Exhibit 10(6)
*
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FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
Dated as of January 31, 1997
between
TOWER AIR, INC.,
as Borrower,
and
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent and as Lender
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FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT dated as of
January 31, 1997 (this "Amendment") is between TOWER AIR, INC., a Delaware
corporation, as borrower under the below-defined Loan Agreement ("Borrower"),
and ▇▇▇▇▇▇ FINANCIAL, INC., a Delaware corporation ("▇▇▇▇▇▇"), and amends that
certain Loan and Security Agreement dated as of December 1, 1996 (the "Loan
Agreement") between Borrower and ▇▇▇▇▇▇.
WITNESSETH:
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WHEREAS, except as otherwise defined in this Amendment, the
capitalized terms used herein shall have the meanings ascribed thereto in the
Loan Agreement;
WHEREAS, pursuant to the Loan Agreement, Lender loaned certain sums to
Borrower upon the terms and conditions set forth therein; and
WHEREAS, Borrower and ▇▇▇▇▇▇ desire to amend the Loan Agreement in
certain respects;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
SECTION 1. Conditions Precedent to Effectiveness. The parties hereto
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agree that this Amendment shall not become effective unless and until the
following conditions have been met:
(a) Closing Fee. Agent shall have received a closing fee in an amount
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equal to $27,500.
(b) Secretary's Certificate. Agent shall have received a certificate
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of the secretary of Borrower, which certificate shall be in form and substance
satisfactory to Agent.
(c) Opinion of Counsel. Agent shall have received an opinion of
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Hewes, Gelband, ▇▇▇▇▇▇▇ & Dann, counsel to Borrower, which opinion shall be in
form and substance satisfactory to Agent.
(d) No Change to Organizational Documents. There shall not have been
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any amendment or other change to Borrower's certificate of incorporation, bylaws
or other organizational document since December 1, 1996.
[First Amendment to Loan
and Security Agreement]
(e) Representations and Warranties. The representations and
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warranties contained herein and in the Loan Documents shall be true, correct and
complete in all material respects on and as of the effective date hereof (the
"Effective Date") to the same extent as though made on and as of that date,
except for any representation or warranty limited by its terms to a specific
date, in which case such representation or warranty shall have been true,
correct and complete as of such earlier date.
(f) No Default. No event shall have occurred and be continuing that
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constitutes or would constitute, with the giving of notice or the passage of
time or both, an Event of Default or a Default.
(g) Performance of Agreements. Each Loan Party shall have performed
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in all material respects all agreements and satisfied all conditions under any
Loan Document required to be performed by it on or before the Effective Date.
(h) No Prohibition. No order, judgment or decree of any court,
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arbitrator or governmental authority shall purport to enjoin or restrain Agent
or any Lender from making any Loans or issuing any Lender Letters of Credit.
(i) No Litigation. There shall not be pending or, to the knowledge of
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Borrower, threatened, any action, charge, claim, demand, suit, proceeding,
petition, governmental investigation or arbitration by, against or affecting any
Loan Party or any of its Subsidiaries or any property of any Loan Party or any
of its Subsidiaries which would reasonably be expected to have a Material
Adverse Effect that has not been disclosed to Agent by Borrower in writing, and
there shall have occurred no development in any such action, charge, claim,
demand, suit, proceeding, petition, governmental investigation or arbitration
that, in the opinion of Agent, would reasonably be expected to have a Material
Adverse Effect.
SECTION 2. Amendments to Section 2.
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(a) Section 2 of the Loan Agreement is hereby amended in the
following manner:
(i) Section 2.1(A) of the Loan Agreement is hereby amended by
deleting the phrase "Twelve Million Five Hundred Thousand Dollars
($12,500,000)" which appears in the fifth and sixth lines of such Section
2.1(A) and inserting in lieu thereof the phrase "Eighteen Million Dollars
($18,000,000)".
(ii) Section 2.1(A)(1) of the Loan Agreement is hereby amended
by adding at the end of each of clauses (a) and (b) the words "minus the
Letter of Credit Reserve".
2
[First Amendment to Loan
and Security Agreement]
(iii) Section 2.1(A)(1) of the Loan Agreement is hereby
amended by inserting before the final period of such Section 2.1(A)(1) the
words "; provided, however, that, notwithstanding anything to the contrary
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contained herein, if at any time the sum of the Borrowing Base (for these
purposes only, calculated without regard to the proviso to Section
2.1(A)(2)) minus the outstanding principal amount of the Loans minus the
Letter of Credit Reserve shall be less than Eight Million Five Hundred
Thousand Dollars ($8,500,000), then the Maximum Revolving Loan Amount shall
be reduced by the amount of such shortfall.
