; provided that (i) in the case of interest required to be paid through the end of the fiscal quarter ending on March 31, 2004, the Company may deposit Cash Collateral Funds on or before (but not after) January 15, 2004 and (ii) it being understood and agreed that if, at any time subsequent to the date Cash Collateral Funds are deposited, the aggregate amount of interest required to be so paid increases, the Company shall promptly, and in any event within three (3) Business Days after demand by the holders of the Senior Notes or the Administrative Agent, deposit additional funds with the Collateral Agent in an aggregate amount not less than the amount of such increase)." 6 2.7 Paragraph 6C(f) of the Note Agreement shall be and hereby isamended by deleting the reference to "$6,000,000" contained therein andinserting "$4,000,000" in lieu thereof. 2.8 Paragraph 7A(b)(iv) of the Note Agreement shall be and hereby isamended by inserting "or paragraph 5T" immediately after the reference to"Paragraph 5S" appearing therein. 2.9 Paragraph 7A to the Note Agreement shall be and hereby is amendedby inserting the following new subparagraphs immediately following subparagraph7A(r) contained therein: "7A(s). COMMITMENT LETTER. The Company shall fail to deliver to the holders of Notes, by no later than January 31, 2004, one or more binding commitment letters (in form and substance satisfactory to the Required Secured Parties as defined in the Intercreditor Agreement) from a bank, institutional lender or other qualified lending source to pay in full, on or before March 30, 2004, the Secured Obligations as defined in the Intercreditor Agreement. 7A(t). FLEET CROSS-DEFAULT. A default or breach under the Fleet Participation Agreement shall occur, regardless of whether such default is waived or whether any right with respect to such default or breach is exercised (including, without limitation, any default or breach arising out of a failure by the Company to deliver a business plan as required by Section 6.1(o) thereof)." 2.10 Paragraph 10B of the Note Agreement shall be and hereby is amendedby inserting the following new defined terms and in the correct alphabeticalorder to such Paragraph: "AMORTIZATION DEBT" means, at any time the same is to be determined, the sum of (i) the outstanding principal amount of the Senior Secured Notes (other than the Deferral Fee Notes and the Make-Whole Notes) (as each such term is defined in the Intercreditor Agreement), as of such time plus (ii) the sum of (1) the outstanding principal amount of all of the Term Loans (other than the PIK Notes) plus (B) the amount then available for drawing under all Term Letters of Credit plus (C) the amount of unpaid reimbursement obligations with respect to drawings under all Term Letters of Credit (as each such term is defined in the Credit Agreement as in effect at the date of the Closing). "APPLICABLE MARGIN" means, for each month the same is determined, the sum of (i) 0.50% for every 10% of negative variance from the Targeted Consolidated EBITDA Amount for such month, (ii) 0.50% for every quarterly occurrence of a Leverage Valuation Ratio above 0.85 to 1 as of the end of the Company's most recently ended fiscal quarter and to be paid in the quarter following such occurrence (it being understood and agreed that, once in effect, such Leverage Valuation Ratio-based increase (a "Leverage Increase") will remain in effect for each month prior to the Company's achievement of a Leverage Valuation Ratio of 0.85 to 1 or less but shall cease to apply (subject to subsequent quarterly occurrences of a Leverage Valuation Ratio above 0.85 to 1) during and after such month when the Company's quarterly-based Leverage Valuation Ratio is equal to or less than 0.85 to 1), (iii) 0.50% for every monthly occurrence of a 7 negative monthly Unadjusted Consolidated EBITDA and (iv) 0.20% for every month during which the "Additional Fee" (as identified and defined in Section 10.1(d) of the Fleet Participation Agreement) is payable under the Fleet Participation Agreement (a "Fleet Equivalent Increase"). Each calculation of the Applicable Margin (1) will be determined as of the end of each calendar month (or quarter in the case of the applicability of a Leverage Increase) and shall be in effect for the next succeeding calendar month (or quarter in the case of a Leverage Increase), (2) shall be determined without giving effect to, and shall not be additive of, the Applicable Margin determined in any previous month and (3) shall be subject to the limitation that the amount calculated by adding the sum of the increases specified in the foregoing subsections (i), (ii) and (iii) shall not exceed 5.00% for any month. "CANADIAN SUBSIDIARY" means any subsidiary of the Company organized under the laws of Canada or any province thereof. "DEFERRED FEE AMOUNT" is defined in paragraph 4G(ii). "DEFERRED PRINCIPAL AMOUNT" is defined in paragraph 4G(i). "ELIGIBLE ASSET DISPOSITION CHARGES" means charges, calculated in accordance with GAAP, incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent (i) such charges relate solely and directly to the sales of assets and properties permitted under paragraph 6B(b) (including, without limitation, charges composed of brokerage and investment banking fees, rental and used trailer disposition fees and charges and other disposition transaction costs) and (ii) the proceeds of such sales are used to prepay Indebtedness of the Company and its Subsidiaries to the extent permitted hereunder. "ELIGIBLE ASSET IMPAIRMENT CHARGES" means up to $35,000,000 in the aggregate attributable to, without duplication, any charges incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent such charges relate solely and directly to the impairment of long-lived assets, goodwill and other intangible assets, all in accordance with GAAP. "ELIGIBLE MISCELLANEOUS NON-CASH CHARGES" means non-cash charges (including, without limitation, to non-cash losses on finance contracts, severance and other loss contingencies but excluding Eligible Asst Impairment Charges and Eligible Restructuring Charges), calculated in accordance with GAAP and, to the extent deducted in computing Consolidated Operating Income, incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent the aggregate amount of such non-cash charges do not exceed $10,000,000. "ELIGIBLE RESTRUCTURING CHARGES" means any charges incurred by the Company in its fiscal year ending on December 31, 2003 but only to the extent such charges (i) are incurred in accordance with GAAP and (ii) relate solely and directly to the restructuring, waiving or amending of the instruments and documents evidencing any of the Secured 8 Obligations and other lines of credit, leases or other extensions of credit, including any amounts paid to any lenders, advisor fees and other related costs. "FLEET EQUIVALENT INCREASE" is defined in the definition of "Applicable Margin" contained in paragraph 10B hereof. "FLEET PARTICIPATION AGREEMENT" means that certain Amended and Restated Participation Agreement dated as of March 30, 2001 as currently in effect among Apex Trailer Leasing & Rentals, L.P., the Company, certain financial institutions from time to time party thereto, U.S. Bank National Association, as trustee and Fleet Capital Corporation individually and as owner participant, collateral agent and administrative agent, as such agreement may be amended, restated, supplemented or otherwise modified from time to time. "SECOND AMENDMENT" means that certain Second Amendment to the Amended and Restated Note Purchase Agreement, dated as of April 12, 2002 and as amended on December 13, 2002, dated as of April 11, 2003 among the Company, and the Noteholders. "SECOND AMENDMENT CLOSING FEES" is defined in paragraph 4G(ii). "SECOND AMENDMENT EFFECTIVE DATE" means April 11, 2003. "SERIES I APPLICABLE RATE" means, at any time, the sum of (i) a rate per annum equal to 11.79% plus (ii) the Applicable Margin at such time. "SERIES I DEFERRED FEE ALLOCATION" means at any time, the percentage determined by dividing (a) the aggregate amount of the amendment fees in favor of the Noteholders as required by, and in connection with, the Second Amendment by (b) the sum of (i) the aggregate amount of the amendment fees in favor of the holders of the Senior Secured Notes (other than the Deferral Fee Notes and the Make-Whole Notes) (as each such term is defined in the Intercreditor Agreement) as required by, and in connection with, the Second Amendment and the amendments (comparable to the Second Amendment) to the Note Agreements (as such term is defined in the Intercreditor Agreement), (ii) the aggregate amount of the amendment fees in favor of the Administrative Agent and the Lenders as required by, and in connection with, the Second Amendment, (iii) the aggregate amount of the amendment fees in favor of General Electric Capital Corporation as required by, and in connection with, the amendments (comparable to the Second Amendment) to the Receivables Purchase Agreement and (iv) the aggregate amount of amendment fees in favor of Fleet Capital Corporation as required by, and in connection with, the Amendment (comparable to the Second Amendment) to the lease agreements evidencing the Fleet Lease Transaction. "SPECIFIED AGREEMENTS" means the Credit Agreement, the Receivables Purchase Documents, the Series A Note Purchase Agreement, the Series C-H Note Purchase Agreement and the lease agreements evidencing the Fleet Lease Transaction. 9 "SPECIFIED HOLDERS" means the holders of the Obligations, under and as defined in the Credit Agreement, the financial institutions party to Receivables Purchase Documents, the holders of the Series A Notes, the holders of the Series C-H Notes and the financial institutions party to the lease agreements evidencing the Fleet Lease Transaction. "TARGETED CONSOLIDATED EBITDA AMOUNT" means, for each relevant month, the cumulative Consolidated EBITDA amount (measured from and after January 1, 2003) furnished on March 6, 2003 to the Noteholders as part of the Company's 2003 budget and as set forth on Schedule B attached hereto minus that portion of such cumulative Consolidated EBITDA amount which is attributable to the sale, from and after January 1, 2003, of any assets or any Subsidiary to the extent permitted herein or otherwise approved by the Required Holder(s). "UNADJUSTED CONSOLIDATED EBITDA" means, for any period, on a consolidated basis for the Company and its consolidated Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Consolidated Operating Income, plus (ii) charges against income for foreign taxes and U.S. income taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, minus (a) the total interest income of the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income minus (b) the total tax benefit reported by the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income. 2.11 Paragraph 10B to the Note Agreement is further amended by amendingthe definitions of "CONSOLIDATED EBITDA," "CONSOLIDATED EQUITY" and "DEFAULTRATE" in their entirety to read as follows: "CONSOLIDATED EBITDA" means, for any period, on a consolidated basis for the Company and its consolidated Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Consolidated Operating Income, plus (ii) charges against income for foreign taxes and U.S. income taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, plus (vii) Eligible Asset Impairment Charges to the extent deducted in computing Consolidated Operating Income, plus (viii) Eligible Miscellaneous Non-Cash Charges to the extent deducted in computing Consolidated Operating Income, plus (ix) Eligible Restructuring Charges to the extent deducted in computing Consolidated 10 Operating Income, minus (a) the total interest income of the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income minus (b) the total tax benefit reported by the Company and its Subsidiaries to the extent included in computing Consolidated Operating Income. "CONSOLIDATED EQUITY" means as of the date of any determination thereof for any relevant period, the total stockholders' equity of the Company and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP, plus the sum of the amounts for such period, without duplication, of (i) foreign currency translation and transaction gains and losses, plus (ii) all charges against income for foreign taxes and U.S. income taxes, plus (iii) Eligible Asset Disposition Charges, plus (iv) Eligible Asset Impairment Charges, plus (v) Eligible Non-Cash Miscellaneous Charges, plus (vi) Eligible Restructuring Charges. "DEFAULT RATE" means the greater of (i) 2.00% over the then applicable Series I Applicable Rate or (ii) 2.00% over the rate of interest publicly announced by Morgan Guaranty Trust Company of New York from time to time in New York, New York as its "base" or "prime" rate. 2.12 The Note Purchase Agreement shall be and hereby is amended byinserting a new Schedule B in the form of Schedule B attached to this SecondAmendment. 2.13 Exhibit 1 to the Note Purchase Agreement is amended in itsentirety by substituting therefor Amended Exhibit 1 attached to this Amendment. 2.14 Exhibit 2 to the Note Purchase Agreement is amended in itsentirety by substituting therefor Amended Exhibit 2 attached to this Amendment. 2.15 Exhibit 5A-2 to the Note Purchase Agreement is amended in itsentirety by substituting therefor Amended Exhibit 5A-2 attached to thisAmendment. SECTION 3 Representations and Warranties of the Company. To induce theNoteholders to execute and deliver this Second Amendment (which representations shall survive the execution and delivery of this Second Amendment), each of the Company and the Guarantors represent and warrant to the Noteholders that: (a) since December 31, 2002, there has been no change in the condition, financial or otherwise, of the Company and its Subsidiaries as shown on the consolidated balance sheet as of such date except changes in the ordinary course of business, none of which individually or in the aggregate has had, or reasonably could be expected to have, a Material Adverse Effect; (b) this Second Amendment has been duly authorized, executed and delivered by it and this Second Amendment constitutes the legal, valid and binding obligation, contract and agreement of the Company and Guarantors enforceable against each of them in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, 11 moratorium or similar laws relating to or limiting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or in law); (c) the Note Agreement, as amended by this Second Amendment, constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or in law); (d) the Amended and Restated Notes have been duly authorized by all necessary corporate action on the part of the Company and the Amended and Restated Notes being delivered on the Effective Date have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or in law); (e) the execution, delivery and performance by the Company of this Second Amendment and the Amended and Restated Notes and by the Guarantors of this Second Amendment (i) have been duly authorized by all requisite corporate action and, if required, shareholder action, (ii) do not require the consent or approval of any governmental or regulatory body or agency, and (iii) do not and will not (A) violate (1) any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) any provision of any material indenture, agreement or other instrument to which it is a party or by which its properties or assets are or may be bound, including, without limitation, the Note Agreement, or (B) result in a breach or constitute (along or with due notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in clause (iii)(A)(3) of this Section 3(e); (f) except as set forth in Sections 5(d) and (e) and as set forth in the description of the 0.25% restructuring fee contained in Section 2.3 of this Second Amendment and comparable fees as set forth in the separate amendments dated as of the date hereof to each of the Specified Agreements, the Company has not paid or agreed to pay