EXHIBIT 10.3
AGREEMENT PERTAINING TO LOANS AND LEASES
(GREAT LAKES)
THIS AGREEMENT PERTAINING TO LOANS AND LEASES (hereinafter
"Agreement") is made this 11th day of July, 1997, by GREAT LAKES
AVIATION, LTD., an Iowa corporation, with its principal place of
business at 0000 000xx Xxxxxx, Xxxxxxx, Xxxx 00000 (herein called
"Debtor") in favor of RAYTHEON AIRCRAFT CREDIT CORPORATION, whose
principal place of business is 00000 Xxxx Xxxxxxx, Xxxxxxx, Xxxxxx
00000 (herein called "Secured Party").
RECITALS
A. Secured Party and Debtor have previously entered into
certain financial transactions whereby Debtor is
obligated to Secured Party as evidenced by those certain
documents described on Exhibit "A" attached hereto
(collectively referred to as the "Initial Loans".
B. Debtor is also obligated to Secured Party pursuant to
certain airplane lease agreements with Secured Party, as
specifically described on Exhibit "B" attached hereto
(collectively referred to as the "Airplane Leases").
C. Debtor is in default under the Initial Loans and Airplane
Leases, as well as certain operational obligations owing
to third parties. Secured Party has agreed to loan an
additional Four Million Dollars ($4,000,000.00) to Debtor
to assist in paying certain financial obligations,
subject to the terms, conditions and understandings set
forth herein.
AGREEMENT
NOW, THEREFORE, for valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, Debtor and Secured
Party agree as follows:
1. NEW PROMISSORY NOTE. Secured Party agrees to make a new
loan to Debtor in the sum of Four Million Dollars
($4,000,000.00) to be evidenced by a Negotiable
Promissory Note in the form and content as set forth in
Exhibit "C" attached hereto ("New Promissory Note").
2. SECURITY. The New Promissory Note as well as the
financial obligations under the Initial Loans and
Airplane Leases shall all be secured pursuant to the
terms of a Security Agreement And Encumbrance Against Air
Carrier Aircraft
Engines, Propellers, Appliances And Spare Parts in the
form and content as attached hereto as Exhibit "D"
("Security Agreement"). The New Promissory Note as well
as all obligations under the Initial Loans and Airplane
Leases shall also be secured pursuant to the terms of
that certain Pledge And Assignment Agreement in
the form and content as attached hereto as Exhibit "E"
("Pledge Agreement"). The Security Agreement and Pledge
Agreement shall grant to Secured Party a first lien
perfected security interest (subject to any prior liens
in favor of Secured Party) in the following property:
All accounts receivable of Debtor, of any kind or
nature, now existing or hereafter arising, whether
arising out of or pertaining in any manner to the
business operations of Debtor, and all proceeds,
renewals, replacements, additions or substitutions
thereof, including but not limited to all of
Debtor's right, title and interest in and to the
entire net settlement amounts of passenger revenue,
air freight, nontransportation, IATA, UATP, and
other receipts, and payments and revenues, which
are or shall be received for the account of and are
or shall become payable to Debtor by Airlines
Clearing House, Inc. including but not limited to
all amounts payable by Chase Manhattan Bank, N.A.
as agent for Airlines Clearing House, Inc.
("Clearing House Funds"). Any funds received by
Debtor from the Brazilian government every six
months shalt be excluded from the foregoing.
All of Debtor's air carrier aircraft engines,
propellers, appliances, spare parts, avionics,
accessories, instruments, rotables, equipment
(including ground support equipment),
subassemblies, tools, kits, consumables, components
and related items for installation in or use in
connection with Debtor's Beechcraft Model 1900 type
airplanes now owned or hereinafter acquired by
Debtor (collectively hereinafter collectively
"Spare Parts").
All of the foregoing is collectively referred to as
the "Collateral."
Debtor hereby covenants and warrants that it holds legal title
to all of the Collateral free and clear of any security
interests, liens or encumbrances of any nature whatsoever
(except prior liens and encumbrances in favor of Secured
Party), and that Debtor has full authority to encumber the
Collateral and grant the aforesaid security interest in favor
of Secured Party. Secured Party acknowledges that certain
off-sets occur automatically to the Clearing House Funds for
payments of transportation and non-transportation charges.
