EXHIBIT 10.27
TWENTY-FOURTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS TWENTY-FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
(this “Amendment”) is dated as of October 18, 2007
between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an
Illinois corporation (“Borrower”) and LASALLE BANK
NATIONAL ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank
NI (“Lender”).
WHEREAS, Borrower and Lender have entered into that certain
Loan and Security Agreement dated as of January 17, 1997, as
amended by those certain letter amendments dated February 28,
1997 and July 23, 1997 and those certain Third, Fourth, Fifth,
Sixth, Seventh, Eighth, Ninth, Eleventh, Twelfth, Thirteenth,
Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth,
Nineteenth, Twentieth, Twenty-First, Twenty-Second and Twenty-Third
Amendments to Loan and Security Agreement dated as of
March 30, 1998, December 1, 1998, June 1, 1999,
December 19, 2000, May 1, 2001, July 1, 2001,
April 30, 2002, April 29, 2003, July 3, 2003,
April 29, 2004, November 15, 2004, April 29, 2005,
June 15, 2005, February 1, 2006, April 29, 2006,
November 10, 2006, January 8, 2007, April 29, 2007,
June 30, 2007, and October 4, 2007, respectively, and
that certain letter amendment (herein, the “Tenth
Amendment”) dated October 17, 2002 (such agreement, as
so amended, the “Loan Agreement”) with regard to the
following loans made by Lender to Borrower: (i) a
$7,000,000.00 revolving line of credit loan (the “Revolving
Loan”), (ii) a consolidated term loan in the original
principal sum of $7,899,332.98 (the “Term Loan”),
(iii) an $11,000,000.00 non-revolving equipment line of credit
loan with term conversion feature (the “Equipment
Loan”), and (iv) a $9,000,000.00 non-revolving equipment
line of credit loan with term conversion feature (the
“Equipment Loan No. 2”); and
WHEREAS, Borrower has informed Lender that ownership of all
shares of the capital stock of Borrower has been or is about to be
purchased by Tower Tech Holdings Inc., a Nevada corporation
(“Tower Tech”), who, upon the consummation of such
sale, is now or will become the parent company of the Borrower, and
Borrower has become or will become a wholly-owned subsidiary of the
Borrower [sic]; and
WHEREAS, Borrower has asked Lender to (i) waive
Borrower’s violation of the change in control provisions in
the Loan Agreement and modify such provision prospectively, and
(ii) modify the Borrower’s financial covenants set forth
in the Loan Agreement, and (iii) make certain other changes to
the Loan Agreement; and
WHEREAS, Lender has agreed to the foregoing loan requests
provided Borrower executes and delivers such documents and
instruments required by Lender, including the promissory note
described below and this Amendment;
NOW, THEREFORE, for valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the foregoing
premises, the parties hereto agree as follows:
1
1.
The capitalized terms used herein without definition shall have the
same meaning herein as such terms have in the Loan
Agreement.
2.
In Section 1.1 of the Loan Agreement, the definitions of
“Capital Expenditures”, “Debt”,
“EBITDA” and “Net Income” are hereby
deleted.
3.
Section 10 of the Loan Agreement is hereby amended to add the
following additional paragraph at the end of
Section 10:
“As soon as
available, but not later than one hundred twenty (120) days after
the end of each fiscal year of Tower Tech Holdings Inc., a Nevada
corporation (“Tower Tech”), Borrower shall furnish the
Lender with annual audited financial statements of Tower Tech,
containing the balance sheet of Tower Tech as of the close of each
such fiscal year, statements of income and retained earnings and a
statement of cash flows for each such fiscal year, and including
consolidating statements of any and all subsidiaries of Tower Tech,
including, but not limited to the Borrower, and such other comments
and financial details as are usually included in similar
reports. Such financial statements shall (a) be in form
and reporting basis satisfactory to the Lender, (b) be
prepared in accordance with GAAP and certified by an independent
certified public accounting firm of recognized standing selected by
Tower Tech and reasonably acceptable to the Lender, and
(c) contain unqualified opinions as to the fairness of the
statements therein contained and be without adverse reference to
going concern. Borrower shall also provide to the Lender any
management letters that may accompany such
statements.”
4.
Borrower has informed Lender that ownership of all shares of the
capital stock of Borrower has been or is about to be purchased by
Tower Tech, and that upon consummation of such sale, Tower Tech is
or will be the parent company of the Borrower, and Borrower has
become or will become a wholly-owned subsidiary of the Borrower
[sic]. The consummation of such sale would violate the terms
of Section 14.3(e) and Section 14.3(g) of the
Loan Agreement. Lender hereby waives Borrower’s
violation of the foregoing covenants set forth in
Section 14.3(e) and Section 14.3(g) of the Loan
Agreement, triggered by the aforesaid sale of all the capital stock
of Tower Tech. Said waivers are limited solely to such
specific covenant violations, and shall not waive, suspend, or
affect any other default by Borrower under the Loan Agreement, and
Lender expressly reserves all of its rights and remedies with
respect to any such other default(s).
5.
Section 14.1 of the Loan Agreement is amended in its entirety
to read as follows:
“14.1 Financial Covenants . Borrower
covenants to Lender and agrees that so long as any Indebtedness
shall remain unpaid:
(a)
No Distributions . Borrower will make no distributions
or dividends of any kind, except as expressly permitted by
Section 14.3(i) hereof. This covenant will be
measured at all times.
(b)
Limitation on Debts Owed To Or By Affiliates .
Indebtedness owed by Borrower to Affiliates and/or from Affiliates
to Borrower will not exceed Five Hundred Thousand
Dollars
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($500,000.00) in the
aggregate at all times. The foregoing sentence shall not be
deemed to prohibit or apply to the approximate $25,000,000.00 in
aggregate principal debt owed by Tower Tech to Tontine Overseas
Funds, Ltd., Tontine Partners, L.P. and Tontine Capital Overseas
Master Fund, L.P., which debt shall be evidenced by senior
subordinated convertible promissory notes executed by Tower Tech in
favor of such payees, and subordinated to all present and future
indebtedness owed by Borrower to Lender pursuant to written
subordination agreements in form acceptable to Lender.
(c)
Subordinated Debt Payments . Borrower will not make
any payments on Subordinated Debt except for interest payments
thereon permitted in accordance with
Section 14.3(i) hereof.
(d)
Senior Debt to EBITDA . As of the end of each of its
fiscal quarters, the Borrower shall maintain a ratio of Senior Debt
to EBITDA of not greater than 3.0 to 1.0. This covenant will
be tested quarterly on a trailing twelve month basis, beginning
with the quarter ended December 31, 2007.
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