any fee or other compensation to any party to the Specified Agreements in connection with the amendment of the Note Agreement or the Notes; 12 (g) as of the date hereof and after giving effect to this Second Amendment, no Default or Event of Default has occurred which is continuing; and (h) all the representations and warranties contained in paragraph 8 of the Note Agreement are true and correct in all material respects with the same force and effect as if made by the Company on and as of the date hereof. SECTION 4 Reaffirmation of Subsidiary Guarantee Agreement. Each of theGuarantors hereby reaffirms each of their obligations under the SubsidiaryGuarantee Agreement after giving effect to this Second Amendment. SECTION 5 Conditions to Effectiveness of this Amendment. Subject to theproviso below, this Second Amendment shall be deemed effective as of April 11,2003, provided that each and every one of the following conditions shall havebeen satisfied: (a) each Amended and Restated Note or, if requested by any Noteholder, each Allonge shall have been duly executed by the Company and shall have been delivered to the Noteholders or their special counsel; (b) executed counterparts of this Second Amendment, duly executed by the Company, the Guarantors and the holders of 100% of the outstanding principal amount of the Notes, shall have been delivered to the Noteholders; (c) the representations and warranties of the Company and the Guarantors set forth in Section 3 hereof are true and correct on and with respect to the date hereof; (d) subject to paragraph 4G(ii) of the Note Purchase Agreement, the Company shall have paid in cash an amendment fee to each Noteholder in an amount equal to 0.625% of the outstanding principal amount of the Notes (other than the Yield-Maintenance Notes) held by such Noteholder (each as calculated on the Second Amendment Effective Date); (e) the Company shall have paid to each Noteholder the aggregate amount of interest, accrued and unpaid up to and including the Second Amendment Effective Date, on the Notes, including, without limitation as a result of the effectiveness of the 0.50% increase in the Series I Applicable Rate effective as of February 27, 2003 pursuant hereto; (f) the Company shall have paid the reasonable fees and expenses of Schiff Hardin & Waite, special counsel to the Noteholders, in connection with the negotiation, preparation, approval, execution and delivery of this Second Amendment; (g) the Noteholders shall have received similar executed amendments to the Specified Agreements in form and substance satisfactory to the Noteholders; 13 provided that upon the satisfaction of the foregoing conditions precedent, the amendments set forth in this Second Amendment relating to the Series I Applicable Rate shall be effective as of February 27, 2003 and the amounts added to the Yield-Maintenance Notes for February 28, 2003 and March 31, 2003 shall be adjusted accordingly. SECTION 6 Consents and Waivers. Upon and by virtue of this SecondAmendment becoming effective as herein contemplated, the Noteholders herebyconsent to the amendments specified herein, including the amendment of theSpecified Agreements, in each case in a manner similar to the amendmentshereunder. SECTION 7 Miscellaneous. (a) This Second Amendment shall be construed in connection with and as part of the Note Agreement, and except as modified and expressly amended by this Second Amendment, all terms, conditions and covenants contained in the Note Agreement are hereby ratified and shall be and remain in full force and effect. (b) Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Second Amendment may refer to the Note Agreement without making specific reference to this Second Amendment, but nevertheless all such references shall include this Second Amendment unless the context otherwise requires. (c) The descriptive headings of the various Sections or parts of this Second Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof. (d) This Second Amendment shall be governed by and construed in accordance with Illinois law, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. (e) The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Second Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement. 14 IN WITNESS WHEREOF, the parties hereto have caused this SecondAmendment to be duly executed by their respective authorized officers as of theday and year first above written. WABASH NATIONAL CORPORATION By: ________________________________________________ Christopher A. Black, Vice President & TreasurerAccepted and Agreed: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: ---------------------------------------- Name: -------------------------------------- Title: Vice PresidentAccepted and Agreed: PRUCO LIFE INSURANCE COMPANY By: ----------------------------------- Name: --------------------------------- Title: Vice President CONSENT AND REAFFIRMATION Each of the undersigned hereby acknowledges receipt of a copyof the foregoing Second Amendment dated as of April 11, 2003 ("SecondAmendment") to the Amended and Restated Note Purchase Agreement, dated as ofApril 12, 2002 and as amended on December 13, 2002 by and among Wabash NationalCorporation, a Delaware corporation ("Company"), and the several Noteholdersparty to the Note Agreement (collectively, the "Noteholders"). Capitalized termsused in this Consent and Reaffirmation and not defined herein shall have themeanings given to them in the Note Purchase Agreement. Without in any wayestablishing a course of dealing by the Noteholders, each of the undersignedconsents to the Second Amendment and reaffirms the terms and conditions of theGuaranty, the Note Purchase Agreement and any other Note Document executed by itand acknowledges and agrees that such agreement and each and every such NoteDocument executed by the undersigned in connection with the Note PurchaseAgreement remains in full force and effect and is hereby reaffirmed, ratifiedand confirmed. All references to the Note Purchase Agreement contained in theabove-referenced documents shall be a reference to the Note Purchase Agreementas so modified by the Second Amendment and as the same may from time to timehereafter be amended, modified or restated.Dated: April 11, 2003 APEX TRAILER LEASING & RENTALS, L.P. By: Wabash National Corporation, its general partner By: ----------------------------------- Christopher A. Black, Vice President & Treasurer President & Treasurer CLOUD OAK FLOORING COMPANY, INC. By: ----------------------------------- Christopher A. Black, Authorized Representative CONTINENTAL TRANSIT CORPORATION By: ----------------------------------- Christopher A. Black, Authorized Representative FTSI DISTRIBUTION COMPANY, L.P. By: Wabash National Trailer Centers, Inc., formerly known as NOAMTC, Inc., its general partner By: ----------------------------------- Christopher A. Black, Authorized Representative NATIONAL TRAILER FUNDING, L.L.C. By: Wabash National Trailer Centers, Inc., formerly known as NOAMTC, Inc., its Member By: ----------------------------------- Christopher A. Black, Authorized Representative WABASH NATIONAL TRAILER CENTERS, INC., formerly known as NOAMTC, Inc. By: ----------------------------------- Christopher A. Black, Authorized Representative WABASH FINANCING LLC By: ----------------------------------- Christopher A. Black, Authorized Representative WABASH NATIONAL L.P. By: Wabash National Trailer Centers, Inc., formerly known as NOAMTC, Inc., its general partner By: ----------------------------------- Christopher A. Black, Authorized Representative WABASH NATIONAL SERVICES, L.P. By: Wabash National Trailer Centers, Inc., formerly known as NOAMTC, Inc., its general partner By: ----------------------------------- Christopher A. Black, Authorized Representative WABASH TECHNOLOGY CORP. By: ----------------------------------- Christopher A. Black, Authorized Representative WNC CLOUD MERGER SUB, INC. By: ----------------------------------- Christopher A. Black, Authorized Representative WNC RECEIVABLES MANAGEMENT CORP. By: ----------------------------------- Christopher A. Black, Secretary WTSI TECHNOLOGY CORP. By: ----------------------------------- Christopher A. Black, Authorized Representative [FORM OF NOTE] AMENDED AND RESTATED WABASH NATIONAL CORPORATION SERIES I ADJUSTING RATE SENIOR SECURED NOTE DUE SEPTEMBER 29, 2007No. [_____] [Date]$[_______] PPN: [________] FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to[___________________________], or registered assigns, the principal sum of[___________________________] DOLLARS on September 29, 2007, with interest(computed on the basis of a 360-day year of twelve 30-day months) (a) on theunpaid balance thereof at the rate equal to the Series I Applicable Rate (asdefined below) from the date hereof, payable monthly, on the last Business Dayof each calendar month in each year, commencing with the last Business Day ofthe calendar month next succeeding the date hereof, until the principal hereofshall have become due and payable, and (b) to the extent permitted by law on anyoverdue payment (including any overdue prepayment) of principal, any overduepayment of interest and any overdue payment of any Yield-Maintenance Amount (asdefined in the Note Purchase Agreement referred to below), payable monthly asaforesaid (or, at the option of the registered holder hereof, on demand), at arate per annum from time to time equal to the greater of (i) 2.00% over theSeries I Applicable Rate or (ii) 2.00% over the rate of interest publiclyannounced by Morgan Guaranty Trust Company of New York from time to time in NewYork, New York as its "base" or "prime" rate. As used herein, "Series IApplicable Rate" means, at any time, the sum of (i) 11.79% per annum plus (ii)the Applicable Margin (as defined in the Note Purchase Agreement) at such time. Payments of principal of, interest on and any Yield-Maintenance Amountwith respect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of a series of Series I Senior Secured Notes (hereincalled the "Notes") issued pursuant to that certain Amended and Restated NotePurchase Agreement, dated as of April 12, 2002 (as from time to time amended,the "Note Purchase Agreement"), between the Company and the respectivePurchasers named therein and is entitled to the benefits thereof. Each holder ofthis Note will be deemed, by its acceptance hereof, (i) to have agreed to theconfidentiality provisions set forth in paragraph 11Q of the Note PurchaseAgreement and (ii) to have made the representation set forth in paragraph 8 ofthe Note Purchase Agreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, and EXHIBIT 1 (to Note Purchase Agreement)registered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. This Note is subject to mandatory and optional prepayment, in whole orfrom time to time in part, at the times and on the terms specified in the NotePurchase Agreement, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Yield-Maintenance Amount) and with the effect provided in the NotePurchase Agreement. This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, assigned, transferred, pledgedand hypothecated, the nature and extent of the security for the Notes, therights of the holders of the Notes, the Collateral Agent (as defined in the NotePurchase Agreement) in respect of such security and otherwise. The payment of the principal amount of, premium, if any, and intereston this Note has been unconditionally guaranteed by the Guarantors (as definedin the Note Purchase Agreement) pursuant to the Note Guaranty (as defined in theNote Purchase Agreement). Reference is hereby made thereto for a statement ofthe rights and benefits accorded thereby. E-1-2 THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOISEXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By: ___________________________________ Title: ____________________________ E-1-3 [FORM OF YIELD-MAINTENANCE NOTE] WABASH NATIONAL CORPORATION SENIOR SECURED PIK GRID NOTE DUE MARCH 30, 2004No. _________ [Date]$____________ PPN: [_____________] FOR VALUE RECEIVED, the undersigned, WABASH NATIONAL CORPORATION(herein called the "Company"), a corporation organized and existing under thelaws of the State of Delaware, hereby promises to pay to ________________, orregistered assigns, the R-__ Note Accreted Principal Amount on March 30, 2004.The outstanding principal amount of this Senior Secured PIK Grid Note shallaccrete at the Series I Applicable Rate per annum on a monthly basis on the lastBusiness Day of each calendar month in each year commencing with the lastBusiness Day of the calendar month next succeeding the date hereof (computed onthe basis of a year of 360 days and twelve 30-day months) from the date ofissuance hereof and shall cease to accrete on the date on which this SeniorSecured PIK Grid Note shall have been paid in full; provided that in the case ofany prepayment or other payment of this Senior Secured PIK Grid Note on any dateother than the last Business Day of any calendar month, the outstandingprincipal amount of this Senior Secured PIK Grid Note shall accrete at theSeries I Applicable Rate per annum on a daily basis from the date of the lastBusiness Day of such calendar month to the date of such prepayment; provided,further that upon the occurrence of an Event of Default (as defined in the NotePurchase Agreement referred to below and until such Event of Default has beencured or waived in writing (such period constituting a "Default InterestPeriod"), the outstanding principal amount of this Senior Secured PIK Grid Noteshall accrete, to the extent permitted by law, at a rate per annum from time totime equal to the greater of (i) 2.00% over the Series I Applicable Rate or (ii)2.00% over the rate of interest publicly announced by Morgan Guaranty Bank ofNew York from time to time in New York, New York as its "base" or "prime" rate.It is understood and agreed that any reference in this Senior Secured PIK GridNote to the "principal amount" of this Senior Secured PIK Grid Note shallinclude a reference to the R-___ Note Accreted Principal Amount thereof whetheror not specifically set forth. As used herein, "Series I Applicable Rate" means,at any time, the sum of (i) 11.79% per annum plus (ii) the Applicable Margin (asdefined in the Note Purchase Agreement) at such time."R-__ Note Accreted Principal Amount" shall mean with reference to this SeniorSecured PIK Grid Note, as of any date of determination, the sum of (a) theYield-Maintenance Amounts which shall become payable to the holder of this Notewith respect to such holder's Series I Notes, from time to time upon payment bythe Company of portions of the principal amount of such Notes pursuant toParagraph 4 of the Note Purchase Agreement and (b) the outstanding principalamount of this Senior Secured PIK Grid Note which shall have been accretedthereon from the date of issuance through such date, such amount shall accreteat the Series I Applicable Rate per annum on a monthly basis on the lastBusiness Day of each calendar month in each year commencing with the lastBusiness Day of the calendar month next succeeding the date hereof (computed onthe basis of a year of 360 days and twelve 30-day months) and shall cease toaccrete on the date on which this Senior Secured PIK Grid Note shall have beenpaid in full; EXHIBIT 2 (to Note Purchase Agreement)provided that in the case of any prepayment or other payment of this SeniorSecured PIK Grid Note on any date other than the last Business Day of anycalendar month, the outstanding principal amount of this Senior Secured PIK GridNote shall accrete at the Series I Applicable Rate per annum on a daily basisfrom the date of the last Business Day of such calendar month to the date ofsuch prepayment. The amounts of the Yield-Maintenance Amounts payable from timeto time may for the convenience of the parties be recorded by the holder hereofon the attached Grid however the books and records of the holder shall, in theabsence of manifest error, be conclusive as to the determination of theYield-Maintenance Amounts evidenced