EXHIBIT 10.10
RACC
[AMENDED AND RESTATED]
SECURITY AGREEMENT
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RAYTHEON AIRCRAFT CREDIT CORPORATION
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[Great Lakes Aviation, Ltd. (the "Debtor") and Raytheon Aircraft Credit
Corporation ("RACC") are parties to a Promissory Note (the "Existing Promissory
Note") and a Security Agreement (the "Existing Security Agreement"), each dated
__________, which provide for the secured financing of the Aircraft as defined
below. Pursuant to a Restructuring Agreement entered into by and between RACC
and Debtor as of the date hereof (the "Restructuring Agreement"), Debtor and
RACC have agreed to amend and restate the Existing Promissory Note to provide
for, among other things, the restructuring of the financing of the Aircraft, and
as a result, have entered into an amended and restated promissory note as of the
date hereof (as originally executed and if amended, varied or supplemented from
time to time, as so amended, the "Promissory Note"), upon the terms and subject
to the conditions of which RACC has agreed to refinance the Aircraft. It is a
condition precedent to the effectiveness of the Restructuring Agreement and the
restructuring of the Aircraft financing under the Existing Promissory Note that,
in order to further secure the payment and performance in full of all of the
obligations of the Debtor to RACC under or in respect of the Restructuring
Agreement, the Promissory Note and the other Transaction Documents as defined in
the Restructuring Agreement that the Debtor and RACC amend and restate the
Existing Security Agreement in its entirety pursuant to this Agreement and the
Existing Security Agreement is hereby so amended and restated in its entirety as
follows:] [USE THIS LANGUAGE ONLY IF SECURITY AGREEMENT IS BEING AMENDED AND
RESTATED]
1. Grant of Security Interest. To secure the payment and performance of all of
the obligations due Raytheon Aircraft Credit Corporation (hereinafter referred
to as "RACC") by Great Lakes Aviation, Ltd. (hereinafter referred to as
"Debtor") under [that certain Promissory Note (hereinafter referred to as the
"Promissory Note"), dated of even date herewith] [the Promissory Note], and any
renewals, extensions or changes in form thereof, and of any and all other
indebtedness of Debtor to RACC, either direct or indirect, absolute or
contingent, whether now existing or hereafter arising, including all such
obligations or indebtedness that would become due but for the operation of the
automatic stay pursuant to Section 362(a) of the Federal Bankruptcy Code and the
operation of Sections 502(b) and 506(b) of the Federal Bankruptcy Code and
including, without limitation, post-petition interest, and including, without
limitation, all "Obligations" as defined in the Restructuring Agreement
(collectively, the "Obligations"), Debtor hereby grants to RACC a security
interest in the following property and in all additions and accessions thereto
and substitutions and replacements thereof, all unearned insurance premiums and
insurance proceeds, and the proceeds of all of the foregoing (all of said
property is hereinafter collectively referred to as the "Collateral"):
A. Raytheon Aircraft Company Aircraft Model [Aircraft], Serial Number
[Serial], Registration Number N [Tail_No] (the "Aircraft"), together
with all other property used in the operation of the Aircraft or
reflecting use or maintenance of the Aircraft, including but not
limited to all engines, propellers, instruments, avionics, equipment
and accessories attached to, connected with, located in or removed from
the Aircraft and all logs, manuals and maintenance records.
Aircraft Engines: Make: [Engine_Make]; Model: [Engine_Model]; Shaft
Horsepower: over 750; Serial Number (L): [Left_Serial]; Serial Number
(R): [Right_Serial] (each of which is capable of producing 750 or
more rated takeoff horsepower), together with any replacement engines.
Aircraft Propellers: Hub Make: [Hub_Make]; Hub Model: [Hub_Model]; Hub
Serial Number (L): [Hub_Left_Serial]; Hub Serial Number (R):
[Hub_Right_Serial] (each of which is capable of producing 750 or more
rated takeoff horsepower), together with any replacement propellers.
B. All contracts and agreements of every kind (oral and written), contract
rights, rights to receive payments, goods or services of every kind,
general intangibles, chattel paper and accounts, whether now existing
or owned or hereafter arising or acquired, governing, relating to or
arising out of Debtor's right, title or interest in the Aircraft.
C. All proceeds of the foregoing, including, without limitation, all
contract rights, general intangibles, accounts, cash, and goods, all
payments under any insurance covering the Aircraft and any of its
engines, propellers, equipment, accessories and accessions.
The security interest granted herein is a purchase money security interest under
the Kansas Uniform Commercial Code.