Debtor agrees to cause no portion of said Clearing House Funds
to be offset or used in any manner for non-transportation
charges, including current or future rental obligations owing
to United Airlines, except for those items
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as specifically set forth on Exhibit "F" attached hereto
("Allowed Offsets To Clearing House Funds").
This Agreement, the New Promissory Note, Pledge Agreement,
Security Agreement and other documents referenced in said
documents, are herein referred to collectively as the
"Governing Documents".
3. USE OF LOAN PROCEEDS. It is expressly agreed by the
parties hereto that a portion of the loan proceeds from
the New Promissory Note shall be retained by the Secured
Party and credited toward the payment and satisfaction of
certain current obligations under the Initial Loans and
Airplane Leases in the amounts and for the obligations
enumerated in attached Exhibit UG" along with payment of
attorneys' fees and costs of Secured Party not to exceed
$10,000.00 (in the event Debtor restructures it financial
obligations, without filing for bankruptcy protection,
Secured Party shall refund such attorneys' fees to
Debtor), with the balance of the loan proceeds to be
disbursed to Debtor and utilized for the obligations
specified on attached Exhibit "H". No portion of the loan
proceeds shall be utilized by Debtor for amounts due
secured or unsecured creditors of Debtor, except as
provided in "Exhibit G" or any payments owing to United
Airlines relating in any manner to rent or other
obligations, including but not limited to rental on the
Denver Airport space. Debtor agrees to obtain a
modification to all agreements and amounts past due and
owing to United Airlines, in form and content acceptable
in all respects to Secured Party ("United Airlines
Modification").
4. SPARE PARTS. ACCESSORIES. EQUIPMENT. Debtor will arrange
for Secured Party's representatives to inspect and
inventory the Spare Parts during the month of July, 1997,
at such time(s) as required or requested by Secured
Party. Debtor covenants and warrants it will promptly
furnish such information and execute and deliver such
further documents, including further UCC-1 financing
statements and FAA filings, and do all other such acts
and things as Secured Party may reasonably request in
order to perfect its security interest in all the Spare
Parts and to allow compilation of further detail for a
complete list of all such items and their location, and
to allow updates to the Security Agreement and
accompanying UCC-1 financing statements thereon, and
accompanying FAA filing(s) thereon.
5. REAFFIRMATION OF INDEBTEDNESS/LEASES. Debtor hereby
reaffirms the validity of each of the Initial Loans and
Airplane Leases, acknowledges and agrees that the current
balances owing under each of said Initial Loans and
Airplane Leases are as set forth on Exhibit "A" and
Exhibit "B" (except as to aircraft bearing serial numbers
UC 101 and 105) respectively, that each of the Initial
Loans and Airplane Leases is in full force and effect,
that no off-sets or
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defenses exist as to such amounts and future obligations
thereunder and remain the valid, effective and enforceable
obligations of Debtor. Secured Party hereby acknowledges
and agrees that amounts currently past due and owing under
the Initial Loans and Airplane Leases shall be paid (along
with all default charges, interest and related amounts
thereto) on July 29, 1997.
6. CONDITIONS PRECEDENT TO LOAN CLOSING. The following
conditions are precedent to closing of the New Promissory Note:
a. DIRECT PAYMENT FROM CLEARING HOUSE FUNDS. A written
agreement shall be obtained by Debtor with Airlines
Clearing House, Inc. and Chase Manhattan Bank,
N.A., as agent for Airlines Clearing House, Inc.,
in favor of Secured Party, wherein they shall agree
to cause all Clearing House Funds to be wired
directly to Secured Party on the date normal
disbursements are made thereunder, subject to the
amounts United Airlines shall be entitled to xxxx
to Airlines Clearing House, Inc. in accordance with
the United Airlines Modification.