by this Note. Payments of principal of, interest on and any Yield-Maintenance Amountwith respect to this Note are to be made in lawful money of the United States ofAmerica at Chicago, Illinois or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below. This Note is one of the Senior Secured PIK Grid Notes due March 30,2004 (the "Yield-Maintenance Notes") of the Company which, together with theCompany's Notes and Deferral Fee Notes (as each is defined in the Note PurchaseAgreement described below) are hereinafter referred to collectively as the"Notes", are issued and outstanding pursuant to that certain Amended andRestated Note Purchase Agreement, dated as of April 12, 2002 (as from time totime amended, the "Note Purchase Agreement"), between the Company and therespective Purchasers named therein and is entitled to the benefits thereof.Each holder of this Note will be deemed, by its acceptance hereof, (i) to haveagreed to the confidentiality provisions set forth in paragraph 11Q of the NotePurchase Agreement and (ii) to have made the representation set forth inparagraph 8 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note PurchaseAgreement, upon surrender of this Note for registration of transfer, dulyendorsed, or accompanied by a written instrument of transfer duly executed, bythe registered holder hereof or such holder's attorney duly authorized inwriting, a new Note for a like principal amount will be issued to, andregistered in the name of, the transferee. Prior to due presentment forregistration of transfer, the Company may treat the person in whose name thisNote is registered as the owner hereof for the purpose of receiving payment andfor all other purposes, and the Company will not be affected by any notice tothe contrary. The Company will make a required prepayment of principal on the dateand in the amount specified in the Note Purchase Agreement. This Note is alsosubject to optional prepayment, in whole or from time to time in part, at thetimes and on the terms specified in the Note Purchase Agreement, but nototherwise. If an Event of Default, as defined in the Note Purchase Agreement,occurs and is continuing, the principal of this Note may be declared orotherwise become due and payable in the manner, at the price (including anyapplicable Yield-Maintenance Amount) and with the effect provided in the NotePurchase Agreement. This Note is equally and ratably secured by the Collateral Documents(as defined in the Note Purchase Agreement). Reference is hereby made to theCollateral Documents for a description of the collateral thereby mortgaged,warranted, bargained, sold, released, conveyed, E-2-2assigned, transferred, pledged and hypothecated, the nature and extent of thesecurity for the Notes, the rights of the holders of the Notes, the CollateralAgent (as defined in the Note Purchase Agreement) in respect of such securityand otherwise. The payment of all R-__ Note Accreted Principal Amount of, premium, ifany, and interest on this Note has been unconditionally guaranteed by theGuarantors (as defined in the Note Purchase Agreement) pursuant to the NoteGuaranty (as defined in the Note Purchase Agreement). Reference is hereby madethereto for a statement of the rights and benefits accorded thereby. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THERIGHTS AND PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS,EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRETHE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. WABASH NATIONAL CORPORATION By: -------------------------------- Title: ------------------------------ E-2-3 WABASH NATIONAL CORPORATION SCHEDULE OF YIELD-MAINTENANCE AMOUNTS DUE UNDER THE SENIOR SECURED PIK GRID NOTE DUE MARCH 30, 2004 Total Accreted Principal, Yield- Accreted Accreted Interest and Maintenance Principal Applicable Interest Deferral Fee Date Amount Amount Interest Rate Payable Payable--------------------- ------------------ ------------------- ------------------ ------------------- ------------------ 4/30/025/31/026/30/027/31/028/31/029/30/0210/31/0211/30/0212/31/021/31/032/28/033/31/034/30/035/31/036/30/037/31/038/31/039/30/0310/31/0311/30/0312/31/031/31/042/28/04 E-2-4 Amended Exhibit 5A-2 FORM OF COMPLIANCE CERTIFICATETo: The Parties to the Note Agreements Described Below This Compliance Certificate is furnished pursuant to that certain Amended and Restated Note Purchase Agreement dated as of April 12, 2002 (as amended, modified, renewed or extended from time to time, the "Agreement") between Wabash National Corporation (the "Company"), and each of the Purchasers named therein. Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected ----------------- of the Company and the [Chief Financial Officer] [Treasurer]; 2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Company and its Subsidiaries during the accounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and 4. Schedule I and Schedule II attached hereto set forth financial data and computations evidencing the Company's compliance with certain covenants of the Agreement and the Excess Cash Flow during the accounting period covered by the attached financial statements, all of which data and computations are true, complete and correct. Exhibit 5A-2 (to Note Purchase Agreement) Described below are the exceptions, if any, to paragraph 3, listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Company has taken, is taking, or proposes to take with respect to each such condition or event: -------------------------------------------------------------- -------------------------------------------------------------- The foregoing certifications, together with the computationsset forth in Schedule I and Schedule II hereto and the financial statementsdelivered with this Certificate in support hereof, are made and delivered this_____ day of __________, ____. -------------------------------- [Insert Name of Officer]Wabash National CorporationQuarterly Compliance Certificate Worksheet COMPLIANCE CERTIFICATE QUARTERLY SCHEDULE OF COMPLIANCE AS OF _______________, 2002 (DOLLARS IN THOUSANDS)A. EXCESS CASH FLOW (PARAGRAPH 4B(c)) 1. Actual Amount: a. Sum of Cash & Cash Equivalents $ - b. Quarterly Average Available Liquidity $ - ----------- c. Total Available Liquidity (a+b) $ - 2. Projected Amount: a. Liquidity Amount (Schedule B-19) $ - b. Cash Basket $ 5,000 ----------- c. Total Projected Liquidity Amount (a+b) $ 5,000 3. Cash Flow Available for Debt Paydown (1c - 2c) $ (5,000)B. MAXIMUM LEVERAGE VALUATION RATIO (PARAGRAPH 6C(c)) 1. Actual Amount: a. Senior Notes b. Indebtedness under Credit Agreement ----------- (excluding L/C Obligations) c. Total Debt (a+b) $ - d. Cash and Cash Equivalents e. Net Inventory f. Net Prepaid and Other Expenses g. Net PP&E ----------- h. Total Assets (d+e+f+g) $ - i. Leveraged Ratio (c/h) 0.00x 2. Maximum Permitted Ratio xC. MAXIMUM CAPITAL EXPENDITURES (PARAGRAPH 6C(f)) 1. Actual Amount: a. Capital Expenditures (Fiscal Year-to-Date) $ - 2. Maximum Annual Allowed Amount $ 6,000D. MAXIMUM FINANCE CONTRACTS (PARAGRAPH 6C(g)) 1. Actual Amount: a. Finance Contracts (12 mth period 4/12/02-4/11/03) $ - 2. Maximum Annual Allowed Amount $ 5,000Wabash National CorporationMonthly Compliance Certificate Worksheet COMPLIANCE CERTIFICATE MONTHLY SCHEDULE OF COMPLIANCE AS OF _________, 2003 (DOLLARS IN THOUSANDS)A. MINIMUM ROLLING 12 MONTH CONSOLIDATED EBITDA (PARAGRAPH 6C(d)) 1. Actual Amount: a. Consolidated Operating Income $ - b. Foreign and Domestic Taxes Deducted in Operating Income $ - c. Interest Expense Deducted in Operating Income $ - d. Other Non-Cash Charges Deducted in Operating Income $ - (Aggregate Annual Amount not in Excess of $15,000,000) e. Depreciation Expense Deducted in Operating Income $ - f. Amortization Expense Deducted in Operating Income $ - g. Interest Income Included in Operating Income $ - h. Total Tax Benefit Included in Operating Income $ - i. Consolidated EBITDA (a+b+c+d+e+f-g-h) $ - 2. Minimum Required Amount $ - Wabash National CorporationQuarterly Compliance Certificate Worksheet COMPLIANCE CERTIFICATE QUARTERLY SCHEDULE OF COMPLIANCE AS OF _________, 2003 (DOLLARS IN THOUSANDS)A. EXCESS CASH FLOW (PARAGRAPH 4B(c)) 1. Actual Amount: a. Sum of Cash & Cash Equivalents $ - b. Available Liquidity $ - ----------- c. Total Available Liquidity (a+b) $ - 2. Deduction $ 50,000 3. Gross Excess Cash Flow ----------- 4. Excess Cash Flow (lesser of $20,000 and item 3) -----------B. MINIMUM CONSOLIDATED TAX ADJUSTED EQUITY (PARAGRAPH 6C(a)) 1. Actual Amount: a. Consolidated Equity $ - b. Cumulative Federal, State and Local Income Tax Benefit $ - ----------- c. Consolidated Tax Adjusted Equity(a+b) $ - 2. Minimum Required Amount $ - C. MINIMUM CONSOLIDATED EQUITY (PARAGRAPH 6C(b)) 1. Actual Amount: a. Consolidated Equity $ - b. Minimum Required Amount $ - D. MAXIMUM LEVERAGE VALUATION RATIO (PARAGRAPH 6C(c)) 1. Actual Amount: a. Senior Notes $ - b. Indebtedness under Credit Agreement (excluding L/C Obligations) $ - ----------- c. Total Debt (a+b) $ - d. Cash and Cash Equivalents $ - e. Net Inventory $ - f. Net Prepaid and Other Expenses $ - g. Net PP&E $ - ----------- h. Total Assets (d+e+f+g) $ - i. Leverage Ratio (c/h) x ----- 2. Maximum Permitted Ratio x -----E. MINIMUM INTEREST COVERAGE RATIO (PARAGRAPH 6C(e)) 1. Actual Amount: a. Cumulative Consolidated EBITDA $ - b. Cumulative Interest Expense $ - c. Interest Coverage Ratio (a/b) x ----- 2. Minimum Ratio Allowed - F. MAXIMUM CAPITAL EXPENDITURES (PARAGRAPH 6C(f)) 1. Actual Amount: a. Capital Expenditures (Fiscal Year-to-Date) $ - 2. Maximum Annual Allowed Amount $ 6,000G. MAXIMUM FINANCE CONTRACTS (PARAGRAPH 6C(g)) 1. Actual Amount: a. Finance Contracts (12 month period 4/12/02-4/11/03) $ - (12 month period 4/12/03-4/11/04) $ 2. Maximum Annual Allowed Amount $ 5,000H. MAXIMUM OTHER UNSECURED INDEBTEDNESS (PARAGRAPH 6B(a)(ix)) 1. Actual Amount: $ ----------- 2. Maximum Permitted Amount: $ 3,000I. SALES OF ASSETS (PARAGRAPH 6B(b) [IF APPLICABLE]) 1. Actual Amount: a. Total amount of sales of assets in current fiscal year to date (See Schedule II for detail) $ ----------- 2. Maximum Permitted Amount: $ 5,000J. SALES OF ASSETS BY APEX TRAILER LEASING & RENTALS, L.P. ("APEX") (PARAGRAPH 6B(b)(iv)) 1. Actual Amount: a. Total amount of sales of assets in current fiscal year to date (See Schedule II for detail) $ ----------- 2. Maximum Permitted Amount: a. Total Assets of APEX at end of prior fiscal year $ ----------- b. Intangible assets -- ----------- c. Tangible Assets of APEX at end of prior fiscal year =$ ---------- x 0.50 d. Maximum Permitted Amount =$ ----------K. INVESTMENTS (PARAGRAPH 6B(d)(vii)) For each new Investment pursuant to Paragraph 6B(d)(vii) of the Agreement during the most recent fiscal quarter covered by this Certificate, complete the following: 1. Date and brief description of nature of new Investment: ------------------------------------------------------- ------------------------------------------------------- 2. Actual Amount: a. Amount of new Investment $ ----------- b. Amount of existing Investments under Paragraph 6B(d)(vii) + ----------- c. Total Investments under Paragraph 6B(d)(vii) =$ ------ 3. Maximum Permitted Amount: $5,000L. LEASES (PARAGRAPH 6B(n)) 1. Actual Amount of Leases: $ ----------- 2. Maximum Permitted Amount: $3,500 SCHEDULE II TO COMPLIANCE CERTIFICATE Schedule of Compliance as of __________, ____ (Dollars in Thousands)A. Sales of Assets [List separate sales and amounts] $ ------------- ------------- ------------- ------------- ------------- Total $ ------------- EXHIBIT 10.48 AMENDMENT NO. 2 Dated as of April 11, 2003 to AMENDED AND RESTATED CREDIT AGREEMENT Dated as of April 11, 2002 THIS AMENDMENT NO. 2 ("Amendment") is made as of April 11,2003 by and among Wabash National Corporation (the "Borrower"), the financialinstitutions listed on the signature pages hereof (the "Lenders") and Bank One,NA, as Administrative Agent (the "Agent"), under that certain Amended andRestated Credit Agreement dated as of April 11, 2002 by and among the Borrower,the Lenders and the Agent, as amended prior to the date hereof (the "CreditAgreement"). Defined terms used herein and not otherwise defined herein shallhave the respective meanings given to them in the Credit Agreement. WHEREAS, the Borrower, the Lenders and the Agent have agreedto amend the Credit Agreement on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises set forthabove, the terms and conditions contained herein, and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, theBorrower, the Lenders and the Agent have agreed to the following amendments tothe Credit Agreement. 1. Amendments to Credit Agreement. Subject to the satisfactionof the conditions precedent set forth in Section 3 below, the Credit Agreementis hereby amended as follows: (a) Section 1.1 of the Credit Agreement is amended by addingthe following new defined terms to such Section: "AMORTIZATION DEBT" means, at any time the same is to be determined, the sum of (i) the outstanding principal amount of the Senior Notes (excluding in any event the Related Notes) as of such time plus (ii) the sum of (A) the outstanding principal amount of all of the Term Loans (other than the PIK Notes) plus (B) the amount then available for drawing under all Term Letters of Credit plus (C) the amount of unpaid reimbursement obligations with respect to drawings under all Term Letters of Credit. "BANK DEFERRED FEE ALLOCATION" means, at any time, the percentage determined by dividing (a) the aggregate amount of the amendment fees in favor of the Administrative Agent and the Lenders as required by, and in connection with, the Second Amendment by (b) the aggregate of the Second Amendment Closing Fees (as defined in Section 2.14(d) hereof). "ELIGIBLE ASSET DISPOSITION CHARGES" means charges, calculated in accordance with Agreement Accounting Principles, incurred by the Borrower in its fiscal year ending on December 31, 2003 but only to the extent (i) such charges relate solely and directly to the sales of assets and properties permitted under Section 6.3(B) (including without limitation charges composed of brokerage and investment banking fees, rental and used trailer disposition fees and charges and other disposition transaction costs) and (ii) the proceeds of such sales are used to prepay Indebtedness of the Borrower and its Subsidiaries to the extent permitted hereunder. "ELIGIBLE ASSET IMPAIRMENT CHARGES" means up to $35,000,000 in the aggregate attributable to, without duplication, any charges incurred by the Borrower in its fiscal year ending on December 31, 2003 but only to the extent such charges relate solely and directly to the impairment of long-lived assets, goodwill and other intangible assets, all in accordance with Agreement Accounting Principles. "ELIGIBLE MISCELLANEOUS NON-CASH CHARGES" means non-cash charges (including but not limited to non-cash losses on finance contracts, severance and other loss contingencies but excluding Eligible Asset Impairment Charges and Eligible Restructuring Charges), calculated in accordance with Agreement Accounting Principles and, to the extent deducted in computing Consolidated Operating Income, incurred by the Borrower in its fiscal year ending on December 31, 2003 but only to the extent the aggregate amount of such non-cash charges do not exceed $10,000,000. "ELIGIBLE RESTRUCTURING CHARGES" means any charges incurred by the Borrower in its fiscal year ending on December 31, 2003 but only to the extent such charges (i) are incurred in accordance with Agreement Accounting Principles and (ii) relate solely and directly to the restructuring, waiving or amending of the instruments and documents evidencing any of the Secured Obligations and other lines of credit, leases or other extensions of credit, including any amounts paid to any lenders, advisor fees and other related costs. "FLEET EQUIVALENT INCREASE" is defined in Section 2.6(b) hereof. "FLEET PARTICIPATION AGREEMENT" means that certain Amended and Restated Participation Agreement dated as of March 30, 2001 