2. Debtor's Warranty of Title and Citizenship. Except for the security interest
granted under this Security Agreement, Debtor warrants that Debtor is (or, to
the extent that the Collateral is to be acquired hereafter, will be) and shall
remain at all times the owner of the Collateral free from any prior security
interest, lien or encumbrance. WITHOUT IN ANY WAY LIMITING THE FOREGOING,
CUSTOMER SHALL NOT SELL, TRANSFER, ASSIGN, SUBLEASE, CONVEY, PLEDGE, MORTGAGE OR
OTHERWISE ENCUMBER ITS OR RACC'S INTEREST IN AND TO THE AIRCRAFT, AND ANY SUCH
SALE, TRANSFER, ASSIGNMENT, SUBLEASE, CONVEYANCE, PLEDGE, MORTGAGE OR
ENCUMBRANCE, WHETHER BY OPERATION OF LAW OR OTHERWISE, WITHOUT THE PRIOR WRITTEN
CONSENT OF RACC SHALL BE NULL AND VOID.
Debtor will defend the Collateral against all claims and demands of all persons
claiming interest therein. Debtor further warrants that it is and shall remain
at all times a citizen of the United States as defined by 49 U.S.C. Section
40102.
3. Debtor Will Execute and Deliver Documents. Debtor will, at RACC's request,
furnish RACC such information and execute and deliver to RACC such documents and
do all such acts and things as RACC may reasonably request as are necessary or
appropriate to assist RACC in establishing and maintaining a valid security
interest in the Collateral and to assure that the Collateral is properly titled
and registered and the security interest perfected to RACC's reasonable
satisfaction. Debtor will pay the cost of filing all appropriate documents in
all public offices where RACC deems such filings necessary or desirable.
4. Operation, Maintenance and Repair. Debtor shall operate, maintain and repair
the Collateral and retain actual control and possession thereof in accordance
with the following provisions:
4a. Debtor shall have complete use of the Collateral until default, and
Debtor shall use, operate, maintain and store the Collateral, or any part
thereof, properly, carefully and in compliance with all applicable statutes,
ordinances, regulations, policies of insurance and manufacturer's recommendation
and operating and maintenance manuals.
4b. Debtor agrees that the Collateral will be operated only by duly
certificated and qualified pilots and shall maintain U.S. registry and shall be
based within the geographical boundaries of the United States.
4c. Debtor shall be responsible for and pay for all expenses of owning and
operating the Collateral, including but not limited to storage, fuel,
lubricants, service, inspections, overhauls, replacements, maintenance and
repairs, all in compliance with the manufacturer's operating and maintenance
manuals, and in compliance with operating and maintenance manuals approved by
the FAA, and with FAA rules and regulations. Debtor shall properly maintain all
records pertaining to the maintenance and operation of the Collateral.
4d. Debtor will use reasonable care to prevent the Aircraft from being
damaged or injured and will promptly (but in no event later than 60 days after
discovery) replace any part or component of the Aircraft that may be damaged,
worn out, lost, destroyed, confiscated or otherwise rendered unsatisfactory or
unavailable for use.
5. Insurance. Debtor shall, at all times and at its sole expense, obtain and
carry the types and amounts of insurance coverage specified below:
(a) "All Risk" type hull insurance on the Aircraft in the kind and
form satisfactory to RACC, including Comprehensive Ground and
Flight Coverage and Fire and Extended Risk Coverage, both
In-Flight and Not In-Flight, in amounts not less than the
unpaid principal balance owed under the Promissory Note plus
interest. All policies of insurance carried in accordance with
this paragraph (a) shall name RACC as a Loss Payee and provide
that the insurance proceeds from any loss involving the
Aircraft shall be paid as follows (1) any loss not exceeding
U.S. $100,000.00 shall be payable to Debtors with notice to
RACC; (2) any loss exceeding $100,000.00 shall be jointly
payable to RACC and Debtor, and (3) any total loss of the
Aircraft shall be payable solely to RACC up to the amount of
the unpaid principal sum and accrued interest and other
charges owed by Debtor under the Promissory Note. The policies
shall include coverage against the perils of strikes, riots,
civil commotions or labor disturbances, and any act of
vandalism outside of the United States. The policies shall
also specify that (i) any losses shall be adjusted by the
insurer with the Debtor, with notice thereof being provided to
RACC and the Aircraft manufacturer, and (ii) RACC and the
Aircraft manufacturer shall have the right to fully inspect
the Aircraft prior to, during and after repair of any loss
involving the Aircraft.