b. UNITED AIRLINES MODIFICATION. The written United
Airlines Modification is obtained in form and
content acceptable to Secured Party, which shall
include a restructured payment schedule for
Debtor's obligations to United Airlines and confirm
the subordination from United Airlines as to all
Clearing House Funds, allowing Secured Party to
hold a senior first lien as to said items and
receive direct payment of the Clearing House Funds.
c. PAYMENT OF FEES AND COSTS. Debtor shall pay Secured
Party from the loan proceeds for all fees, costs
and expenses, including attorneys' fees, relating
in any manner to the initial documentation of the
New Promissory Note and related transaction, in an
amount not to exceed $10,000.00.
d. VALID LIENS. The Security Agreement and Pledge
Agreement shall have been fully executed,
appropriate UCC-1 financing statements and FAA
filings have been fully executed.
e. CODE SHARE AGREEMENT. Debtor shall obtain written
confirmation from United Airlines that the code
share agreement shall continue in effect through
August 31, 1997.
f. LEGAL OPINION. A legal opinion from Debtor's
counsel confirming the validity of this Agreement,
the New Promissory Note, the Pledge Agreement, the
Security Agreement and other documents related to this
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transaction, as well as the validity of the
lien interests being created thereby and authority
of the person signing all documents on behalf of
Debtor.
All of the foregoing agreements, documents and confirmations
shall be in such form and content as approved and accepted by
Secured Party, in its sole discretion.
7. CONDITIONS TO BE MET FOLLOWING LOAN CLOSING. Debtor shall
undertake and diligently prosecute in an expeditious and
timely manner, each of the following items following
closing of the New Promissory Note transaction:
a. CREDITOR RESTRUCTURE. Debtor shall obtain a
restructure of all its indebtedness on all aircraft
financing with third parties in order that all
financial obligations owing to said third party for
amounts currently past due and payable shall be
extended in full for a minimum of 120 days from the
date hereof, and shall cause amounts that become
due after the date hereof to include step down
payments in order that not more than 25% of the
first month's payment, 50% of the second month's
payment, and 75% of the third month's payment
accruing hereafter is paid in the first, second and
third months, respectively, from the date of this
Agreement (with the unpaid portion each month to be
extended until after 120 days from the date of this
Agreement. In addition, Debtor shall obtain
uncollateralized notes to all unsecured creditors
for trade payables and otherwise, for each
indebtedness owing to any single creditor in the
amount of $20,000 or more, to allow payoff over a
one year period at an interest rate not to exceed
12% per annum with equal monthly payments of
principal and interest.
b Debtor shall diligently proceed with, and prosecute
enrollment (at competitive market rates) of all
1900 Airliner engines in Xxxxx & Whitney's Fleet
Maintenance Program and complete such enrollment no
later than October 1, 1997. This provision does not
require Debtor to purchase retroactive enrollment
of the engines.
c Debtor agrees to actively investigate other cash
sources and restructure strategies and update
Secured Party on a weekly basis pursuant to a
written report showing said strategies, cash
sources and other activities of material impact on
the business operations of Debtor.
d Debtor shall issue warrants to Secured Party for
one million common shares of Debtor at a strike
price of 0.75 per share. The warrants shall be
exercisable for a period commencing one year from
the date of issuance and terminating ten (10) years
from such issuance, All
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documents pertaining to said warrants shall be
prepared by Debtor and presented to Secured Party
within two (2) weeks following close of the loan,
and Debtor agrees to negotiate in good faith as to
all requested changes in the language, terms, and
provisions of said warrant documents. Secured Party
shall have no obligation to pay any monies or consideration
for issuance of the warrants, other than the granting
of the New Promissory Note loan to Debtor pursuant
to this Agreement. Debtor hereby acknowledges
receipt of good and valuable consideration for
issuance of the warrants hereunder, and agrees that
the value of issuance of said warrants shall be
$2,000.00.
e. Prior to July 29, 1997, Secured Party and Debtor
shall meet to determine if it is in the best
interests of both parties to (i) extend the date
that certain of Debtor's obligations arising out of
this Agreement are due, for the purpose of allowing
Debtor additional time to restructure its financial
obligations and (ii) revise Secured Party's
security, pledge and other agreements for the
purpose of restructuring the Debtor's financial
obligations.
8. REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants to Secured Party that:
a. ORGANIZATION. ETC. Debtor is a corporation duly
organized, validly existing and in good standing
under the laws of the State of Iowa and is
qualified to do business in each jurisdiction where
such qualification is legally required, and is
entitled to own property in the place where such
property is now owned or leased and is empowered to
conduct business as now conducted. Debtor has not
carried on business under any name except United
Express, Midway Connection, Arizona Airways
Express, Great Lakes Airlines and that shown in
this Agreement within five (5) years of the date of
this Agreement.
b. AUTHORITY AND ENFORCEABILITY. Debtor has full power
to enter into and perform its obligations under
this Agreement, the New Promissory Note, Security
Agreement and Pledge Agreement and all other
documents contemplated hereby or executed pursuant
hereto. The execution and delivery of this
Agreement, the New Promissory Note, Security
Agreement, Pledge Agreement and all other documents
contemplated hereby or executed pursuant hereto and
the performance and observance of their terms,
conditions and obligations have been duly authorized
by all necessary action on the part of Debtor. This
Agreement, the New Promissory Note, Security Agreement,
Pledge Agreement and all other documents contemplated
hereby or executed
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pursuant hereto constitute, when executed and
delivered by Debtor to Secured Party, valid and
binding obligations of Debtor enforceable in
accordance with their terms.
c. NO CONFLICT. The execution and delivery of this
Agreement, and other documents contemplated hereby
and thereby, do not and will not conflict with, or
be in contravention of, any law, order, rule or
regulation applicable to Debtor or any agreement or
instrument to which Debtor is a party or by which
any of its property is bound or affected.
d. FINANCIAL CONDITION. Except for the absence of
notes to the monthly Financial Statement, all
Financial Statements furnished to Secured Party for
the purpose of establishing financial
responsibility of Debtor in connection with this
Agreement were prepared in accordance with
generally accepted accounting principles
consistently applied throughout the periods
involved, and fairly present the financial
conditions and results of operation of Debtor for
the period through March 31, 1997. Without limiting
the generality of the foregoing, Debtor does not
know of any material contingent liabilities that it
may have that were not reflected in the Financial
Statements. Since the date of the Financial
Statements there has been no:
i. material adverse change in Debtor's financial
conditions, assets, liabilities or business,
except as has been previously disclosed in
writing to Secured Party and except for the
voluntary suspension on May 16, 1997 of
operations and subsequent consent decree with
the FAA;
ii. damage, destruction or loss, whether covered
by insurance or not so covered, materially
adversely affecting Debtor's properties or
business;
iii. declaration, setting aside or payment of any
dividend or other distribution in respect to
Debtor's equity securities; nor
iv. loans to officers, directors, shareholders,
warrant holders or other equity participants
in Debtor.
e. LITIGATION. There is no action, suit, legal
proceeding or other proceeding pending or, to the
best knowledge of Debtor's officers, directors and
legal counsel, threatened against Debtor or
affecting the properties or assets of Debtor in any
court or before any arbitrator of
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any kind or before or by any governmental body, except
as set forth in Exhibit "I" hereto. Debtor is not in
default with respect to any order of any court,
arbitrator or governmental body, and is not subject
to or a party to any order of any court or
governmental body arising out of any action, suit
or proceeding under any statute or other law
respecting antitrust, monopoly, restraint of trade,
unfair competition or similar matters. For the
purposes of this section, the term "governmental
body". includes any federal, state, municipal or
other governmental department, commission, bars,
bureau, agency or instrumentality, domestic or
foreign, and the term "order" includes any other,
writ, injunction, decree, judgment, award,
determination, direction or demand.
f. TAXES. Debtor has filed all federal, state and
local tax returns that are required to be filed and
has paid all taxes shown on such returns and on all
assessments received by it to the extent that such
taxes and assessments have become due. All federal
and state income taxes and all other taxes and
assessments of any nature pertaining to Debtor's
business, assets and operations have been paid when
due, including but not limited to payroll,
withholding obligations, and personal property
taxes.