as currently in effect among Apex Trailer Leasing & Rentals, L.P., the Borrower, certain financial institutions from time to time party thereto, U.S. Bank National Association, as trustee and Fleet Capital Corporation individually and as owner participant, collateral agent and administrative agent, as such agreement may be amended, restated, supplemented or otherwise modified from time to time. "MONTHLY AMORTIZATION AMOUNT" means (i) $1,166,667 with respect to the first nine (9) installments, (ii) $4,958,333 with respect to the succeeding four (4) installments, (iii) $2,479,167 with respect to the succeeding eight (8) installments and (iv) $4,958,333 with respect to the remaining three (3) installments; provided that, with respect to the additional January 15, 2004 installment required under Section 2.1(B)(c), "Monthly Amortization Amount" means $19,833,332 minus the aggregate amount of payments in 2 excess, if any, of $19,833,332 made by the Borrower on the Amortization Debt from the Second Amendment Effective Date to December 31, 2003. "SECOND AMENDMENT" means that certain Amendment No. 2 dated as of April 11, 2003 among the Borrower, the Lenders and the Administrative Agent. "SECOND AMENDMENT EFFECTIVE DATE" means April 11, 2003. "TARGETED CONSOLIDATED EBITDA AMOUNT" means, for each relevant month, the cumulative Consolidated EBITDA amount (measured from and after January 1, 2003) furnished on March 6, 2003 to the Lenders as part of the Borrower's 2003 budget minus that portion of such cumulative Consolidated EBITDA amount which is attributable to the sale, from and after January 1, 2003, of any assets or any Subsidiary to the extent permitted herein or otherwise approved by the Required Lenders. "UNADJUSTED CONSOLIDATED EBITDA" means , for any period, on a consolidated basis for the Borrower and its consolidated Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Consolidated Operating Income, plus (ii) charges against income for foreign taxes and U.S. income taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, minus (a) the total interest income of the Borrower and its Subsidiaries to the extent included in computing Consolidated Operating Income minus (b) the total tax benefit reported by the Borrower and its Subsidiaries to the extent included in computing Consolidated Operating Income. (b) Section 1.1 of the Credit Agreement is further amended byamending the definitions of "BANK PRINCIPAL ALLOCATION", "CONSOLIDATED EBITDA","CONSOLIDATED EQUITY" and "PAYMENT DATE" in their entirety to read as follows: "BANK PRINCIPAL ALLOCATION" shall mean, at any time, the percentage determined by dividing (a) the sum of (i) the outstanding principal amount of all of the Term Loans (other than the PIK Notes) plus (ii) the amount then available for drawing under all Term Letters of Credit plus (iii) the amount of unpaid reimbursement obligations with respect to drawings under all Term Letters of Credit by (b) the sum of (i) the outstanding principal amount of the Senior Notes (excluding in any event the Related Notes) as of such time and (ii) the sum of (A) the outstanding principal amount of all of the Term Loans (other than the PIK Notes) plus (B) the amount then available for drawing under all Term Letters of Credit plus (C) the amount of unpaid reimbursement obligations with respect to drawings under all Term Letters of Credit. "CONSOLIDATED EBITDA" means, for any period, on a consolidated basis for the Borrower and its consolidated Subsidiaries, the sum of the amounts for such period, 3 without duplication, of (i) Consolidated Operating Income, plus (ii) charges against income for foreign taxes and U.S. income taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, plus (vii) Eligible Asset Impairment Charges to the extent deducted in computing Consolidated Operating Income, plus (viii) Eligible Miscellaneous Non-Cash Charges to the extent deducted in computing Consolidated Operating Income, plus (ix) Eligible Restructuring Charges to the extent deducted in computing Consolidated Operating Income, minus (a) the total interest income of the Borrower and its Subsidiaries to the extent included in computing Consolidated Operating Income minus (b) the total tax benefit reported by the Borrower and its Subsidiaries to the extent included in computing Consolidated Operating Income. "CONSOLIDATED EQUITY" means as of the date of any determination thereof for any relevant period, the total stockholders' equity of the Borrower and its Subsidiaries on a consolidated basis, as determined in accordance with Agreement Accounting Principles, plus the sum of the amounts for such period, without duplication, of (i) foreign currency translation and transaction gains and losses, plus (ii) all charges against income for foreign taxes and U.S. income taxes, plus (iii) Eligible Asset Disposition Charges, plus (iv) Eligible Asset Impairment Charges, plus (v) Eligible Non-Cash Miscellaneous Charges, plus (vi) Eligible Restructuring Charges. "PAYMENT DATE" means the last Business Day of each calendar month. (c) Section 2.1(B)(c)(i) of the Credit Agreement is amended in its entirety to read as follows: (c) Repayment of the Term Credit. (i) The unpaid principal balance of the Term Credit shall be repaid in twenty-four (24) consecutive monthly principal installments, payable on the last Business Day of each calendar month, commencing on April 30, 2002, and continuing thereafter until the Termination Date (provided that one additional installment shall be due and payable on January 15, 2004), and the Term Credit shall be permanently reduced by the amount of each installment on the date payment thereof is made hereunder. Each monthly installment on the Term Credit shall be in an aggregate principal amount equal to the product of the Bank Principal Allocation times the Monthly Amortization Amount. The then outstanding principal balance of the Term Credit, if any, shall be due and payable on the Termination Date. No installment of any Term Credit shall be reborrowed once repaid. (d) Section 2.3(B)(c) of the Credit Agreement is amended by deleting the reference to "June 30, 2002" appearing therein and inserting "March 31, 2004" in lieu thereof. 4 (e) Section 2.6(b) of the Credit Agreement is amendedin its entirety to read as follows: (b) Determination of Applicable Margin, Applicable Letter of Credit Fee and Applicable Revolving Loan Commitment Fee. As used in this Section 2.6(b) and in this Agreement, the following terms shall have the following meanings: "Applicable Margin", "Applicable Revolving Loan Commitment Fee" and "Applicable Letter of Credit Fee" shall mean the sum of (x) the per annum rates, effective as of February 27, 2003, constituting the Applicable Margin, Applicable Revolving Loan Commitment Fee and Applicable Letter of Credit Fee, respectively, as set forth in the chart below plus (y) the "Additional Spread" described below:--------------------------------------------------------------------------------------------------- APPLICABLE APPLICABLE APPLICABLE APPLICABLE APPLICABLE APPLICABLE APPLICABLE MARGIN WITH MARGIN WITH MARGIN WITH MARGIN WITH REVOLVING LOAN LETTER OF LETTER OF RESPECT TO RESPECT TO RESPECT TO RESPECT TO COMMITMENT FEE CREDIT FEE CREDIT FEE BASE RATE BASE RATE EURODOLLAR EURODOLLAR FOR REVOLVER FOR TERM LOANS WHICH LOANS WHICH RATE LOANS RATE LOANS LETTERS OF LETTERS OFARE REVOLVING ARE TERM WHICH ARE WHICH ARE CREDIT CREDIT LOANS LOANS REVOLVING TERM LOANS LOANS--------------------------------------------------------------------------------------------------- 2.00% 2.00% 4.05% 4.30% 1.00% 4.05% 4.30%--------------------------------------------------------------------------------------------------- In addition, the foregoing per annum rates (other than the Applicable Revolving Loan Commitment Fee) shall be subject, for each month the same are determined, to an increase during such month equal to the sum of (i) 0.50% for every 10% of negative variance from the Targeted Consolidated EBITDA Amount, (ii) 0.50% for every quarterly occurrence of a Leverage Valuation Ratio above 0.85 to 1 as of the end of the Borrower's most recently ended fiscal quarter and to be paid in the quarter following such occurrence (it being understood and agreed that, once in effect, such Leverage Valuation Ratio-based increase (a "LEVERAGE INCREASE") will remain in effect for each month prior to the Borrower's achievement of a Leverage Valuation Ratio of 0.85 to 1 or less but shall cease to apply (subject to subsequent quarterly occurrences of a Leverage Valuation Ratio above 0.85 to 1) during and after such month when the Borrower's quarterly-based Leverage Valuation Ratio is equal to or less than 0.85 to 1), (iii) 0.50% for every monthly occurrence of a negative monthly Unadjusted Consolidated EBITDA and (iv) 0.20% for every month during which the "Additional Fee" (as identified and defined in Section 10.1(d) of the Fleet Participation Agreement) is payable under the Fleet Participation Agreement (a "Fleet Equivalent Increase") (the amount calculated by adding the sum of increases specified in the foregoing subsections (i), (ii), (iii) and (iv) being referred to as the "ADDITIONAL Spread"). Each calculation of the Additional Spread (1) will be determined as of the end of each calendar month (or quarter in the case of the applicability of a Leverage Increase) and shall be in effect for the next succeeding calendar month (or quarter in the case of a Leverage Increase), 5 (2) shall be determined without giving effect to, and shall not be additive of, the Additional Spread determined in any previous month and (3) shall be subject to the limitation that the amount calculated by adding the sum of the increases specified in the foregoing subsections (i), (ii) and (iii) shall not exceed 5.00% for any month. (f) Section 2.14 of the Credit Agreement is amended to insertnew subsections (c), (d) and (e) thereto which shall read as follows: (c) In addition to the rate of interest otherwise applicable thereto under Section 2.6(b) hereof and all other amounts payable hereunder or in connection herewith, the Borrower shall pay, by no later than January 15, 2004, additional interest ("ADDITIONAL INTEREST") to the Lenders in accordance with their Pro Rata Shares in an amount equal to the aggregate of (i) each Deferred Principal Amount multiplied by a rate per annum equal to 2.00% from the date such Deferred Principal Amount is created and determined hereunder until the date such Deferred Principal Amount has been paid in full plus (ii) each Deferred Principal Amount multiplied by a rate per annum equal to 1.00% from the date such Deferred Principal Amount has been paid in full (through voluntary prepayments pursuant to Section 2.3(a) hereof) to (but not including) January 15, 2004. Each such voluntary prepayment shall be applied to the earliest occurring Deferred Principal Amount and, after the same has been paid in full, thereafter to each immediately succeeding Deferred Principal Amount until all Deferred Principal Amounts have been paid in full. On January 15, 2004, the Borrower shall pay all Deferred Principal Amounts. As used in this Section 2.14(c), "DEFERRED PRINCIPAL AMOUNT" means, with respect to each monthly repayment of the Amortization Debt occurring on or after the Second Amendment Effective Date but prior to January 1, 2004, the Bank Principal Allocation multiplied by the excess of (x) $4,958,333 minus (y) the actual amount of such repayment; it being understood and agreed that each occurrence of such an excess will create a new and independent Deferred Principal Amount. Any payments of the Deferred Principal Amounts and interest constituting, or comparable to, the Additional Interest shall be made concurrently and on a ratable basis among the relevant holders of the Amortization Debt. (d) The Borrower acknowledges that it is required to pay certain amendment/closing fees (in addition to and not including the 0.25% fee described in subsection (e) below and reimbursement for out of pocket costs and expenses) to (i) the Administrative Agent and the Lenders in connection with, and as required by, the Second Amendment, (ii) the holders of the Senior Notes in connection with, and as required by, amendments (comparable to the Second Amendment) to the Note Agreements, (iii) General Electric Capital Corporation in connection with, and as required by, the amendment (comparable to the Second Amendment) to the Receivables Purchase Documents and (iv) Fleet Capital Corporation in connection with, and as required by, the amendment (comparable to the Second Amendment) to the lease agreements evidencing the Fleet Lease Transaction (such fees to such financial institutions being hereinafter referred to 6 collectively as the "SECOND AMENDMENT CLOSING FEES"). In lieu of paying the entire balance of the Second Amendment Closing Fees on the Second Amendment Effective Date, the Borrower shall pay (1) to such financial institutions, on the Second Amendment Effective Date, at least $2,000,000 (in the aggregate) of such Second Amendment Closing Fees and the portion of the Second Amendment Closing Fees paid to the Lenders on the Second Amendment Effective Date shall not be less than the Bank Deferred Fee Allocation multiplied by the actual amount of the Second Amendment Closing Fees paid on the Second Amendment Effective Date and (2) by a date no later than January 15, 2004, (a) the then unpaid balance of the Second Amendment Closing Fees to such financial institutions and the portion of such unpaid balance paid to the Lenders on such date shall not be less than the Bank Deferred Allocation multiplied by such unpaid balance and (b) a deferral fee to the Lenders in accordance with their Pro Rata Shares on the Deferred Fee Amount at a rate per annum equal to the sum of (A) the rate of interest applicable to Base Rate Loans which are Term Loans plus (B) (i) 2.00% from the Second Amendment Effective Date until the date such Deferred Fee Amount has been paid in full plus (ii) 1.00% on the date immediately prior to the day such Deferred Fee Amount balance has been paid in full [and for the period from the date such Deferred Fee amount has been paid in full until January 15, 2004. As used in this Section 2.14(d), "DEFERRED FEE AMOUNT" means, with respect to the Second Amendment Closing Fees, the Bank Deferred Fee Allocation multiplied by the excess of (x) the actual amount of the Second Amendment Closing Fees minus (y) the amount of the Second Amendment Closing Fees paid on the Second Amendment Effective Date. The Borrower agrees that in connection with any payment on any date of the Deferred Fee Amount or the deferral fees described above, the Borrower shall pay to the Lenders (in accordance with their Pro Rata Shares) on the same date an amount equal to the Bank Deferred Fee Allocation multiplied by the amount of such payment. (e) The Borrower shall pay, on January 15, 2004, a restructuring fee to the Administrative Agent, for the ratable account of each Lender, in an amount equal to 0.25% of the sum of (i) the then outstanding amount of the Term Credit and (ii) the daily average balance of the Revolving Credit Obligations for the period of 30 days ending on January 15, 2004 (it being understood and agreed that such restructuring fee shall be non-refundable and is deemed to be fully earned on the Second Amendment Effective Date). (g) Section 6.1(A) of the Credit Agreement is amended toinsert the following immediately after the reference to "As soon as practicableand in any event" appearing therein: "(A) By no later than fifteen (15) days after the end of each monthly accounting period of the Borrower, the following (prepared in such format and detail as is required by the Administrative Agent): (1) a statement of projected cash sources and uses of the Borrower and its Subsidiaries for the 13 calendar weeks following the end of such monthly accounting period and a report (to the extent requested by the Administrative Agent from time to time) 7 containing management's discussion and analysis