(b) Legal liability insurance, in the kind and form satisfactory
to RACC, with limits no less than $50,000,000.00 of combined
single limit per occurrence, for bodily injury and property
damage (including passengers). All policies of insurance
carried in accordance with this paragraph (b) shall name
Debtor as the primary insured and RACC as an additional
insured thereunder.
All policies maintained by Debtor in accordance with subsections (a) and (b)
above shall also comply with the following requirements:
(1) be issued by insurers of recognized responsibility which are
satisfactory to RACC;
(2) provide that if such insurance is canceled for any reason
whatsoever, or any substantial change is made in policy terms,
conditions or coverage, or the policy is allowed to lapse for
nonpayment of premium, such cancellation, change or lapse
shall not be effective as to RACC until thirty (30) days after
RACC's receipt of written
notice from Debtor's insurers of the cancellation, change or
lapse in policy terms, conditions or coverage;
(3) provide that in respect of the interest of RACC in such
policies, the insurance shall not be invalidated by any action
or inaction of Debtor and shall insure RACC regardless of any
breach or violation by Debtor of any warranty, declaration or
condition contained in such policies;
(4) be primary without right of contribution from any other
insurance which is carried by RACC with respect to its
interest in the Aircraft;
(5) waive any right of subrogation of the insurer against RACC;
provided, however, that the right of subrogation shall not be
waived with respect to any acts or omissions on the part of
RACC or the manufacturer of the Aircraft (or any of its
subsidiaries) related to products sold, handled, distributed,
repaired, serviced or maintained by said parties;
(6) provide that the geographic limits, if any, contained in such
policy shall include at a minimum all territories over which
Debtor will operate the Aircraft; and
(7) provide that RACC shall have no obligation or liability for
premiums, commissions, assessments or calls in connection with
such insurance policies.
Debtors shall furnish to RACC evidence of the aforesaid insurance coverage in
certificate form. Evidence of renewal of each policy shall thereafter be
furnished to RACC in certificate form. Debtor covenants that it will not do any
act or voluntarily suffer or permit any act to be done whereby any insurance
required hereunder shall or may be suspended, impaired or defeated. Upon the
occurrence of an Event of Default, as defined in the Promissory Note, RACC may,
at its option, apply insurance proceeds, in whole or in part, to (i) repair or
replace the Aircraft or any part thereof or (ii) satisfy any or all of the
Obligations. Any surplus proceeds are to be paid to Debtor.
6. Power of Attorney. Debtor hereby appoints RACC and its assigns or their
designated agent as Debtor's attorney-in-fact, irrevocably, with full power of
substitution, to collect all payments with respect to the Collateral, to receive
all moneys (including, but not limited to, refunds or proceeds of insurance)
that may become due under any policy insuring the Collateral and all awards
payable in connection with the condemnation, requisition or seizure of the
Collateral, or any part thereof, to execute proofs of claim, to endorse drafts,
checks and other instruments for the payment of money payable to Debtor in
payment of such insurance moneys and to do all other acts, things, take any
actions (including the filing of financing statements or other documents,
including, without limitation, those documents referred to in Section 3 hereof)
or institute any proceedings that RACC may deem to be necessary or appropriate
at any time to protect and preserve the interest of RACC in the Collateral, or
in this Security Agreement or the Promissory Note.
7. Debtor's Possession. Until default, Debtor may have possession of the
Collateral and use it in any lawful manner not inconsistent with this Security
Agreement. RACC may examine and inspect the Collateral, wherever located, at all
reasonable times. At its option, but without assuming any obligation to do so,
RACC may discharge taxes, liens or security interests, or other encumbrances
levied or asserted against the Collateral, may place and pay for insurance
thereon, may order and pay for the repair, maintenance and preservation thereof,
and may pay any necessary filing or recording fees. Amounts paid by RACC under
the preceding sentence shall be added to Debtor's unpaid balance under the
Promissory Note, shall be secured by the Collateral and shall be payable upon
demand, together with interest at the rate computed as provided in Paragraph 2
of the Promissory Note until paid in full. Debtor shall at all times keep the
Collateral, and any proceeds therefrom, separate and
distinct from other property of the Debtor and shall keep accurate and complete
records of the Collateral and any such proceeds.