g. TITLE. Title to all Collateral is (or will be,
with respect to Collateral hereafter acquired)
vested solely in Debtor, free and clear of all
liens, encumbrances and other claims whatsoever,
except as otherwise approved in writing by Secured
Party. Debtor has not made any contract or
arrangement of any kind which could give rise to a
lien on the Collateral, except as provided herein,
and the granting of such lien is not contemplated
by Debtor.
h. NO DEFAULT. There is no Event of Default or breach
on the part of Debtor under this Agreement and no
event has occurred which with notice or the passage
of time or both would constitute an Event of
Default or breach hereunder.
i. INFORMATION CORRECT. Except for financial
projections, all information furnished in any
document required to be furnished by Debtor to
Secured Party under or in connection with this
Agreement is accurate and complete in all material
respects.
j. LOANS TO DIRECTORS OR OFFICERS. Debtor has no loans
or leases with any past or present director,
officer or employee, including their spouses
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and any entity in which any said person holds an
equity, officer or director relationship.
k. CLEARING HOUSE FUNDS OFFSETS. Debtor shall cause no
offsets to the Clearing House Funds different from
past operations, and shall allow only the
non-transportation charges to be offset as set
forth on Exhibit "F" attached hereto.
9. AFFIRMATIVE COVENANTS. Until payment or performance in
full of all obligations, Debtor shall:
a. PAY NEW PROMISSORY NOTE. Duly and punctually pay or
cause to be paid the principal and interest on the
New Promissory Note on the date, in the places and
in the manner set forth therein, and perform and
observe all other obligations of Debtor under the
Initial Loans, Airplane Leases, this Agreement, the
Pledge Agreement and the Security Agreement.
b. COMPLIANCE WITH LAWS: Comply promptly with all
laws, rules, regulations, resolutions, ordinances
and codes applicable to the business of Debtor and
keep in effect all permits or approvals obtained in
connection therewith.
c. ACCOUNTS AND RECORDS. Keep and maintain full and
accurate accounts and records of its operations in
accordance with generally accepted accounting
principles applicable to businesses of the type in
which Debtor is engaged and consistent with
principles heretofore applied by Debtor in
preparation of the Financial Statements, and permit
Secured Party by its duly authorized agents to
inspect such accounts and records at any reasonable
time.
d. INSPECTION. Permit Secured Party or its duly
authorized agents to inspect all of Debtor's
property wherever located, whether owned or leased,
at any reasonable time.
e. MAINTAIN EXISTENCE. Maintain and preserve the
corporate existence of Debtor in good standing
under the laws of the State of Iowa and maintain
its right to transact business in all other states
where its activities and ownership of assets is
such that qualification to transact business is
necessary under the laws of such states.
f. NOTIFICATIONS. Promptly notify Secured Party in
writing of the occurrence of:
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i. any Event of Default;
ii. any material adverse change in the business,
property, assets, operations or condition,
financial or otherwise, of Debtor; and
iii. the pendency or threat of any material
litigation, arbitration, or any material tax
deficiency or other proceeding before any
governmental body or official affecting
Debtor.
g. PAYMENT OF TAXES, ETC. Duly and punctually pay and
discharge all taxes, assessments and other charges
against Debtor prior to the date when they shall
become delinquent and all charges for labor,
materials and supplies that if unpaid might become
a lien against any part of the Collateral of
Debtor, unless contested in good faith and by
appropriate proceedings and provided that Debtor
shall have furnished Secured Party with adequate
security for the payment thereof, including without
limitation bonds or similar security.
h. FURTHER ASSURANCES. From time to time record,
register and file all such notices, statements and
other documents and take such other steps,
including but not limited to the amendment of the
Security Agreement and Pledge Agreement, as may be
necessary or advisable to render fully valid and
enforceable under all applicable laws the rights,
liens and priorities furnished under this Agreement
or intended to be so furnished, in each case in
such form and at such times as shall be
satisfactory to Secured Party, and pay all fees and
expenses incident to compliance with this
paragraph.