of such projections and (2) a statement of cash sources and uses for the immediately preceding monthly accounting period of the Borrower and for such historical period as is reasonably required by the Administrative Agent, in comparative form against the figures and for the corresponding date and period in the projected cash flow statements required under the foregoing subsection (1); the foregoing statements required under subsections (1) and (2) being duly certified by the chief financial officer or treasurer of the Borrower, (B) Concurrently with the delivery of each monthly report and information under the Fleet Participation Agreement (including without limitation under Section 6.1(e)(vii) thereof), the Borrower shall deliver to the Administrative Agent copies of such reports and information and any other information relevant to the calculation and determination of the Fleet Equivalent Increase and (C)" (h) Section 6.2 of the Credit Agreement is amended to insert anew Section 6.2(R) thereto which shall read as follows: (R) Canadian Guaranty and Collateral. By no later than May 31, 2003, the Borrower shall (i) cause its Canadian Subsidiary to execute and deliver to the Agent, a guarantee of the Obligations pursuant to a guaranty agreement, or supplement thereto, in form and substance satisfactory to the Administrative Agent and its counsel, (ii) cause its Canadian Subsidiary to execute and deliver to the Collateral Agent a general security agreement, or supplement thereto, in form and substance satisfactory to the Collateral Agent and its counsel, (iii) execute and deliver a Pledge Agreement, or supplement thereto, pledging 100% of the capital stock of its Canadian Subsidiary and (iv) deliver to the Administrative Agent corporate resolutions and other documentation (including legal opinions, Personal Property Security Act financing statements and such other instruments and documents as are requested by, and in form and substance satisfactory to, the Administrative Agent and its counsel) related to the delivery of the foregoing agreements; provided that the Borrower may elect not to provide that portion or amount of collateral described above and evidenced by any of the foregoing instruments and documents to the extent but only to the extent that delivery of such collateral would cause its Canadian Subsidiary's accumulated and undistributed earnings and profits to be deemed to be repatriated to the Borrower or a Domestic Subsidiary for U.S. federal income tax purposes and the effect of such repatriation would be to cause materially adverse tax consequences for the Borrower. (i) Sections 6.4(A), (B), (C), (D), (E) and (F) of the CreditAgreement are amended and restated in their entirety to read as follows: (A) Intentionally Omitted. (B) Minimum Consolidated Equity. The Borrower shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated Equity at an 8 amount not less than the applicable "Minimum Consolidated Equity" specified below:Fiscal Quarter Ending Minimum Consolidated --------------------- -------------------- Equity ------ March 31, 2003 $40,000,000June 30, 2003 $35,000,000September 30, 2003 $30,000,000December 31, 2003 $25,000,000 (C) Maximum Leverage Valuation Ratio. The Borrower shall not permit, as of the last day of each of the fiscal quarters specified below, the Leverage Valuation Ratio to exceed the applicable "Maximum Leverage Valuation Ratio" specified below:Fiscal Quarter Ending Maximum Leverage Valuation --------------------- -------------------------- Ratio ----- March 31, 2003 0.95 to 1June 30, 2003 0.95 to 1September 30, 2003 0.95 to 1December 31, 2003 0.95 to 1 (D) Minimum Consolidated EBITDA. The Borrower shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated EBITDA, at an amount not less than the applicable "Minimum Cumulative Consolidated EBITDA" specified below, for the period commencing on January 1, 2003 and ending on such last day: Minimum Cumulative Consolidated -------------------------------Month Ending EBITDA------------ ------ March 31, 2003 $0June 30, 2003 $5,000,000September 30, 2003 $15,000,000December 31, 2003 $20,000,000 (E) Minimum Interest Coverage Cash Collateral. The Borrower shall, by no later than December 31, 2002, enter into a Cash Collateral Agreement and, by no later than one (1) Business Day prior to the first day of each fiscal quarter of the Borrower ending on or after March 31, 2003, deposit funds ("CASH COLLATERAL FUNDS") with the Collateral Agent in an amount not less than the aggregate amount of interest required to be paid, through the end of the immediately succeeding fiscal quarter, under this Agreement and under the Note Agreements; provided that (i) in the case of interest required to be paid through the end of the fiscal quarter ending on March 31, 2004, the Borrower may deposit Cash 9 Collateral Funds on or before (but not after) January 15, 2004 and (ii) it being understood and agreed that if, at any time subsequent to the date Cash Collateral Funds are deposited, the aggregate amount of interest required to be so paid increases, the Borrower shall promptly, and in any event within three (3) Business Days after demand by the Agent or by the holders of the Senior Notes, deposit additional funds with the Collateral Agent in an aggregate amount not less than the amount of such increase). (F) Maximum Capital Expenditures. The Borrower will not, and will not permit any Subsidiary to, expend for Capital Expenditures during any fiscal year of the Borrower and its Subsidiaries, in excess of $4,000,000 in the aggregate for the Borrower and its Subsidiaries. (j) Section 7.1 of the Credit Agreement is amended to addnew subsections (s) and (t) which shall read as follows: (s) Failure to Deliver Refinancing Commitment Letter. The Borrower shall fail to deliver, by no later than January 31, 2004, one or more binding commitment letters (in form and substance satisfactory to the Required Secured Parties as defined in the Intercreditor Agreement) from a bank, institutional lender or other qualified lending source to pay in full, on or before the Termination Date, the Secured Obligations as defined in the Intercreditor Agreement. (t) Default under Fleet Participation Agreement. A default or breach shall occur under the Fleet Participation Agreement, regardless of whether such default is waived or whether any right with respect to such default or breach is exercised (including, without limitation, any default or breach arising out of failure by Performance Guarantor to deliver a business plan as required by Section 6.1(o) thereof). (k) Section 7.1(b)(ii) of the Credit Agreement isamending by inserting "or Section 6.2(R)" immediately after the reference to"Section 6.2(Q)" appearing therein. (l) Exhibit F to the Credit Agreement is amended in itsentirety by substituting therefor Amended Exhibit F attached to this Amendment. 2. Consent. Subject to the conditions precedent setforth in Section 3 below, the Agent and the Lenders grant their consent tocertain transactions as follows: Amendments to Documents. In connection with the amendments specified in Section 1 hereof, the Borrower has informed the Agent and Lenders of its intention to amend the Note Agreements, the Receivables Purchase Documents and the lease agreements evidencing the Fleet Lease Transactions, in each case in a manner similar to the amendments hereunder. At the Borrower's request, the Lenders consent to such amendments. 3. Conditions of Effectiveness. The effectiveness of this Amendment is 10subject to the conditions precedent that (i) the Agent shall have receivedcounterparts of this Amendment duly executed by the Borrower, the Lenders andthe Agent and the Consent attached hereto duly executed by the Guarantors, (ii)amendments to the Note Agreements, the Receivables Purchase Documents and thelease agreements evidencing the Fleet Lease Transaction shall have been executedand delivered by the parties thereto and become effective, which amendmentsshall be in form and substance acceptable to the Agent and its counsel, (iii)subject to the amendment set forth in Section 1(f) hereof, the Borrower shallhave paid to the Agent, for the ratable account of each Lender, an amendment feein an amount equal to 0.625% of such Lender's Revolving Loan Commitment and TermCredit (each as calculated on the Second Amendment Effective Date), (iv) theAgent shall have received, for the ratable account of each Lender, the aggregateamount of unpaid interest on the relevant Obligations, accrued for the periodfrom February 27, 2003 up to and including the Second Amendment Effective Date,including without limitation an amount equal to the excess of (A) the amountthat would have been payable on the relevant Obligations as a result of theeffectiveness, as of February 27, 2003, of the 0.50% increase in the ApplicableMargin, Applicable Letter of Credit Fee and Applicable Revolving Loan CommitmentFee and the implementation of the Additional Spread, in each case pursuanthereto minus (B) the amount of interest actually paid thereon for such periodand (v) the Agent shall have received reimbursement in full of the Agent's legaland other advisory fees and expenses it has heretofore incurred in connectionwith the preparation, negotiation, execution and delivery of this Amendment andthe transactions contemplated hereby. 4. Representations and Warranties of the Borrower. The Borrower hereby represents and warrants as follows: (a) This Amendment and the Credit Agreement as amendedhereby constitute legal, valid and binding obligations of the Borrower and areenforceable against the Borrower in accordance with their terms. (b) As of the date hereof and giving effect to the termsof this Amendment, (i) there exists no Default or Unmatured Default and (ii) therepresentations and warranties contained in Article V of the Credit Agreement,as amended hereby, are true and correct, except for representations andwarranties made with reference solely to an earlier date and changes reflectingevents, conditions or transactions permitted or not prohibited by the CreditAgreement. 5. Reference to and Effect on the Credit Agreement. (a) Upon the effectiveness of Sections 1 and 2 hereof,each reference to the Credit Agreement in the Credit Agreement or any other LoanDocument shall mean and be a reference to the Credit Agreement as amended orwaived (as applicable) hereby. (b) Except as specifically amended above, the Credit Agreement and all other documents, instruments and agreements executed and/ordelivered in connection therewith shall remain in full force and effect and arehereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver ofany right, power or remedy of the Agent or the Lenders, nor constitute a waiverof any provision of the Credit Agreement or any 11other documents, instruments and agreements executed and/or delivered inconnection therewith. 6. Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws (and not the law ofconflicts) of the State of Indiana, but giving effect to federal laws applicableto national banks. 7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute apart of this Amendment for any other purpose. 8. Counterparts. This Amendment may be executed by oneor more of the parties hereto on any number of separate counterparts, and all ofsaid counterparts taken together shall be deemed to constitute one and the sameinstrument. [Signature Pages Follow] 12 IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written. WABASH NATIONAL CORPORATION, as the Borrower By:_____________________________________________ Name: Title: BANK ONE, NA, as Administrative Agent and as a Lender By:_____________________________________________ Name: Title: THE NORTHERN TRUST COMPANY, as a Lender By:_____________________________________________ Name: Title: U.S. BANK NATIONAL ASSOCIATION, as a Lender By:_____________________________________________ Name: Title: Signature Page to Amendment No. 2 Wabash National Corporation Amended and Restated Credit Agreement dated as of April 11, 2002 SUNTRUST BANK, as a Lender By:_____________________________________________ Name: Title: FIFTH THIRD BANK, as a Lender By:_____________________________________________ Name: Title: KEYBANK NATIONAL ASSOCIATION, as a Lender By:_____________________________________________ Name: Title: NATIONAL CITY BANK OF INDIANA, as a Lender By:_____________________________________________ Name: Title: Signature Page to Amendment No. 2 Wabash National Corporation Amended and Restated Credit Agreement dated as of April 11, 2002 CONSENT AND REAFFIRMATION Each of the undersigned hereby acknowledges receipt of a copyof the foregoing Amendment No. 2 to the Amended and Restated Credit Agreementdated as of April 11, 2002 (as amended and as the same may be amended, restated,supplemented or otherwise modified from time to time, the "Credit Agreement") byand among Wabash National Corporation (the "Borrower"), the financialinstitutions from time to time party thereto (the "Lenders") and Bank One, NA,in its individual capacity as a Lender and in its capacity as contractualrepresentative (the "Agent"), which Amendment No. 2 is dated as of April 11,2003 (the "Amendment"). Capitalized terms used in this Consent and Reaffirmationand not defined herein shall have the meanings given to them in the CreditAgreement. Without in any way establishing a course of dealing by the Agent orany Lender, each of the undersigned consents to the Amendment and reaffirms theterms and conditions of the Guaranty, the Security Agreement and any other LoanDocument executed by it and acknowledges and agrees that such agreement and eachand every such Loan Document executed by the undersigned in connection with theCredit Agreement remains in full force and effect and is hereby reaffirmed,ratified and confirmed. All references to the Credit Agreement contained in theabove-referenced documents shall be a reference to the Credit Agreement as somodified by the Amendment and as the same may from time to time hereafter beamended, modified or restated.Dated: April 11, 2003 WABASH NATIONAL, L.P. By: NOAMTC, Inc., its General Partner By: ___________________________________________ Christopher A. Black, Authorized Representative WABASH NATIONAL FINANCE CORPORATION By: ___________________________________________ Name: Title: APEX TRAILER LEASING & RENTALS, L.P. By: Wabash National Corporation, its General Partner By: ___________________________________________ Christopher A. Black, Vice President & Treasurer Signature Page to Amendment No. 2 Wabash National Corporation Amended and Restated Credit Agreement dated as of April 11, 2002 CLOUD OAK FLOORING COMPANY, INC. By: ______________________________________ Christopher A. Black, Authorized Representative CONTINENTAL TRANSIT CORPORATION By: ___________________________________________ Christopher A. Black, Authorized Representative FTSI DISTRIBUTION COMPANY, L.P. By: NOAMTC, Inc., its General Partner By: ___________________________________________ Christopher A. Black, Authorized Representative NATIONAL TRAILER FUNDING, L.L.C. By: NOAMTC, INC., its Member By: ___________________________________________ Christopher A. Black, Authorized Representative NOAMTC, INC. By: ___________________________________________ Christopher A. Black, Authorized Representative WNC CLOUD MERGER SUB, INC. By: ___________________________________________ Christopher A. Black, Authorized Representative WTSI TECHNOLOGY CORP. By: ___________________________________________ Christopher A. Black, Authorized Representative Signature Page to Amendment No. 2 Wabash National Corporation Amended and Restated Credit Agreement dated as of April 11, 2002 WABASH FINANCING LLC By: ___________________________________________ Christopher A. Black, Authorized Representative WABASH NATIONAL SERVICES, L.P. By: NOAMTC, Inc., its General Partner By: ___________________________________________ Christopher A. Black, Authorized Representative WABASH TECHNOLOGY CORP. By: ___________________________________________ Christopher A. Black, Authorized Representative WNC