INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (this "Agreement") is entered into this 31
day of December, 1999, by and among COAST BUSINESS CREDIT, a division of
Southern Pacific Bank ("Coast"), RAYTHEON AIRCRAFT CREDIT CORPORATION, a
Kansas corporation ("Raytheon"), and GREAT LAKES AVIATION, LTD., an Iowa
corporation ("Borrower"), in light of the following:
R E C I T A L S
WHEREAS, Coast has agreed to make certain financial accommodations to
Borrower pursuant to the terms of that certain Loan and Security Agreement,
of even date herewith, by and between Borrower and Coast (the "Coast Loan
Agreement").
WHEREAS, pursuant to the terms of the Coast Loan Instruments, repayment
of the Coast Obligations are to be secured, inter alia, by a first priority
lien and security interest in all present and future Coast Primary Collateral
and a second priority lien and security interest in all present and future
Coast Inventory Collateral, together with the proceeds of all of the
foregoing.
WHEREAS, Raytheon and Borrower have previously entered into that certain
Agreement Pertaining to Loans and Leases (Great Lakes), dated as of July 11,
1997 (the "Raytheon Loan Agreement"), pursuant to which Raytheon agreed to
make certain financial accommodations to Borrower.
WHEREAS, pursuant to the terms of the Raytheon Loan Instruments,
repayment of the Raytheon Obligations are secured, inter alia, by a first
priority lien and security interest in all present and future Raytheon
Primary Collateral, and all proceeds of all of the foregoing.
WHEREAS, pursuant to the terms of the Raytheon Loan Instruments, the
Raytheon Obligations are also secured by a first priority lien and security
interest in Borrower's Accounts and Accounts Proceeds, with said lien and
security interest to be immediately terminated pursuant to the terms of this
Agreement in favor of Coast.
WHEREAS, Borrower and Raytheon have agreed that repayment of the Raytheon
Obligations will be accomplished through Borrower's payment of Five Million
Dollars ($5,000,000) in cash (the "Paydown"), with the source of such Paydown
funds being the financial accommodations provided by Coast to Borrower under
the Coast Loan Agreement. In addition, Raytheon Aircraft Parts Inventory &
Distribution Company ("RAPID") has agreed to purchase up to $5,000,000 in new
or certified overhauled 19000 C or D aircraft parts. The return of the parts
is subject to the conditions described in a November 10, 1999 letter from
Raytheon Aircraft Credit Corporation and RAPID to Mr. Xxxxxxx Xxxxxx of
Borrower (the "Inventory Return"). The proceeds from the return of the parts
shall be applied to the Raytheon Obligations. The Inventory Return is to be
completed by March 31, 2000. In the event there is insufficient inventory to
return for credit to satisfy the Raytheon Obligations, then Raytheon agrees
to term out the then existing and remaining Raytheon Obligations over a
twenty-four (24) month period
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(the "Term Out"). Payments under the Term Out will commence on April 30, 2000
and will continue each and every month thereafter until a final payment due
on March 31, 2002.
WHEREAS, Borrower, Raytheon, and Coast have agreed that until the
Raytheon Obligations are satisfied in full, Raytheon will continue to have a
first priority lien and security interest in the Raytheon Primary Collateral
and Coast will have a second priority lien and security interest with respect
only to the Raytheon Primary Collateral consisting of Beechcraft Model Type
1900 Engines, Propellers and Spare Parts. At all relevant times, Raytheon's
first priority lien and security interest in the Raytheon Primary Collateral
(other than Embraer Brasilia collateral) will be limited to the amount of the
outstanding Raytheon Obligations after receipt of the Paydown. Upon payment in
full of the Raytheon Obligations, Raytheon and Coast each agree that they
will release their liens and security interests in the Raytheon Primary
Collateral.
WHEREAS, as a condition precedent to Coast's entering into the Coast Loan
Agreement, Coast has required that the parties hereto execute this Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. INCORPORATION OF RECITALS. The Recitals set forth above are hereby
incorporated by reference.
2. DEFINITIONS. When used herein, the following terms shall have the
following meanings (such meanings to be applicable equally both to the
singular and plural terms defined):
"ACCOUNTS", "CHATTEL PAPER", "DOCUMENTS", "EQUIPMENT", "FIXTURES",
"GENERAL INTANGIBLES", "INSTRUMENTS", and "INVENTORY" shall have the meanings
assigned to them under the UCC.
"ACCOUNTS PROCEEDS" shall mean all proceeds of Accounts including,
without limitation, all of Borrower'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 of revenues,
which are or shall be received for the account of and are or shall become
payable to Borrower by Airlines Clearing House, Inc. or otherwise.
"COAST INVENTORY COLLATERAL" shall mean all of Borrower's now existing
and hereafter acquired Inventory which secures indebtedness incurred by
Borrower, and all proceeds of the foregoing, other than the Beechcraft Model
1900 type aircraft owned by Borrower in which a purchase money security
interest exists in favor of Raytheon.