(iv) Section 2.1(A)(2) of the Loan Agreement is hereby amended
by inserting before the final period of such Section 2.1(A)(2) the words ";
provided, however, that, notwithstanding anything to the contrary contained
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herein, in no event shall the amount of the Borrowing Base attributable to
Eligible Inventory exceed Fifteen Million Dollars ($15,000,000)".
SECTION 3. Amendments to Section 5.
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(a) Section 5.1(F) of the Loan Agreement is hereby amended by adding
at the end of clause (1) before the semi-colon the words "together with an
inventory report in form and substance satisfactory to Agent".
(b) Section 5.1 of the Loan Agreement is hereby amended by adding a
new paragraph (S), which shall be and read in its entirety as follows:
"(S) Weekly Cash Flow Forecasts. Borrower shall provide to Agent,
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on or before February 7, 1997, weekly cash flow forecasts for the months of May
and June 1997."
SECTION 4. Amendment to Section 7. Section 7 of the Loan Agreement
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is hereby amended by adding a new Section 7.16, which shall be and read in its
entirety as follows:
"7.16 Engine Servicing Agreement. Submit any or all of the Spare
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Engines for servicing or maintenance under any engine servicing agreement
applicable to such Spare Engine or Engines."
SECTION 5. Expenses. Whether or not the transaction contemplated by
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this Amendment shall be consummated, Borrower agrees to promptly pay all
reasonable fees, costs and expenses incurred by Agent and each of the Lenders in
connection with any matters contemplated by or arising out of this Amendment or
the other Loan Documents including the following, and all such fees, costs and
expenses shall be part of the Obligations, payable on demand and secured by the
Collateral: (a) fees, costs and expenses (including attorneys' fees, allocated
costs of internal counsel and fees of environmental consultants, accountants and
other
3
[First Amendment to Loan
and Security Agreement]
professionals retained by Agent) incurred in connection with the examination,
review, due diligence investigation, documentation and closing of the financing
arrangement evidenced by this Amendment and the other the Loan Documents; and
(b) fees, costs and expenses (including attorneys' fees, allocated costs of
internal counsel and fees of environmental consultants, accountants and other
professionals retained by Agent) incurred in connection with the review,
negotiation, preparation, documentation, execution, syndication, and
administration of this Amendment and the other Loan Documents, the Loans, and
any amendments, waivers, consents, forbearances and other modifications relating
thereto or any subordination or intercreditor agreements.
SECTION 6. Borrower's Representations and Warranties.
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To induce Agent and each Lender to enter into this Amendment, Borrower
hereby represents and warrants to Agent and each Lender that the following
statements are and will be true, correct and complete:
6.1 Organization, Powers, Capitalization.
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(A) Organization and Powers. Each of the Loan Parties is a
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corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and qualified to do business in
all states where such qualification is required except where failure to be
so qualified could not be reasonably expected to have a Material Adverse
Effect. Each of the Loan Parties has all requisite corporate power and
authority to own and operate its properties, to carry on its business as
now conducted and proposed to be conducted and to enter into this
Amendment.
(B) Capitalization. The authorized capital stock of each of the
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Loan Parties is as set forth on Schedule 4.1(B) to the Loan Agreement. All
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issued and outstanding shares of capital stock of each of the Loan Parties
are duly authorized and validly issued, fully paid, nonassessable, free and
clear of all Liens and such shares were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.
The capital stock of each of the Loan Parties is owned by the stockholders
and in the amounts set forth on Schedule 4.1(B) to the Loan Agreement. No
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shares of the capital stock of any Loan Party, other than those described
above, are issued and outstanding. There are no preemptive or other
outstanding rights, options, warrants, conversion rights or similar
agreements or understandings for the purchase or acquisition from any Loan
Party, of any shares of capital stock or other securities of any such
entity except as set forth on Schedule 4.1(B) to the Loan Agreement.
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6.2 Authorization of Borrowing, No Conflict. Borrower has the
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corporate power and authority to enter into this Amendment. On the Effective
Date, the execution, delivery
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[First Amendment to Loan
and Security Agreement]
and performance of this Amendment by each Loan Party signatory hereto will have
been duly authorized by all necessary corporate and shareholder action. The
execution, delivery and performance of this Amendment by each Loan Party
signatory hereto and the consummation of the transactions contemplated by this
Amendment by each such Loan Party do not contravene and will not be in
contravention of any applicable law, the corporate charter or bylaws of any Loan
Party or any agreement or order by which any Loan Party or any Loan Party's
property is bound. This Amendment is the legally valid and binding obligation of
the applicable Loan Parties, enforceable against such Loan Parties in accordance
with its terms.