RECEIVABLES MANAGEMENT CORP. By:___________________________________________ Christopher A. Black, Secretary Signature Page to Amendment No. 2 Wabash National Corporation Amended and Restated Credit Agreement dated as of April 11, 2002 AMENDED EXHIBIT F EXHIBIT F FORM OF COMPLIANCE CERTIFICATETo: The Lenders Parties to the Credit Agreement Described Below This Compliance Certificate is furnished pursuant to thatcertain Amended and Restated Credit Agreement dated as of April 11, 2002 (asamended, modified, renewed or extended from time to time, the "Agreement") amongWabash National Corporation (the "Borrower"), the Lenders party thereto and BankOne, NA (successor by merger to Bank One, Indiana, N.A.), as contractualrepresentative (the "Administrative Agent") for the Lenders. Unless otherwisedefined herein, capitalized terms used in this Compliance Certificate have themeanings ascribed thereto in the Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected ____________________ of the Borrowerand the [Chief Financial Officer] [Treasurer]; 2. I have reviewed the terms of the Agreement and I have made,or have caused to be made under my supervision, a detailed review of thetransactions and conditions of the Borrower and its Subsidiaries during theaccounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose,and I have no knowledge of, the existence of any condition or event whichconstitutes a Default or Unmatured Default during or at the end of theaccounting period covered by the attached financial statements or as of the dateof this Certificate, except as set forth below; and 4. Schedule I and Schedule II attached hereto set forthfinancial data and computations evidencing the Company's compliance with certaincovenants of the Agreement and the Excess Cash Flow during the accounting periodcovered by the attached financial statements, all of which data and computationsare true, complete and correct. Described below are the exceptions, if any, to paragraph 3,listing, in detail, the nature of the condition or event, the period duringwhich it has existed and the action which the Borrower has taken, is taking, orproposes to take with respect to each such condition or event:---------------------------------------------------------------------------------------------------------------------------------- The foregoing certifications, together with the computationsset forth in Schedule I and Schedule II hereto and the financial statementsdelivered with this Certificate in support hereof, are made and delivered this_____ day of __________, ____. ------------------------------------------- [Insert Name of Officer]Wabash National CorporationQuarterly Compliance Certificate Worksheet COMPLIANCE CERTIFICATE QUARTERLY SCHEDULE OF COMPLIANCE AS OF _________, 2003 A. INTENTIONALLY OMITTEDB. INTENTIONALLY OMITTEDC. MINIMUM CONSOLIDATED EQUITY (SECTION 6.4(B)) 1. Actual Amount: a. Consolidated Equity $ - b. Minimum Required Amount $ - D. MAXIMUM LEVERAGE VALUATION RATIO (SECTION 6.4(C)) 1. Actual Amount: a. Term Debt (Notes & Bank Debt) $ - b. Revolver (Super Revolver) $ - ----------- c. Total Debt (a+b) $ - d. Cash and Cash Equivalents $ - e. Net Inventory $ - f. Net Prepaid and Other Expenses $ - g. Net PP&E $ - ----------- h. Total Assets (d+e+f+g) $ - i. Leverage Ratio (c/h) x ----- 2. Minimum Required Amount x ----- E. MINIMUM CONSOLIDATED CUMULATIVE (SINCE 1/1/2003) EBITDA (SECTION 6.4(D)) 1. Actual Amount: a. Consolidated Operating Income $ - b. Foreign and Domestic Taxes Deducted in Operating Income $ - c. Interest Expense Deducted in Operating Income $ - d. Eligible Asset Disposition Charges $ - e. Eligible Asset Impairment Charges $ - f. Eligible Miscellaneous Non-Cash Charges $ - g. Eligible Restructuring Charges $ - h. Depreciation Expense Deducted in Operating Income $ - i. Amortization Expense Deducted in Operating Income $ - j. Interest Income Included in Operating Income $ - k. Total Tax Benefit Included in Operating Income $ - l. Consolidated EBITDA (a+b+c+d+e+f+g+h+i-j-k) $ - 2. Minimum Required Amount $ - F. INTENTIONALLY OMITTEDG. MAXIMUM CAPITAL EXPENDITURES (SECTION 6.4(F)) 1. Actual Amount: a. Capital Expenditures (Year-to-Date) $ - 2. Maximum Annual Allowed Amount $ 4,000,000H. MAXIMUM FINANCE CONTRACTS (SECTION 6.4(G)) 1. Actual Amount: a. Finance Contracts (Year-To-Date) $ - 2. Maximum Annual Allowed Amount $ 5,000,000 A. MAXIMUM OTHER UNSECURED INDEBTEDNESS (Section 6.3(A)) 1. Actual Amount: $_____________ 2. Maximum Permitted Amount: $3,000,000B. SALES OF ASSETS (Section 6.3(B)(v)) 1. Actual Amount: a. Total amount of sales of assets in current fiscal year to date (See Schedule II for detail) $_____________ 2. Maximum Permitted Amount: $5,000,000C. INTENTIONALLY OMITTEDD. INVESTMENTS (Section 6.3(D)(vii)) For each new Investment pursuant to Section 6.3(D)(vii) of the Agreement during the most recent fiscal quarter covered by this Certificate, complete the following: 1. Date and brief description of nature of new Investment: _______________________________________________________ _______________________________________________________ 2. Actual Amount: a. Amount of new Investment $_____________ b. Amount of existing Investments under Section 6.3(D)(vii) +_____________ c. Total Investments under Section 6.3(D)(vii) =$_____________ 3. Maximum Permitted Amount: $5,000,000E. LEASES (Section 6.3(N)) 1. Actual Amount of Leases: $__________ 2. Maximum Permitted Amount: $5,000,000 SCHEDULE II TO COMPLIANCE CERTIFICATE Schedule of Compliance as of __________, ____ (Dollars in Thousands)A. Sales of Assets [List separate sales and amounts] $_____________ ______________ ______________ ______________ ______________ Total $_____________ EXHIBIT 10.49 OMNIBUS AMENDMENT NO. 2 THIS OMNIBUS AMENDMENT NO. 2 (this "AMENDMENT") is enteredinto as of April 11, 2003, by and among: (1) WABASH NATIONAL CORPORATION, a Delaware corporation (the "PERFORMANCE GUARANTOR"), (2) WNC RECEIVABLES, LLC, a Delaware limited liability company (the "SPE"), (3) WNC RECEIVABLES MANAGEMENT CORP., a Delaware corporation (the "INDEPENDENT MEMBER"), (4) WNC FINANCING LLC, a Delaware limited liability company ("WFL"), (5) WABASH NATIONAL TRAILER CENTERS, INC., a Delaware corporation (f/k/a NOAMTC, INC., a Delaware corporation) and WABASH NATIONAL, L.P., a Delaware limited partnership (collectively, the "ORIGINATORS"; and together with the Performance Guarantor, the SPE and the Independent Member, each a "COMPANY" and collectively, the "COMPANIES"), and (6) GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, in its capacity as Agent (the "AGENT") for the purchasers from time to time parties to the Purchase Agreement (as defined below) and as the sole initial purchaser thereunder (the "PURCHASER"),with respect to (a) that certain Receivables Sale and Contribution Agreement,dated as of April 11, 2002, by and among the Performance Guarantor, theOriginators, as sellers, and the SPE, as buyer (as supplemented, restated,amended or otherwise modified from time to time, the "SALE AGREEMENT"), and (b)that certain Receivables Purchase and Servicing Agreement, dated as of April 11,2002, by and among the SPE, as seller, WFL, as initial Servicer, the IndependentMember, the Agent and the Purchaser (as supplemented, restated, amended orotherwise modified from time to time, the "PURCHASE AGREEMENT"). UNLESS OTHERWISE INDICATED, CAPITALIZED TERMS USED IN THISAMENDMENT ARE USED WITH THE MEANINGS ATTRIBUTED THERETO IN ANNEX X TO THE SALEAGREEMENT AND PURCHASE AGREEMENT. W I T N E S S E T H : WHEREAS, the Performance Guarantor, the SPE, the Originators,the Agent and the Purchaser have agreed to amend certain provisions of the SaleAgreement, Purchase Agreement and the other Related Documents. NOW, THEREFORE, in consideration of the premises and themutual agreements herein contained, the parties hereto hereby agree as follows: 1. AMENDMENTS TO THE SALE AGREEMENT, PURCHASE AGREEMENTS ANDTHE OTHER RELATED DOCUMENTS. Subject to the terms and conditions hereinafter setforth, the parties hereby agree as follows: 1.1 Annex X Amendments. (1) Annex X to the Sale Agreement and the Purchase Agreementis hereby amended by adding the following new defined terms to Annex X in theirproper alphabetical order: "ELIGIBLE ASSET DISPOSITION CHARGES" means charges, calculated in accordance with Agreement Accounting Principles, incurred by the Parent in its fiscal year ending on December 31, 2003 but only to the extent (i) such charges relate solely and directly to the sales of assets and properties permitted under Section (B) of Annex 4.04(o) to the Sale Agreement (including without limitation charges composed of brokerage and investment banking fees, rental and used trailer disposition fees and charges and other disposition transaction costs) and (ii) the proceeds of such sales are used to prepay Indebtedness (as defined in Annex 4.04(l) to the Sale Agreement) of the Parent and its Subsidiaries to the extent permitted under the Related Documents. "ELIGIBLE ASSET IMPAIRMENT CHARGES" means up to $35,000,000 in the aggregate attributable to, without duplication, any charges incurred by the Parent in its fiscal year ending on December 31, 2003 but only to the extent such charges relate solely and directly to the impairment of long-lived assets, goodwill and other intangible assets, all in accordance with Agreement Accounting Principles. "ELIGIBLE MISCELLANEOUS NON-CASH CHARGES" means non-cash charges (including but not limited to non-cash losses on finance contracts, severance and other loss contingencies but excluding Eligible Asset Impairment Charges and Eligible Restructuring Charges), calculated in accordance with Agreement Accounting Principles and, to the extent deducted in computing Consolidated Operating Income (as defined in Annex 4.04(l) to the Sale Agreement), incurred by the Parent in its fiscal year ending on December 31, 2003 but only to the extent the aggregate amount of such non-cash charges do not exceed $10,000,000. "ELIGIBLE RESTRUCTURING CHARGES" means any charges incurred by the Parent in its fiscal year ending on December 31, 2003 but only to the extent such charges (i) are incurred in accordance with Agreement Accounting Principles and (ii) relate solely and directly to the restructuring, waiving or amending of the instruments and documents evidencing any of the Secured Obligations and other lines of credit, leases or other extensions of credit, including any amounts paid to any lenders, advisor fees and other related costs. "FLEET EQUIVALENT INCREASE" is defined in Section 1.1(2) hereof. 2 "FLEET PARTICIPATION AGREEMENT" means that certain Amended and Restated Participation Agreement dated as of March 30, 2001 as currently in effect among Apex Trailer Leasing & Rentals, L.P., the Performance Guarantor, certain financial institutions from time to time party thereto, U.S. Bank National Association, as trustee and Fleet Capital Corporation individually and as owner participant, collateral agent and administrative agent, as such agreement may be amended, restated, supplemented or otherwise modified from time to time. "GE DEFERRED FEE ALLOCATION" means, at any time, the percentage determined by dividing (a) the aggregate amount of the amendment fees in favor of the Agent and the Purchaser as required by, and in connection with, this Amendment by (b) the aggregate of the Second Amendment Closing Fees (as defined in Section 5 hereof). "SECOND AMENDMENT EFFECTIVE DATE" has the meaning assigned to it in Section 4 hereof. "TARGETED CONSOLIDATED EBITDA AMOUNT" means, for each relevant month, the cumulative Consolidated EBITDA amount (measured from and after January 1, 2003) furnished on March 6, 2003 to the Lenders as part of the Parent's 2003 budget minus that portion of such cumulative Consolidated EBITDA amount which is attributable to the sale, from and after January 1, 2003, of any assets or any Subsidiary to the extent permitted herein or otherwise approved by the Required Purchasers. "UNADJUSTED CONSOLIDATED EBITDA" means, for any period, on a consolidated basis for the Parent and its consolidated Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Consolidated Operating Income (as defined in Annex 4.04(l) to the Sale Agreement), plus (ii) charges against income for foreign taxes and U.S. income taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense (as defined in Annex 4.04(l) to the Sale Agreement) to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, minus (a) the total interest income of the Parent and its Subsidiaries to the extent included in computing Consolidated Operating Income minus (b) the total tax benefit reported by the Parent and its Subsidiaries to the extent included in computing Consolidated Operating Income. (2) Annex X to the Sale Agreement and the Purchase Agreementis hereby further amended by amending and restating the definitions of"CONSOLIDATED EBITDA" and "PER ANNUM DAILY MARGIN" in their entirety to read asfollows: "CONSOLIDATED EBITDA" means, for any period, on a consolidated basis for the Parent and its consolidated Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Consolidated Operating Income (as defined in Annex 4.04(l) to the Sale Agreement), plus (ii) charges against income for foreign taxes and U.S. income 3 taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense (as defined in Annex 4.04(l) to the Sale Agreement) to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, plus (vii) Eligible Asset Impairment Charges to the extent deducted in computing Consolidated Operating Income, plus (viii) Eligible Miscellaneous Non-Cash Charges to the extent deducted in computing Consolidated Operating Income, plus (ix) Eligible Restructuring Charges to the extent deducted in computing Consolidated Operating Income, minus (a) the total interest income of the Parent and its Subsidiaries to the extent included in computing Consolidated Operating Income minus (b) the total tax benefit reported by the Parent and its Subsidiaries to the extent included in computing Consolidated Operating Income. "PER ANNUM DAILY MARGIN" shall mean: (a) at all times prior to the date on which the Parent files its 10-K for the year ended December 31, 2002: (i) with respect to Capital Investment (A) at the LIBOR Rate, 4.00%, and (B) at the Index Rate, 2.50%, and (ii) with respect to Unused Facility Fees. 1.00%; and (b) at all times from and after the date on which the Parent files its 10-K for the year ended December 31, 2002, the applicable per annum percentage set forth opposite the then applicable range of the Aggregate Interest Coverage Ratio: PER ANNUM DAILY MARGIN ---------------------------------------------- AGGREGATE CAPITAL CAPITAL INTEREST COVERAGE INVESTMENT INVESTMENT UNUSED RATIO AT THE AT THE FACILITY FEE LIBOR RATE INDEX RATE > 2.0 : 1.0 3.75% 2.25% 0.875%< OR = 2.0 : 1.0 BUT 4.00% 2.50% 1.00% > 1.5 : 1.0< OR = 1.5 : 1.0 4.25% 2.75% 1.125% In addition, the foregoing Per Annum Daily Margin (other than with respect to the Unused Facility Fee) shall be subject, for each month in which the same is determined, to an increase during such month equal to the sum of (i) 0.50% for every 10% of negative 4 variance from the Targeted Consolidated EBITDA Amount, (ii) 0.50% for every quarterly occurrence of a Leverage Valuation Ratio (as defined in Annex 4.04(l) to the Sale Agreement) above 0.85 to 1 as of the end of the Parent's most recently ended fiscal quarter and to be paid in the fiscal quarter following such occurrence (it being understood and agreed that, once in effect, such Leverage Valuation Ratio-based increase (a "LEVERAGE INCREASE") will remain in effect for each month prior to the Parent's achievement of a Leverage Valuation Ratio of 0.85 to 1 or less but shall cease to apply (subject to subsequent quarterly occurrences of a Leverage Valuation Ratio above 0.85 to 1) during and after such month when the Parent's quarterly-based Leverage Valuation Ratio is equal to or is less than 0.85 to 1), (iii) 0.50% for every monthly occurrence of a negative monthly Unadjusted Consolidated EBITDA and (iv) 0.20% for every month during which the "Additional Fee" (as identified and defined in Section 10.1(d) of the Fleet Participation Agreement) is payable under the Fleet Participation Agreement (a "FLEET EQUIVALENT INCREASE") (the amount calculated by adding the sum of increases specified in the foregoing subsections (i), (ii), (iii) and (iv) being referred to as the "ADDITIONAL SPREAD"). Each calculation of the Additional Spread (1) will be determined as of the end of each calendar month (or quarter in the case of the applicability of a Leverage Increase) and shall be in effect for the next succeeding calendar month (or fiscal quarter in the case of a Leverage Increase), (2) shall be determined without giving effect to, and shall not be additive of, the Additional Spread determined in any previous month and (3) the amount calculated by adding the sum of the increases specified in the foregoing subsections (i), (ii) and (iii) shall not exceed 5.00% for any month. It is understood and agreed by the parties hereto that the foregoing Per Annum Daily Margin shall be deemed to apply as of February 27, 2003. (3) Annex X of the Sale Agreement and the Purchase Agreementis hereby further amended by amending and restating Schedule CC to Annex X tothe Sale Agreement and Purchase Agreement in the form of Amended Schedule CCattached to this Amendment. 