10 NEGATIVE COVENANTS OF DEBTOR. Until payment and
performance in full of all of the obligations, Debtor
shall not without the prior written consent of Secured
Party:
a. LIENS. Create, assume, incur or suffer to exist any
mortgage, pledge, security interest, lien or other
encumbrance upon the Collateral, without the
written consent of Secured Party.
b. ASSIGNMENT. Assign or attempt to assign any of its
rights or delegate any of its duties hereunder,
under the Security Agreement or the Pledge
Agreement or under the New Promissory Note.
c. CHANGE BUSINESS. Change materially the nature of
the business conducted by Debtor, engage to any
material extent in a kind of business materially
different from that presently conducted or change
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Debtors fiscal year. Debtor shall not enter into
any new business arrangement that expands routes,
or purchase or lease any new aircraft, prior to
notifying Secured Party of such arrangement.
d. LOANS. Make loans or advances from Debtor to its
officers or directors or persons or entities in any
manner related to such officers and directors.
e. EXTENDED LIABILITY. Assume, create, guarantee,
endorse, contingently agree to purchase or
otherwise become liable upon the obligation of any
person, firm or corporation, except by endorsement
of negotiable instruments for deposit or collection
except for business in the ordinary course in
accordance with prior operations, for an amount in
excess of $100,000.00.
11 EVENTS OF DEFAULT AND REMEDIES.
a. EVENTS OF DEFAULT. The occurrence of any one or
more of the following events or existence of one or
more of the following conditions shall constitute
an Event of Default under this Agreement:
i. Debtor's failure to make any timely payment of
either principal, interest, late payment
charges or any other amount required to be
paid hereunder, or Debtor's failure to pay any
amount required under the New Note, Security
Agreement, Pledge Agreement, Initial Loans
and/or Airplane Leases. Secured Party hereby
acknowledges and agrees that amounts currently
due and owing under the Initial Loans and
Airplane Leases, (other than the obligations
being paid out of the loan proceeds hereunder)
shall be deemed extended (along with all
default charges interest and related amounts
thereto), until July 29, 1997;
ii. Debtor's failure to perform any non-monetary
promise, agreement, obligation, warranty or
covenant made by it herein or in the Pledge
Agreement or Security Agreement, if such
default is not cured by Debtor within five (5)
calendar days of receipt of Secured Party's
notice specifying such default;
iii. five (5) calender days after Secured Party
provides Debtor with written notice of any
material misrepresentation made by Debtor to
Secured Party in connection with the Pledge
Agreement, Security Agreement or this
Agreement, provided that Secured Party is
materially prejudiced thereby;
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iv. entry of a money judgment against Debtor, if
such judgment is nonappealable and remains
undischarged or unstayed for a period in
excess of sixty (60) days;
v. dissolution, termination of existence,
insolvency, business failure, inability to pay
debts that arise or accrue after the date of
this Agreement as they mature, assignment for
the benefit of creditors, or the commencement,
with respect to Debtor of any proceedings
(either voluntary or involuntary) under any
bankruptcy or insolvency laws;
vi. appointment of a receiver of any material part
or all of Debtor's assets or the commencement
of any involuntary proceedings against Debtor
under any bankruptcy or insolvency laws, if
such appointment or proceeding continues for a
period of more than sixty (60) days;
vii. Debtor entering into any transaction, without
the prior written consent of Secured Party,
which consent will not be unreasonably
withheld, whereby all or substantially all of
Debtor's undertakings, property and assets
would become the property of any other
company, whether by way of reconstruction,
reorganization, consolidation, amalgamation,
merger, transfer, sale or otherwise;
viii. default in the payment by Debtor of any
indebtedness for borrowed money owed to
any creditor other than Secured Party
resulting in the acceleration of a
material amount of indebtedness greater
than U.S. $5,000,000.00 that would
reasonably justify Debtor in deeming
itself insecure;
ix. Debtor (or its Permitted Lessee) ceasing to be
licensed pursuant to U.S. or other applicable
law to operate a commercial air service; or
x. any representation or warranty made under this
Agreement or otherwise made in writing to
Secured Party, or in connection with the
making of the loan or any certificate,
statement or report made pursuant to this
Agreement by Debtor shall prove at any time to
have been false or misleading in any material
respect when made; however Debtor shall have
five (5) business days following receipt of
notice from Secured Party advising Debtor of a
violation under this paragraph, to cure
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such violation. Furthermore, Debtor may commence
or maintain litigation in good faith
protecting its property, without violating
this provision.