8. Indemnity. Debtor assumes liability for, and hereby agrees to indemnify,
protect, save, defend and keep harmless RACC, its agents, employees, officers,
directors, shareholders, subsidiaries, affiliates, successors and assigns (for
purposes of this Section 8, collectively "RACC"), on a net after-tax basis, from
and against any and all liabilities, obligations, losses, damages, penalties,
claims (including, without limitation, claims involving or alleging product
liability or strict or absolute liability in tort), actions, suits, demands,
costs, expenses and disbursements (including, without limitation, legal fees and
expenses) of any kind and nature whatsoever ("Claims") which may be imposed on,
incurred by or asserted against RACC, whether or not RACC shall also be
indemnified as to any such Claim by any other Person, in any way relating to or
arising hereunder, any other Transaction Document or any other documents
contemplated hereby or thereby, or the performance or enforcement of any of the
terms hereof or thereof, or in any way relating to or arising out of any
Transaction Document or the performance or enforcement of any of the terms
hereof or thereof, or in any way relating to or arising out of the assertion or
enforcement of any manufacturer's, vendor's or dealer's warranties on the
Aircraft or any part thereof (including, without limitation, any warranty of
RAC), or in any way relating to or arising out of the manufacture, inspection,
construction, purchase, pooling, interchange, acceptance, rejection, ownership,
titling or re-titling, delivery, lease, sublease, possession, use, operation,
maintenance, management, condition, registration or re-registration, sale,
return, removal, repossession, storage or other disposition of the Aircraft or
part thereof or any accident in connection therewith (including, without
limitation, latent and other defects, whether or not discoverable, and any Claim
for patent, trademark or copyright infringement).
Notwithstanding the foregoing, Debtor shall not be required to indemnify RACC
for (a) any Claim caused solely and directly by the gross negligence or willful
misconduct of the RACC or (b) any Claim in respect of the Aircraft arising from
acts or events which occur after any and all other obligations of any kind
whatsoever of Debtor hereunder and under the other Transaction Documents have
been fully paid and/or performed, as the case may be, unless any such Claims
were caused by Debtor (or any stockholder, director, officer, employee,
successor, assignee, agent or servant of Debtor) or resulted or arose, directly
or indirectly, from any acts, events or omissions of any kind whatsoever during
the term hereof.
The liability of Debtor to make indemnification payments shall, notwithstanding
any expiration or other termination (whether voluntary, as the result of an
Event of Default, or otherwise) hereof or any of the other Transaction
Documents, continue to exist until such indemnity payments are irrevocably made
in full by Debtor and received by RACC. If any Claim is made against Debtor or
RACC, the party receiving notice of such Claim shall promptly notify the other,
but the failure of the party receiving notice to so notify the other shall not
relieve Debtor of any obligation hereunder.
9. Event of Default. Upon the occurrence of an Event of Default, as defined in
the Promissory Note, (a) RACC shall have the right to exercise all remedies
allowed by law, including, without limitation, those available to a secured
party under the Uniform Commercial Code and (b) RACC may require Debtor to
assemble the Collateral and make it available to RACC at a place to be
designated by RACC which is reasonably convenient to both parties. The
requirements of the Kansas Uniform Commercial Code for reasonable notification
to Debtor of the time and place of any proposed public sale of the Collateral or
of the time after which any private sale or other intended disposition is to be
made, shall be met if such notice is mailed, postage prepaid, to Debtor's
address, as shown herein, at least twenty (20) days before the time of the sale
or disposition. After deduction of all reasonable expenses of retaking, holding,
preparing for sale or lease, selling, leasing and the like, together with
reasonable costs of collection, attorneys' fees and legal expenses of RACC, and
after the payment of the principal and interest due under the Promissory Note,
the balance, if any, of the proceeds of the sale may be
applied to the payment of any or all other Obligations, and to the satisfaction
of indebtedness secured by any subordinate security interest in the Collateral
of which RACC has received notice prior to distribution of the proceeds. Debtor
shall be liable for any deficiency after application of such proceeds, to the
extent permitted by law. After the occurrence of an Event of Default, Debtor
agrees that, RACC may fly or otherwise move the Aircraft for demonstration and
other purposes reasonably related to a proposed public or private sale or other
disposition of the Collateral. Notwithstanding the foregoing, RACC may at its
option and in its sole discretion keep idle, lease, or use or operate the
Aircraft without any liability whatsoever. To the extent permitted by applicable
law, Debtor hereby waives any rights now or hereafter conferred by statute or
otherwise which may require RACC to sell, lease or otherwise use the Aircraft in
mitigation of RACC's damages as set forth in this Section or otherwise provided
herein or which may otherwise limit or modify any of RACC's rights or remedies
under this Section or otherwise provided herein.
10. Waiver of Default. No waiver by RACC of any default shall be effective
unless in writing, nor operate as a waiver of any other default or of the same
default in the future.
11. Restriction on Transfer or Liens. Debtor will not, without the prior written
consent of RACC, sell or otherwise transfer or encumber the Collateral, or any
interest therein, or offer to do so or permanently remove or attempt to
permanently remove the Collateral from the United States. Debtor will keep the
Collateral free from any adverse security interest, lien or encumbrance and will
not permit the Collateral to be attached or replevied.