6.3 Financial Condition. All financial statements concerning
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Borrower and its Subsidiaries which have been or will hereafter be furnished by
Borrower and its Subsidiaries to Agent or any Lender pursuant to the Loan
Agreement have been or will be prepared in accordance with GAAP consistently
applied throughout the periods involved (except as disclosed therein) and do or
will present fairly the financial condition of the Borrower covered thereby as
at the dates thereof and the results of their operations for the periods then
ended. The Projections delivered (and attached hereto as Schedule 6.3) and to
be delivered have been and will be prepared by Borrower in light of the past
operations of the business of Borrower and its Subsidiaries, and such
Projections represent and will represent the good faith estimate of Borrower and
its senior management concerning the most probable course of its business as of
the date such Projections are prepared and delivered.
6.4 Indebtedness and Liabilities. As of the Effective Date, neither
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Borrower nor any of its Subsidiaries has (a) any Indebtedness except as
reflected on the most recent financial statements delivered to Agent and
Lenders; or (b) any Liabilities other than as reflected on the most recent
financial statements delivered to Agent and Lenders or as incurred in the
ordinary course of business following the date of the most recent financial
statements delivered to Agent and Lenders.
6.5 Title to Properties; Liens. Borrower and each of its
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Subsidiaries has good, sufficient and legal title, subject to Permitted
Encumbrances, to all its respective material properties and assets. Except for
Permitted Encumbrances, all such properties and assets are free and clear of
Liens. To the best knowledge of Borrower after due inquiry, there are no
actual, threatened or alleged defaults with respect to any leases of real
property under which Borrower or any of its Subsidiaries is lessee or lessor
which would have a Material Adverse Effect.
6.6 Litigation; Adverse Facts. There are no judgments outstanding
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against any Loan Party or affecting any property of any Loan Party nor is there
any action, charge, claim, demand, suit, proceeding, petition, governmental
investigation or arbitration now pending or, to the best knowledge of Borrower
after due inquiry, threatened against or affecting any Loan Party or any
property of any Loan Party which could reasonably be expected to result in any
Material
5
[First Amendment to Loan
and Security Agreement]
Adverse Effect other than as set forth on Schedule 4.9 to the Loan Agreement.
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No Loan Party has received any opinion or memorandum or legal advice from legal
counsel to the effect that it is exposed to any liability which could reasonably
be expected to result in any Material Adverse Effect.
6.7 Payment of Taxes. All material tax returns and reports of
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Borrower and each of its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes, assessments, fees and other governmental
charges upon such Persons and upon their respective properties, assets, income
and franchises which are shown on such returns as due and payable have been paid
when due and payable. As of the Effective Date, none of the United States
income tax returns of Borrower or any of its Subsidiaries are under audit. No
tax liens have been filed and no claims (except as otherwise permitted by
subsection 5.9 of the Loan Agreement) are being asserted with respect to any
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such taxes. The charges, accruals and reserves on the books of Borrower and
each of its Subsidiaries in respect of any taxes or other governmental charges
are in accordance with GAAP.
6.8 Performance of Agreements. None of the Loan Parties and none of
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their respective Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
contractual obligation of any such Person, and no condition exists that, with
the giving of notice or the passage of time or both, would constitute such a
default.
6.9 Broker's Fees. No broker's or finder's fee or commission will be
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payable with respect to any of the transactions contemplated hereby.
6.10 Solvency. From and after the date of this Amendment,
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Borrower: (a) owns and will own assets the fair salable value of which are (i)
greater than the total amount of its liabilities (including contingent
liabilities) and (ii) greater than the amount that will be required to pay the
probable liabilities of Borrower as they mature; (b) has capital that is not
unreasonably small in relation to its business as presently conducted or any
contemplated or undertaken transaction; and (c) does not intend to incur and
does not believe that it will incur debts beyond its ability to pay such debts
as they become due. There is no material fact known to Borrower that has or
could have a Material Adverse Effect and that has not been fully disclosed in
the Loan Agreement or in such other documents, certificates and statements
furnished to Agent or Lenders for use in connection with the transactions
contemplated thereby.