1.2 Sale Agreement Amendments (1) Section (c) of Annex 4.03 to the Sale Agreement is herebyamended by adding at the end thereof the following: In addition, in the course of each calendar month, all information concerning the business or financial condition of the Performance Guarantor as is provided to (and at the same time as is provided) to the Lenders and Noteholders, including, without limitation, and as soon as available but in any event by no later than fifteen (15) days after the end of each monthly accounting period of the Parent, the following (prepared in such format and detail as is required by the Agent (as Buyer's assignee)): (1) a statement of projected cash sources and uses of the Parent and its Subsidiaries for the 13 calendar weeks following the end of such monthly accounting period and a report (to the extent requested by the Agent (as Buyer's assignee)) containing management's discussion and analysis of such projections and (2) a statement of cash sources and uses for the immediately preceding monthly accounting period of the Parent and for such historical period as is reasonably required by the Agent (as Buyer's assignee), in comparative form against the figures and 5 for the corresponding date and period in the projected cash flow statements required under the foregoing subsection (1); the foregoing statements required under subsections (1) and (2) being duly certified by the chief financial officer or treasurer of the Parent. Concurrently with the delivery of each monthly report and information under the Fleet Participation Agreement (including without limitation under Section 6.1(e)(vii) thereof), the Performance Guarantor shall deliver to the Agent copies of such reports and information and any other information relevant to the calculation and determination of the Fleet Equivalent Increase. (2) Annex 4.04(l) to the Sale Agreement is hereby amended byadding the following new defined terms to Annex 4.04(l) in their properalphabetical order: "CONSOLIDATED EQUITY" means as of the date of any determination thereof for any relevant period, the total stockholders' equity of the Performance Guarantor and its Subsidiaries on a consolidated basis, as determined in accordance with Agreement Accounting Principles, plus the sum of the amounts for such period, without duplication, of (i) foreign currency translation and transaction gains and losses, plus (ii) all charges against income for foreign taxes and U.S. income taxes, plus (iii) Eligible Asset Disposition Charges, plus (iv) Eligible Asset Impairment Charges, plus (v) Eligible Non-Cash Miscellaneous Charges, plus (vi) Eligible Restructuring Charges. "ELIGIBLE ASSET DISPOSITION CHARGES" means charges, calculated in accordance with Agreement Accounting Principles, incurred by the Performance Guarantor in its fiscal year ending on December 31, 2003 but only to the extent (i) such charges relate solely and directly to the sales of assets and properties permitted under Section (B) of Annex 4.04(o) to the Sale Agreement (including without limitation charges composed of brokerage and investment banking fees, rental and used trailer disposition fees and charges and other disposition transaction costs) and (ii) the proceeds of such sales are used to prepay Indebtedness of the Performance Guarantor and its Subsidiaries to the extent permitted under Annex 4.04(l) of the Sale Agreement. "ELIGIBLE ASSET IMPAIRMENT CHARGES" means up to $35,000,000 attributable to, without duplication, any charges incurred by the Performance Guarantor in its fiscal year ending on December 31, 2003 but only to the extent such charges relate solely and directly to the impairment of long-lived assets, goodwill and other intangible assets, all in accordance with Agreement Accounting Principles. "ELIGIBLE MISCELLANEOUS NON-CASH CHARGES" means non-cashcharges (including but not limited to non-cash losses on finance contracts,severance and other loss contingencies), calculated in accordance with AgreementAccounting Principles and, to the extent deducted in computing ConsolidatedOperating Income, incurred by the Performance Guarantor in its fiscal yearending on December 31, 2003 but only to the extent the aggregate amount ofEligible Miscellaneous Non-Cash Charges do not exceed $10,000,000. (3) Annex 4.04(l) to the Sale Agreement is hereby amended byamending and restating the definition of "CONSOLIDATED EBITDA" therein in itsentirety to read as follows: 6 "CONSOLIDATED EBITDA" means, for any period, on a consolidated basis for the Performance Guarantor and its consolidated Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Consolidated Operating Income, plus (ii) charges against income for foreign taxes and U.S. income taxes to the extent deducted in computing Consolidated Operating Income, plus (iii) Interest Expense to the extent deducted in computing Consolidated Operating Income, plus (iv) depreciation expense to the extent deducted in computing Consolidated Operating Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Consolidated Operating Income, plus (vi) Eligible Asset Disposition Charges to the extent deducted in computing Consolidated Operating Income, plus (vii) Eligible Asset Impairment Charges to the extent deducted in computing Consolidated Operating Income, plus (viii) Eligible Miscellaneous Non-Cash Charges to the extent deducted in computing Consolidated Operating Income, plus (ix) Eligible Restructuring Charges to the extent deducted in computing Consolidated Operating Income, minus (a) the total interest income of the Performance Guarantor and its Subsidiaries to the extent included in computing Consolidated Operating Income minus (b) the total tax benefit reported by the Performance Guarantor and its Subsidiaries to the extent included in computing Consolidated Operating Income. (4) Annex 4.04(l) to the Sale Agreement is hereby amended byamending and restating Sections (A), (B), (C), (D) and (E) thereof in theirentirety to read as follows: (A) Intentionally Omitted. (B) Minimum Consolidated Equity. The Performance Guarantor shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated Equity at an amount not less than the applicable "Minimum Consolidated Equity" specified below: Fiscal Quarter Ending Minimum Consolidated Equity March 31, 2003 $40,000,000 June 30, 2003 $35,000,000 September 30, 2003 $30,000,000 December 31, 2003 $25,000,000 (C) Maximum Leverage Valuation Ratio. The Performance Guarantor shall not permit, as of the last day of each of the fiscal quarters specified below, the Leverage Valuation Ratio to exceed the applicable "Maximum Leverage Valuation Ratio" specified below: Fiscal Quarter Ending Maximum Leverage Valuation Ratio March 31, 2003 0.95 to 1 June 30, 2003 0.95 to 1 7 September 30, 2003 0.95 to 1 December 31, 2003 0.95 to 1 (D) Minimum Consolidated EBITDA. The Performance Guarantor shall, as of the last day of each of the fiscal quarters specified below, maintain Consolidated EBITDA at an amount not less than the applicable "Minimum Cumulative Consolidated EBITDA" specified below for the period commencing on January 1, 2003 and ending on such last day: Minimum Cumulative Consolidated Month Ending EBITDA March 31, 2003 $0 June 30, 2003 $5,000,000 September 30, 2003 $15,000,000 December 31, 2003 $20,000,000 (E) Minimum Interest Coverage Cash Collateral. The Performance Guarantor shall, by no later than December 31, 2002, enter into a Cash Collateral Agreement (as defined by the Credit Agreement) and, by no later than one (1) Business Day prior to the first day of each fiscal quarter of the Performance Guarantor ending on or after March 31, 2003, deposit funds ("CASH COLLATERAL FUNDS") with the Collateral Agent in an amount not less than the aggregate amount of interest required to be paid, through the end of the immediately succeeding fiscal quarter, under the Credit Agreement and under the Note Agreements; provided that (i) in the case of interest required to be paid through the end of the fiscal quarter ending on March 31, 2004, the Performance Guarantor may deposit Cash Collateral Funds (as defined by the Credit Agreement) on or before (but not after) January 15, 2004 and (ii) it being understood and agreed that if, at any time subsequent to the date Cash Collateral Funds are deposited, the aggregate amount of interest required to be so paid increases, the Performance Guarantor shall promptly, and in any event within three (3) Business Days after demand by the Credit Facility Agent or by the holders of the Senior Notes, deposit additional funds with the Collateral Agent in an aggregate amount not less than the amount of such increase. (F) Maximum Capital Expenditures. The Performance Guarantor will not, and will not permit any Subsidiary to, expend for Capital Expenditures during any fiscal year of the Performance Guarantor and its Subsidiaries, in excess of $4,000,000 in the aggregate for the Performance Guarantor and its Subsidiaries. 1.3 Purchase Agreement Amendments. The Section 9.01 of the PurchaseAgreement is hereby amended by adding new subsections (y) and (z) which shallread as follows: (y) Failure to Deliver Refinancing Commitment Letter. The Performance Guarantor shall fail to deliver, by no later than January 31, 2004, one or more binding commitment letters (in form and substance satisfactory to the Required Secured Parties 8 (as defined in the Intercreditor and Collateral Agency Agreement)) from a bank, institutional lender or other qualified lending source to pay in full, on or before the Termination Date (as defined in the Credit Agreement), the Secured Obligations (as defined in the Intercreditor and Collateral Agency Agreement). (z) a default or breach under the Fleet Participation Agreement, regardless of whether such default is waived or whether any right with respect to such default or breach is exercised (including, without limitation, any default or breach arising out of failure by Performance Guarantor to deliver a business plan as required by Section 6.1(o) thereof). 2. CONSENTS. In connection with the amendments specified inSection 1 hereof, the Parent has informed the Agent and the Purchaser of itsintention to amend the Note Agreements, the Credit Agreement and the leaseagreements evidencing the Fleet Lease Transactions, in each case in a mannersimilar to the amendments hereunder. At the Parent's request, the Agent and thePurchaser consent to such amendments. 3. REPRESENTATIONS. 3.1 In order to induce the Agent and the Purchaser toenter into this Amendment, each of the Companies represents and warrants to theAgent and the Purchaser that it has duly authorized, executed and delivered thisAmendment and that the Amendment constitutes, a legal, valid and bindingobligation of such Company, enforceable in accordance with its terms (except asenforceability may be limited by applicable bankruptcy, insolvency, or similarlaws affecting the enforcement of creditors' rights generally or by equitableprinciples relating to enforceability). 3.2 Each of the Originators further represents andwarrants to the SPE and the Agent that, after giving effect to this Amendment,each of its representations and warranties set forth in Section 4.01 of the SaleAgreement is true and correct as of the date hereof. 3.3 Each of the Servicer and SPE further representsand warrants to the Agent and the Purchaser that, after giving effect to thisAmendment, each of its representations and warranties set forth in Article IV ofthe Purchase Agreement is true and correct as of the date hereof and that noIncipient Termination Event, Termination Event, Incipient Servicer TerminationEvent, or Events of Servicer Termination exists as of the date hereof and iscontinuing. 4. CONDITION PRECEDENT. This Amendment shall become effectiveon the date (the "SECOND AMENDMENT EFFECTIVE DATE") all the following conditionprecedents shall have been satisfied: (i) the Agent shall have receivedcounterparts of this Amendment duly executed by each of the parties hereto, (ii)amendments to the Note Agreements, the Credit Agreement and the lease agreementsevidencing the Fleet Lease Transaction shall have been executed and delivered bythe parties thereto and become effective, which amendments shall be in form andsubstance acceptable to the Agent and its counsel, (iii) the SPE and WFL,jointly and severally, shall have paid to the Agent, for the account of eachPurchaser, the GE Second 9Amendment Closing Fee in the amount and manner as set forth in Section 5 hereof,(iv) the Agent shall have received, for the ratable account of Purchaser, theaggregate unpaid amount of Daily Yield and all accrued and unpaid fees, costsand expenses through the Second Amendment Effective Date, including, withoutlimitation, an amount equal to the excess of (A) the unpaid portion of theUnused Facility Fee resulting from the increase in the Per Annum Daily Margineffective as of February 27, 2003 and the implementation of the AdditionalSpread pursuant hereto minus (B) the amount of Unused Facility Fee actually paidthereon for such period, and (v) the Agent shall have received reimbursement infull of the Agent's legal and other advisory fees and expenses it has heretoforeincurred in connection with the preparation, negotiation, execution and deliveryof this Amendment and the transactions contemplated hereby. 