Exhibit 10(7)
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SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
Dated March 13, 1997
between
TOWER AIR, INC.,
as Borrower,
and
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent and as Lender
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SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT dated March 13, 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, as amended by that certain
First Amendment to Loan and Security Agreement dated as of January 31, 1997 (the
"First Amendment") (as so amended, the "Loan Agreement") between Borrower and
▇▇▇▇▇▇. Terms not otherwise defined herein shall have the respective meanings
assigned to them in the Loan Agreement.
WITNESSETH:
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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 $20,000.
(b) Second Amended and Restated Revolving Note. Agent shall have received
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the Second Amended and Restated Revolving Note in form and substance
satisfactory to it.
(c) Secretary's Certificate. Agent shall have received a certificate of
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the secretary of Borrower, which certificate shall be in form and substance
satisfactory to Agent.
(d) Opinion of Counsel. Agent shall have received an opinion of ▇▇▇▇▇,
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to Borrower, which opinion shall be in form and
substance satisfactory to Agent.
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(e) No Change to Organizational Documents. There shall not have been any
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amendment or other change to Borrower's certificate of incorporation, bylaws or
other organizational document since December 1, 1996.
(f) Representations and Warranties; Covenants. The representations,
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warranties and covenants contained herein and in the Loan Documents shall be
true, correct and affirmed 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 the Effective 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.
(g) 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.
(h) No Prohibition. No order, judgment or decree of any court, arbitrator
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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. Amendment of the Loan Agreement. The Loan Agreement is hereby
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amended as follows:
(a) The first paragraph of Section 2.1(A) of the Loan Agreement is hereby
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amended by deleting the phrase "Eighteen Million Dollars ($18,000,000)" as added
pursuant to the First Amendment and inserting in lieu thereof the phrase "(i)
from and after March 13, 1997 to and including June 5, 1997, Twenty Million
Dollars ($20,000,000) and (ii) on and after June 6, 1997, Fifteen Million
Dollars ($15,000,000)".
(b) Section 2.1(A)(2)(d) of the Loan Agreement is hereby amended by
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deleting the phrase "twenty percent (20%)" and inserting in lieu thereof the
phrase "eighty percent (80%)".
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(c) Section 2.4(B)(3)(a) of the Loan Agreement is hereby amended by
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deleting the phrase "twenty percent (20%)" and inserting in lieu thereof the
phrase "eighty percent (80%)".
(d) Section 5.1 of the Loan Agreement is hereby amended by adding new
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paragraph (T) which shall be and read in its entirety as follows:
"(T) Revised Financial Projections. Borrower shall provide to Agent
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revised Projections on or before March 24, 1997, in form and substance
acceptable to Agent, which reflect actual results for January and February,
1997 and Borrower's current forecasts and results for the remainder of
fiscal year 1997 which reflect Borrower's termination of service to
Brazil."
SECTION 3. 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 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 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 4. 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:
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4.1 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 Loan
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Parties is as set forth on Schedule 4.1(B) to the Loan Agreement. All issued
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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 shares of the capital
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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)
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to the Loan Agreement.
4.2 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 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.
4.3 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 most recent Projections delivered to Agent and all future
Projections have been and will be prepared by Borrower in light of the past
operations of the business of Borrower and its Subsidiaries, and such
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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.
4.4 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.
4.5 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.
4.6 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 Adverse Effect other than as set forth on Schedule 4.9 to the Loan
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Agreement. 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.
4.7 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.
4.8 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
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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.
4.9 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.
4.10 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.
4.11 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 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.
4.12 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.
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SECTION 5. Ratification; References to Loan Agreement. Except as
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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 6. Severability; Headings; Amendment. Any provision of this
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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 7. 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 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 8. 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
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WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
SECTION 9. 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 9. 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 10. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
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SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
SECTION 11. 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 12. 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.
* * *
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IN WITNESS WHEREOF, each of the parties hereto has caused this Second
Amendment to Loan and Security Agreement to be duly executed on 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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