xi. Debtor shall fail to perform or observe any
covenant contained in this Agreement for five
(5) business days after written notice from
Secured Party, or five (5) business days after
Debtor is aware of such failure, if sooner.
b. REMEDIES.
i. Upon the occurrence of any Event of Default
and thereafter, the loan, with all accrued
interest and other amounts payable hereunder,
together with all other obligations of Debtor
to Secured Party, including but not limited to
the obligations under the Initial Loans and
Airplane Leases, shall, at the option of
Secured Party, become immediately due and
payable without presentment, demand, protest
or other notice of any kind, all of which are
expressly waived by Debtor. Secured Party may
proceed with every remedy available at law or
equity or provided for herein or in any
document executed in connection herewith or in
connection with the Initial Loans and the
Airplane Leases, and all expenses incurred by
Secured Party in connection with any remedy
shall be deemed indebtedness of Debtor to
Secured Party and a part of the obligations
hereunder. Secured Party may apply the
proceeds from any Collateral or any other
source against any of the indebtedness from
Debtor to Secured Party as and in any order
Secured Party sees fit.
ii. Without limiting the foregoing, upon the
occurrence of an Event of Default hereunder
Secured Party shall have all the rights
provided in the Governing Documents, as well
as the right to take possession of the
Collateral and take any action it deems
advisable or necessary to protect the
Collateral. Debtor hereby irrevocably
constitutes and appoints Secured Party its
attorney-in-fact with full power and authority
upon the occurrence of an Event of Default to:
(a) take possession of any property covered
hereby;
(b) employ such employees, contractors,
subcontractors, agents and other persons
that Secured Party deems necessary or
desirable to protect the Collateral;
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(c) pay, settle or compromise all existing
invoices, charges and claims relating to
the Collateral for protection of its
interest; and
(d) prosecute and defend all actions and
proceedings in connection with Debtor's
business and to apply the proceeds of any
judgment received by Debtor in any such
action against any of the obligations as
it sees fit.
No delay or failure of Secured Party in the
exercise of any right or remedy provided for
hereunder shall be deemed a waiver of the right by
Secured Party, and no exercise or partial exercise
or waiver of any right or remedy shall be deemed a
waiver of any further exercise of such right or
remedy or of any other right or remedy that Secured
Party may have. The enforcement of any rights of
Secured Party as to any security for the loan shall
not affect the rights of Secured Party to enforce
payment of the New Promissory Note and to recover
judgment for any portion thereof remaining unpaid.
The rights and remedies herein expressed are
cumulative and not exclusive of any right or remedy
that Secured Party shall otherwise have. Further,
nothing contained herein shall obligate Secured
Party to undertake any action unless required by
law.
12 RIGHTS AND DUTIES OF SECURED PARTY.
a. RELATIONSHIP. Nothing herein shall be construed as
establishing a relationship between Secured Party
and any other party except the secured
party-borrower relationship between Secured Party
and Debtor.
b. RIGHT TO ASSIGN. Secured Party may assign,
negotiate, pledge or otherwise hypothecate this
Agreement, the New Promissory Note, Pledge
Agreement and Security Agreement or any of its
rights and security hereunder or thereunder. In
case of such assignment, Debtor will accord full
recognition thereto and hereby agrees that all
rights and remedies of Secured Party in connection
with the interest so assigned shall be enforceable
against Debtor by the assignee thereof.