5. CLOSING FEES. SPE and WFL acknowledge that they arerequired, jointly and severally, to pay amendment/closing fees in the amount of$412,500 (in addition to and not including the 0.25% fee described in Section 9hereof and reimbursement for out of pocket costs and expenses), representing0.375% of the Maximum Purchase Limit of $110,000,000, to Agent in connectionwith, and as required by, this Amendment (the "GE SECOND AMENDMENT CLOSINGFEE"), and the Performance Guarantor acknowledges that it is required to paycertain closing fees (in addition to and not including reimbursement for out ofpocket costs and expenses) to (i) the Credit Facility Agent and the Lenders inconnection with, and as required by, the amendment (comparable to thisAmendment) to the Credit Agreement, (ii) the holders of the Senior Notes inconnection with, and as required by, amendments (comparable to this Amendment)to the Note Agreements, and (iii) Fleet Capital Corporation in connection with,and as required by, the amendment (comparable to this Amendment) to the leaseagreements evidencing the Fleet Lease Transaction (such fees to such financialinstitutions being hereinafter referred to collectively as the "LENDERS' SECONDAMENDMENT CLOSING FEES"; and together with the GE Second Amendment Closing Fee,the "SECOND AMENDMENT CLOSING FEES"). In lieu of paying the entire balance ofthe Second Amendment Closing Fees on the Second Amendment Effective Date, (1) onthe Second Amendment Effective Date, SPE, WFL and the Performance Guarantorshall pay to such financial institutions and Agent at least $2,000,000 (in theaggregate) of such Second Amendment Closing Fees and the GE Second AmendmentClosing Fee paid to the Agent shall not be less than the GE Deferred FeeAllocation multiplied by the actual amount of the Second Amendment Closing Feespaid on the Second Amendment Effective Date and (2) by a date no later thanJanuary 15, 2004, SPE and WFL, jointly and severally, shall pay to the Agent (a)the then unpaid balance of the GE Second Amendment Closing Fee and (b) adeferral fee to the Agent in an amount equal to the Deferred Fee Amount at arate per annum equal to the sum of (A) the Daily Yield as in effect on such dateplus (B) (i) 2.00% from the Second Amendment Effective Date until the date suchDeferred Fee Amount has been paid in full plus (ii) 1.00% on the dateimmediately prior to the day such Deferred Fee Amount balance has been paid infull and for the period from the date such Deferred Fee Amount has been paid infull until January 15, 2004. As used in this Section 5, "DEFERRED FEE AMOUNT"means, with respect to the Second Amendment Closing Fees, the GE Deferred FeeAllocation multiplied by the excess of (x) the actual amount of the SecondAmendment Closing Fees minus (y) the amount of the Second Amendment Closing Feespaid on the Second Amendment Effective Date. The Performance Guarantor agreesthat in connection with any payment on any date of the Deferred Fee Amount orthe deferral fees described in this Section 5, the Performance Guarantor shallcause SPE and WFL to, jointly and severally, pay to the Agent on the same datean amount equal to the GE Deferred Fee Allocation multiplied by the amount ofsuch payment. 10 6. RATIFICATION. Except as expressly modified hereby, each ofthe Sale Agreement, the Purchase Agreement and each of the other RelatedDocuments, as amended hereby, is hereby ratified, approved and confirmed in allrespects. 7. PERFORMANCE GUARANTOR REAFFIRMATION. Without limiting thegenerality of Section 6 of this Amendment above, the Performance Guarantorhereby acknowledges, ratifies and reaffirms the Undertaking and all of its otherobligations and undertakings under Article VIII of the Sale Agreement, andacknowledges and agrees that subsequent to, and taking into account all of theterms and conditions of the Amendment, the Undertaking and all of its otherobligations and undertakings under Article VIII of the Sale Agreement are andshall remain in full force and effect in accordance with the terms thereof. 8. REFERENCE TO RELATED DOCUMENTS. From and after the datehereof, each reference in the Sale Agreement, the Purchase Agreement and theother Related Documents to "this Agreement", "hereof", or "hereunder" or wordsof like import, and all references to such agreement in any and all agreements,instruments, documents, notes, certificates and other writings of every kind andnature shall be deemed to mean such Sale Agreement, Purchase Agreement or otherRelated Documents, as the case may be, as amended by this Amendment. 9. ADDITIONAL FEE. SPE and WFL shall, jointly and severally,pay an additional fee to Agent in connection with this Amendment in an amountequal to 0.25% of the daily average balance of Capital Investments for theperiod of 30 days ending on January 15, 2004, which additional fee shall bepayable on January 15, 2004 and which is non-refundable and is fully earned onthe date hereof. 10. MISCELLANEOUS. 10.1 Except as expressly amended hereby, the SaleAgreement, the Purchase Agreement and the Related Documents shall remainunaltered and in full force and effect, and each of the parties hereby ratifiesand confirms each of the Related Documents to which it is a party. 10.2 THIS AMENDMENT SHALL BE GOVERNED BY, ANDCONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUTREFERENCE TO PRINCIPLES OF CONFLICTS OF LAW. 10.3 EACH OF THE COMPANIES HEREBY ACKNOWLEDGES ANDAGREES THAT IT IRREVOCABLY (i) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION, FIRST,OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOTAVAILABLE, OF ANY ILLINOIS COURT, IN EITHER CASE SITTING IN COOK COUNTY,ILLINOIS, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THEAGREEMENTS, AND (ii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THEDEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF AN ACTION OR PROCEEDINGIN SUCH COURTS. 10.4 This Amendment may be executed in any number ofcounterparts and by the different parties hereto in separate counterparts, eachof which when so executed shall be deemed to be an original and all of whichwhen taken together shall constitute one and the same Amendment. IN WITNESS WHEREOF, the parties hereto have executed thisAmendment as of the date first above written. GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT By: ------------------------------------- Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION, AS PURCHASER By: ------------------------------------ Name: Title: WABASH NATIONAL CORPORATION By: ------------------------------------ Name: Title: WNC RECEIVABLES, LLC By: ----------------------------------- Name: Title: WNC RECEIVABLES MANAGEMENT CORP. By: ----------------------------------- Name: Title: WNC FINANCING, LLC By: ----------------------------------- Name: Title: NOAMTC, INC. By: ------------------------------------ Name: Title: WABASH NATIONAL, L.P. By: ------------------------------------ Name: Title: [Signature Page to Omnibus Amendment No. 2] AMENDED SCHEDULE CC FORM OF COMPLIANCE CERTIFICATETo: Agent, as Buyer's Assignee (as defined in the Agreement described below) This Compliance Certificate is furnished pursuant to thatcertain that certain Receivables Sale and Contribution Agreement, dated as ofApril 11, 2002, (as amended, modified, renewed or extended from time to time,the "Agreement") among Wabash National Corporation (the "PerformanceGuarantor"), NOAMTC, INC. and WABASH NATIONAL, L.P., (each, an "Originator") andWNC Receivables, LLC (the "Buyer"). Unless otherwise defined herein, capitalizedterms used in this Compliance Certificate have the meanings ascribed thereto inthe Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected _________________ of the PerformanceGuarantor and the [Chief Financial Officer] [Treasurer]; 2. I have reviewed the terms of the Agreement and I have made,or have caused to be made under my supervision, a detailed review of thetransactions and conditions of the Performance Guarantor and its Subsidiariesduring the accounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose,and I have no knowledge of, the existence of any condition or event whichconstitutes a Default or Unmatured Default (as defined in the Credit Agreement)during or at the end of the accounting period covered by the attached financialstatements or as of the date of this Certificate, except as set forth below; and 4. Schedule I and Schedule II attached hereto set forthfinancial data and computations evidencing the Performance Guarantor'scompliance with certain covenants of the Agreement and the Excess Cash Flowduring the accounting period covered by the attached financial statements, allof which data and computations are true, complete and correct. Described below are the exceptions, if any, to paragraph 3,listing, in detail, the nature of the condition or event, the period duringwhich it has existed and the action which the Performance Guarantor has taken,is taking, or proposes to take with respect to each such condition or event:---------------------------------------------------------------------------------------------------------------------------------- The foregoing certifications, together with the computationsset forth in Schedule I and Schedule II hereto and the financial statementsdelivered with this Certificate in support hereof, are made and delivered this_____ day of __________, ____. -------------------------------- [Insert Name of Officer]Wabash National CorporationQuarterly Compliance Certificate Worksheet COMPLIANCE CERTIFICATE QUARTERLY SCHEDULE OF COMPLIANCE AS OF _________, 2003A. INTENTIONALLY OMITTEDB. INTENTIONALLY OMITTEDC. MINIMUM CONSOLIDATED EQUITY (SECTION (B) OF ANNEX 4.04(l)) 1. Actual Amount: a. Consolidated Equity $ - b. Minimum Required Amount $ - D. MAXIMUM LEVERAGE VALUATION RATIO (SECTION (C) OF ANNEX 4.04(l)) 1. Actual Amount: a. Term Debt (Notes & Bank Debt) $ - b. Revolver (Super Revolver) $ - ----------- c. Total Debt (a+b) $ - d. Cash and Cash Equivalents $ - e. Net Inventory $ - f. Net Prepaid and Other Expenses $ - g. Net PP&E $ - ----------- h. Total Assets (d+e+f+g) $ - i. Leverage Ratio (c/h) x ----- 2. Minimum Required Amount x -----E. MINIMUM CONSOLIDATED CUMULATIVE (SINCE 1/1/2003) EBITDA (SECTION (D) OF ANNEX 4.04(l)) 1. Actual Amount: a. Consolidated Operating Income $ - b. Foreign and Domestic Taxes Deducted in Operating Income $ - c. Interest Expense Deducted in Operating Income $ - d. Eligible Asset Disposition Charges $ - e. Eligible Asset Impairment Charges $ - f. Eligible Miscellaneous Non-Cash Charges $ - g. Eligible Restructuring Charges $ - h. Depreciation Expense Deducted in Operating Income $ - i. Amortization Expense Deducted in Operating Income $ - j. Interest Income Included in Operating Income $ - k. Total Tax Benefit Included in Operating Income $ - l. Consolidated EBITDA (a+b+c+d+e+f+g+h+i-j-k) $ - 2. Minimum Required Amount $ -F. INTENTIONALLY OMITTEDG. MAXIMUM CAPITAL EXPENDITURES (SECTION (F) OF ANNEX 4.04(l)) 1. Actual Amount: a. Capital Expenditures (Year-to-Date) $ - 2. Maximum Annual Allowed Amount $ 4,000,000H. MAXIMUM FINANCE CONTRACTS (SECTION (G) OF ANNEX 4.04(l)) 1. Actual Amount: a. Finance Contracts (Year-To-Date) $ - 2. Maximum Annual Allowed Amount $ 5,000,000A. MAXIMUM OTHER UNSECURED INDEBTEDNESS (SECTION (A) OF ANNEX 4.04(o)) 1. Actual Amount: $_____________ 2. Maximum Permitted Amount: $3,000,000B. SALES OF ASSETS (SECTION (B)(v) OF ANNEX 4.04(o)) 1. Actual Amount: a. Total amount of sales of assets in current fiscal year to date (See Schedule II for detail) $_____________ 2. Maximum Permitted Amount: $5,000,000C. INTENTIONALLY OMITTEDD. INVESTMENTS (SECTION (D)(vii) OF ANNEX 4.04(o)) For each new Investment pursuant to Section (D)(vii) of Annex 4.04(o) of the Agreement during the most recent fiscal quarter covered by this Certificate, complete the following: 1. Date and brief description of nature of new Investment: ------------------------------------------------------- ------------------------------------------------------- 2. Actual Amount: a. Amount of new Investment $_____________ b. Amount of existing Investments under Section (D)(vii) of Annex 4.04(o) +_____________ c. Total Investments under =$_____________ Section (D)(vii) of Annex 4.04(o) 3. Maximum Permitted Amount: $5,000,000E. LEASES (SECTION (N) OF ANNEX 4.04(o)) 1. Actual Amount of Leases: $__________ 2. Maximum Permitted Amount: $5,000,000 SCHEDULE II TO COMPLIANCE CERTIFICATE Schedule of Compliance as of __________, ____ (Dollars in Thousands)A. Sales of Assets [List separate sales and amounts] $_____________ ______________ ______________ ______________ ______________ Total $_____________ . . . EXHIBIT 21 SUBSIDIARIES OF THE COMPANY AND OWNERSHIP OF SUBSIDIARY STOCK NAME OF STATE/COUNTRY OF % OF SHARES OWNED SUBSIDIARY INCORPORATION BY THE CORPORATION* ------------------ ------------------- --------------------- Wabash International, Inc. (Foreign Sales Corp.) U.S. Virgin Islands 100% Wabash National GmbH Germany 100% Wabash National Trailer Centers, Inc Delaware 100% WNC Cloud Merger Sub, Inc Arkansas 100% Cloud Oak Flooring Company, Inc Arkansas 100% Wabash National L.P. Delaware 100% Apex Trailer Leasing & Rentals, L.P. Delaware 100% Wabash National Services L.P. Delaware 100% WTSI Technology Corp. Delaware 100% Wabash Technology Corp. Delaware 100% Wabash Financing LLC Delaware 100% RoadRailer Bimodal Ltd. United Kingdom 100% RoadRailer Mercosal, Ltda Brazil 50% Wabash do Brazil Brazil 100%RoadRailer Technology Development Company, Ltd. China 81% National Trailer Funding LLC Delaware 100% Continental Transit Corp Indiana 100% Europaische Trailerzug Germany 100% Beteiligungsgessellschaft mbH (ETZ) Bayerische Trailerzug Germany 99.89% Beteiligungsgessellschaft mbH (BTZ) FTSI Canada, Ltd. Canada 100% Wabash Receivables, LLC Delaware 100% WNC Receivables Management Corp. Delaware 100% FTSI Distribution Company, L.P. Delaware 100%* Includes both direct and indirect ownership by the parent, Wabash National Corporation EXHIBIT 23.01 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTSWe consent to the incorporation by reference in the Registration Statement (FormS-3 No. 333-102350) and in the Registration Statements (Form S-8 No. 333-54714)pertaining to the 2000 Stock Option and Incentive Plan, (Form S-8 No. 333-29309)pertaining to the 1992 Stock Option Plan and Stock Bonus Plan, (Form S-8 No.33-49256) pertaining to the Wabash National Corporation 1992 Stock Option Plan,(Form S-8 No. 33-65698) pertaining to the 1993 Employee Stock Purchase Plan and(Form S-8 No. 33-90826) pertaining to the Wabash National Corporation Directorsand Executives Deferred Compensation Plan of Wabash National Corporation of ourreport dated February 19, 2003 except for Notes 1, 7, 9, and 12, as to which thedate is April 11, 2003, with respect to the consolidated financial statements ofWabash National Corporation and subsidiaries included in this Annual Report(Form 10-K) for the year ended December 31, 2002. /s/ ERNST & YOUNG LLPIndianapolis, IndianaApril 11, 2003 EXHIBIT 23.02NOTICE REGARDING CONSENT OF ARTHUR ANDERSEN LLP Section 11(a) of the Securities Act provides that if part of aregistration statement at the time it becomes effective contains an untruestatement of a material fact, or omits a material fact required to be statedtherein or necessary to make the statements therein not misleading, any personacquiring a security pursuant to such registration statement (unless it isproved that at the time of such acquisition such person knew of such untruth oromission) may assert a claim against, among others, an accountant who hasconsented to be named as having certified any part of the registration statementor as having prepared any report for use in connection with the registrationstatement. On May 30, 2002, Wabash National Corporation (the "Company")dismissed Arthur Andersen LLP as its independent auditors. On May 30, 2002, theCompany appointed Ernst & Young LLP to replace Arthur Andersen LLP as theindependent auditor of the Company. Prior to the date of this Form 10-K (whichis incorporated by reference into the Company's previously filed RegistrationStatement File Nos. 33-49256, 33-65988, 33-90826, 333-29309, 333-54714 and333-102350 (the "Registration Statements")), the Arthur Andersen partnerresponsible for the audit of audited financial statements of the Company as ofDecember 31, 2001 and for the year then ended resigned from Arthur Andersen. Asa result, after reasonable efforts, the Company has been unable to obtain ArthurAndersen's written consent to the incorporation by reference into theRegistration Statements of its audit reports with respect to the Company'sfinancial statements as of December 31, 2001 and for the two years in the periodthen ended. Under these circumstances, Rule 437a under the Securities Actpermits the Company to file this Form 10-K without a written consent from ArthurAndersen. However, as a result, Arthur Andersen will not have any liabilityunder Section 11(a) of the Securities Act for any untrue statements of amaterial fact contained in the financial statements audited by Andersen LLP orany omissions of a material fact required to be stated therein. Accordingly, youwould be unable to assert a claim against Arthur Andersen under Section 11(a) ofthe Securities Act because it has not consented to the incorporation byreference of its previously issued report into the Registration Statements. 75

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