6.11 Disclosure. No representation or warranty of Borrower, any
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of its Subsidiaries or any other Loan Party contained in this Amendment, the
financial statements, the other Loan Documents, or any other document,
certificate or written statement furnished to Agent or any Lender by or on
behalf of any such Person for use in connection with this Amendment or the other
Loan Documents contains any untrue statement of a material fact or
6
[First Amendment to Loan
and Security Agreement]
omitted, omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances in which the same were made. The Projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by such Persons to be reasonable at the time
made, it being recognized by Agent and Lenders that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the projected
results. There is no material fact known to Borrower that has had or will have
a Material Adverse Effect and that has not been disclosed in the Loan Agreement
or in such other documents, certificates and statements furnished to Agent or
any Lender for use in connection with the transactions contemplated thereby.
6.12 Compliance with Laws. Neither Borrower nor any of its
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Subsidiaries is in violation of any law, ordinance, rule, regulation, order,
policy, guideline or other requirement of any domestic or foreign government or
any instrumentality or agency thereof, having jurisdiction over the conduct of
its business or the ownership of its properties, including, without limitation,
any violation relating to any use, release, storage, transport or disposal of
any Hazardous Material, which violation would subject Borrower or any of its
Subsidiaries, or any of their respective officers to criminal liability or have
a Material Adverse Effect and no such violation has been alleged.
SECTION 7. Ratification; References to Loan Agreement. Except as
------------------------------------------
amended hereby, the Loan Agreement continues and shall remain in full force and
effect in all respects. From and after the date of this Amendment, each and
every reference in the Loan Agreement to "this Loan Agreement," "this
Agreement," "herein," "hereof" or similar words and phrases or any word or
phrase referring to a section or provision of the Loan Agreement is deemed for
all purposes to be a reference to the Loan Agreement or such section or
provision as amended pursuant to this Amendment.
SECTION 8. Severability; Headings; Amendment. Any provision of this
---------------------------------
Amendment which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. No term or
provision of this Amendment may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by Borrower, Agent and
Requisite Lenders. The section headings in this Amendment are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof.
SECTION 9. CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE
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JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF ▇▇▇▇
STATE OF ILLINOIS AND IRREVOCABLY AGREES
7
[First Amendment to Loan
and Security Agreement]
THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AMENDMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN
SUCH COURTS. BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AMENDMENT, THE
OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.
SECTION 10. WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER
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HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AMENDMENT OR THE OTHER LOAN DOCUMENTS.
BORROWER, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED
ON THE WAIVER IN ENTERING INTO THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
BORROWER, AGENT AND EACH LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.
SECTION 11. Confidentiality. Agent and Lenders shall hold all
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nonpublic information obtained pursuant to the requirements hereof and
identified as such by Borrower in accordance with such Person's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound business practices and in any event may make
disclosure to such of its respective Affiliates, officers, directors, employees,
agents and representatives as need to know such information in connection with
the Loans. If any Lender is otherwise a creditor of a Borrower, such Lender may
use the information in connection with its other credits. Agent and Lenders may
also make disclosure reasonably required by a bona fide offeree or assignee (or
participation), or as required or requested by any Governmental Authority or
representative thereof, or pursuant to legal process, or to its accountants,
lawyers and other advisors, and shall require any such offeree or assignee (or
participant) to agree (and require any of its offerees, assignees or
participants to agree) to comply with this Section 11. In no event shall Agent
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or any Lender be obligated or required to return any materials furnished by
Borrower; provided, however, each Offeree shall be required to agree that if it
does not become a assignee (or participant) it shall return all materials
furnished to it by Borrower in connection herewith.
SECTION 12. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
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SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
8
[First Amendment to Loan
and Security Agreement]
WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF
LAW PRINCIPLES.
SECTION 13. Successors and Assigns. This Amendment shall be binding
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upon and inure to the benefit of the parties hereto and their respective
successors and assigns except that Borrower may not assign its rights or
obligations hereunder without the written consent of Lenders.
SECTION 14. Counterparts; Effectiveness. This Amendment may be
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executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument. This Amendment shall become effective upon the
execution of a counterpart hereof by each of the parties hereto. Delivery of an
executed counterpart of a signature page to this Amendment by telecopier shall
be as effective as delivery of a manually executed counterpart thereof.
* * *
9
[First Amendment to Loan
and Security Agreement]
IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to Loan and Security Agreement to be duly executed as of the date
first above written.
TOWER AIR, INC.,
Borrower
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: VP-Finance
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▇▇▇▇▇▇ FINANCIAL, INC.,
Agent and Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Vice President
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