12. Taxes. Debtor will promptly pay, or cause to be paid, when due, all taxes
and assessments upon the Collateral or upon its use or operation or upon this
Security Agreement and the obligations evidenced by the Promissory Note.
13. Change of Address. Debtor will notify RACC in writing of any change of
address from that shown in this Security Agreement within ten (10) days of such
change.
14. GOVERNING LAW AND CHOICE OF FORUM. THIS SECURITY 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 PARTIES
AGREE THAT ANY LEGAL PROCEEDING BASED UPON THE PROVISIONS OF THIS SECURITY
AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN EITHER THE UNITED STATES DISTRICT
COURT FOR 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 AN "EVENT OF
DEFAULT" SHOULD OCCUR, RACC (AT ITS SOLE OPTION) MAY INSTITUTE A LEGAL
PROCEEDING IN ANY JURISDICTION AS MAY BE APPROPRIATE IN ORDER FOR RACC TO OBTAIN
POSSESSION OF THE COLLATERAL. THE PARTIES HEREBY CONSENT AND AGREE TO BE SUBJECT
TO THE JURISDICTION OF THE AFORESAID COURTS IN SUCH PROCEEDINGS.
15. WAIVER OF RIGHT TO JURY TRIAL. ALL PARTIES TO THIS SECURITY AGREEMENT HEREBY
VOLUNTARILY, KNOWINGLY AND IRREVOCABLY WAIVE ANY CONSTITUTIONAL OR OTHER RIGHT
EACH MAY HAVE TO A TRIAL BY JURY IN THE EVENT OF LITIGATION CONCERNING THIS
SECURITY AGREEMENT.
16. Damages. To the extent that any party hereto is subject to liability for any
breach under this Security Agreement, the liability of such party shall be
limited to the actual and direct monetary damages caused by such breach. In no
event shall any party hereto be liable for indirect, special,
consequential, multiple or punitive damages, or any damage deemed to be of an
indirect or consequential nature arising out of or related to its performance
hereunder, whether based upon breach of contract, warranty, negligence and
whether grounded in tort, contract, civil law or other theories of liability,
including strict liability. To the extent that this limitation of liability
conflicts with any other provision(s) in this Security Agreement, said
provision(s) shall be regarded as amended to whatever extent required to make
such provision(s) consistent with this Section 16.
17. Enforceability. The unenforceability of any provision hereof shall not
affect the validity of any other provision hereof.
18. Binding Agreement. All obligations of Debtor hereunder shall bind the heirs,
agents and attorneys-in-fact, successors and assigns of Debtor. If there be more
than one Debtor, their liabilities shall be joint and several. All rights of
RACC hereunder shall inure to the benefit of its successors and assigns.
19. Assignment. RACC may transfer or assign all or any part of its interest in
this Security Agreement without the consent of Debtor or any other party. Debtor
shall not sell, assign, transfer, encumber or convey any of its interests in the
Collateral or in this Security Agreement without the prior written consent of
RACC.
20. Entire Agreement. This Security Agreement and the Promissory Note constitute
the entire agreement between and among the parties with respect to the subject
matter hereof. There are no verbal understandings, agreements, representations
or warranties not expressly set forth herein. Neither this Security Agreement
nor the Promissory Note shall be changed orally, but only by writing signed by
the parties hereto.
21. Miscellaneous. Time is of the essence hereof. RACC's failure to insist on
performance of any of the terms and conditions contained in this Security
Agreement or the Promissory Note or to exercise any right or benefit will not
constitute a waiver unless the waiver is in writing, executed by an authorized
representative of RACC. RACC's waiver of any default hereunder or thereunder
will not thereafter waive those terms, conditions, rights or privileges, whether
of the same or a similar type.
DEBTOR HEREIN ACKNOWLEDGES THAT DEBTOR HAS READ AND FULLY UNDERSTANDS ALL OF THE
TERMS AND CONDITIONS OF THIS SECURITY AGREEMENT. BY EXECUTION HEREOF, THE
UNDERSIGNED HEREBY CERTIFIES THAT HE/SHE IS DULY AUTHORIZED TO EXECUTE THIS
SECURITY AGREEMENT IN THE CAPACITY STATED BELOW.
Executed as of this 31st day of December, 2002, at Wichita, Kansas.
Debtor: Great Lakes Aviation, Ltd.
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(signature) (title)
Address: 0000 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
RAYTHEON AIRCRAFT CREDIT CORPORATION
By:
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"RACC"