13 NOTICES. Any notice pertaining to this Agreement
shall be deemed sufficiently given if personally
delivered or sent by registered or certified mail,
return receipt requested, to the party to whom said
notice is to be given, or sent via telecopy with
oral confirmation from a person at the receiving
office that the transmission has been received,
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or sent overnight carrier. Notices sent by registered
or certified mail shall be deemed given on the
third day after the date of postmark. Notices hand
delivered shall be deemed given on the date
delivered. Notices forwarded by telecopy shall be
deemed given upon the foregoing oral confirmation
that the transmission has been received. Notices
sent overnight carrier shall be deemed delivered
the day after being forwarded.
a. If to Debtor:
Great Lakes Aviation, Ltd.
Attention: President
0000 000xx Xxxxxx
Xxxxxxx, Xxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
b. If to Secured Party:
Raytheon Aircraft Credit Corporation
Attention: President
0000 X. Xxxxxxx
Xxxxxxx, Xxxxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
The designated addresses of both parties must be located
within the United States of America and allow for Federal
Express delivery and served by telecopy transmission
service twenty-four (24) hours daily. Any party may
change its address for the giving of notice hereunder by
notice so given.
12 MISCELLANEOUS.
a. AMENDMENTS. No provision or term of this Agreement may be
amended, modified, revoked, supplemented, waived or
otherwise changed except by a written instrument duly
executed by Debtor and Secured Party and designated as an
amendment, supplement or waiver.
b. COUNTING OF DAYS. If any time period ends on other than
a business day, the period shall be deemed to end on the
next succeeding business day.
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c. COMPUTATIONS. All computations of interest and fees made
or called for hereunder shall be made on the basis of a
year of 360 days and actual day months.
d. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which
shall be deemed an original.
e. HEADINGS. The paragraph headings herein are for
convenience only and shall not affect the construction
hereof.
f. CONFLICT. If the terms of the Pledge Agreement or
Security Agreement shall conflict with this Agreement,
this Agreement shall govern to the extent of the
conflict.
g. USE OF TERMS. As used herein, words in any gender shall
be deemed to include the other gender and the singular
shall be deemed to include the plural, and vice versa.
h. SEVERABILITY. If any provision in this Agreement shall be
held invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability
of the remaining provisions of this Agreement shall not
be impaired thereby, nor shall the validity, legality or
enforceability of any such defective provisions be in any
way affected or impaired in any other jurisdictions.
i. GOVERNING LAW AND FORUM CHOICE. This Agreement was made
and entered into in the State of Kansas and the law
governing this transaction shall be that of the State of
Kansas as it may from time to time exist. The law of the
State of Kansas shall apply to any and all matters
arising from or related to this Agreement and should an
"Event of Default" occur, such as an action to obtain
possession of and foreclose upon the Collateral, and all
other remedies which may be available including seeking
a deficiency judgment against Debtor. The parties agree
that any legal proceeding based upon the provisions of
this Agreement shall be brought exclusively in either the
United States District Court of the District of Kansas at
Wichita, Kansas, or in the Eighteenth Judicial District
Court of Sedgwick County, Kansas, to the exclusion of all
other courts and tribunals. Notwithstanding the above, in
the event of an "Event of Default", Secured Party (at its
sole option) may institute a legal proceeding in any
jurisdiction as may be appropriate in order for Secured
Party to obtain possession of and foreclose upon the
Collateral. The parties hereby consent and agree to be
subject to the jurisdiction of the aforesaid courts in
such proceedings.
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j. EXHIBITS. Exhibits "A", "B", "C", "D", "E", "F", "G",
"H", and "I" are attached hereto and incorporated herein.
k. ENTIRE AGREEMENT. The Governing Documents constitute the
entire agreement between Secured Party and Debtor
concerning the subject matter of this Agreement, and
supersede any prior written or oral agreements between
Secured Party and Debtor concerning the subject matter
hereof.
EXECUTED as of the day and year first set forth above.
GREAT LAKES AVIATION, LTD., an Iowa
corporation
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
President
Date: July 11, 1997
----------------------------------
RAYTHEON AIRCRAFT CREDIT CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
President
Date: July 11, 1997
----------------------------------
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