"COAST LOAN INSTRUMENTS" shall mean all of the instruments executed by
and among Borrower and Coast in connection with the transactions contemplated
by the Coast Loan Agreement.
"COAST OBLIGATIONS" shall mean the obligations owed by Borrower to Coast
pursuant to the Coast Loan Instruments.
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"COAST PRIMARY COLLATERAL" shall mean all of Borrower's Accounts, Chattel
Paper, Documents, Equipment, Fixtures, General Intangibles and Instruments,
and the proceeds thereof other than (a) the Raytheon Primary Collateral and
the Raytheon Purchase Money Collateral, (b) any of Borrower's Slots (as
defined in the Coast Loan Agreement) and (iii) any of Borrower's Brasilia
aircraft, engines, propellers or spare parts which are subject to lease or
finance arrangements. More specifically, included within the Coast Primary
Collateral are Borrower's Accounts Proceeds, and the proceeds thereof.
"COLLATERAL" shall mean, collectively, the Coast Primary Collateral and
the Raytheon Primary Collateral.
"DEBT INSTRUMENTS" shall mean, collectively, the Coast Loan Instruments
and the Raytheon Loan Instruments.
"ENGINES" shall mean all aircraft engines which are rated at 750 or more
takeoff horsepower or the equivalent of that horsepower.
"LENDERS" shall mean, collectively, Raytheon and Coast.
"OBLIGATIONS" shall mean, collectively, the Coast Obligations and the
Raytheon Obligations.
"PROPELLERS" shall mean all aircraft propellers which are capable of
absorbing 750 or more rated shaft horsepower.
"RAYTHEON PRIMARY COLLATERAL" shall mean all of Borrower's now existing
and hereafter acquired Engines, Propellers and Spare Parts with respect to
Borrower's Beechcraft Model 1900 type aircraft and Borrower's Embraer
Brasilia type aircraft, and the proceeds thereof.
"RAYTHEON LOAN INSTRUMENTS" shall mean a negotiable promissory note in
the amount of Five Million Dollars ($5,000,000) dated July 31, 1996, a
negotiable promissory note in the amount of Four Million Dollars ($4,000,000)
dated July 11, 1997, and a negotiable promissory note in the amount of One
Million Dollars ($1,000,000) dated January 1, 1998, as well as any and all
security agreements, pledge and assignment agreements and other documentation
associated therewith.
"RAYTHEON OBLIGATIONS" shall mean the obligations owed by Borrower to
Raytheon pursuant to the Raytheon Loan Instruments.
"RAYTHEON PURCHASE MONEY COLLATERAL" shall mean all of Borrower's now
existing and hereafter acquired aircraft, engines and propellers which secured
indebtedness incurred by Borrower to finance all or part of the purchase
price of such property, and all proceeds of the foregoing.
"SPARE PARTS" shall mean all air carrier aircraft engines (other than
Engines), propellers (other than Propellers), appliances, spare parts,
avionics, accessories, instruments, rotables, equipment (including ground
support equipment), subassemblies, tool, kits,
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consumables, components and related items maintained by or on behalf of
Borrower for installation in or use in connection with Borrower's currently
owned or hereafter acquired aircraft.
"UCC" shall mean the Uniform Commercial Code as adopted in the State of
Iowa.
3. TERMINATION OF RAYTHEON LIEN AND SECURITY INTEREST AGAINST ACCOUNTS
AND ACCOUNTS PROCEEDS. Upon receipt of the Paydown, Raytheon agrees to
immediately terminate its lien and security interest in all of Borrower's
assets (including but not limited to the Accounts and the Accounts Proceeds),
other than the Raytheon Primary Collateral and the Raytheon Purchase Money
Collateral. Raytheon agrees to execute and deliver to Coast such terminations
or other instruments as may be required by Coast to give effect to said
termination including, without limitation, providing executed UCC termination
statements with respect to the financing statements set forth on Exhibit A
hereto.
4. PRIORITY OF LIENS. Notwithstanding the date, manner or order of
perfection or attachment of the security interests and liens granted by
Borrower to Raytheon or the priority provisions of the UCC or any other
applicable law, Coast shall have a first priority and only security interest
in and lien upon the Coast Primary Collateral (including, without limitation,
the right to go upon the premises of Borrower in order to collect and take
possession of such Coast Primary Collateral in accordance, with the
provisions of the Coast Loan Instruments) and Raytheon shall have no lien or
security interest in the Coast Primary Collateral. Notwithstanding the date,
manner or order of perfection or attachment of the security interests and
liens granted to by Borrower to Coast or the priority provisions of the UCC
or any other applicable law, Raytheon shall have a first priority security
interest in and lien upon the Raytheon Primary Collateral and the Raytheon
Purchase Money Collateral (including, without limitation, the right to go
upon the premises of Borrower in order to collect and take possession of such
Raytheon Primary Collateral and the Raytheon Purchase Money Collateral in
accordance, with the provisions of the Raytheon Loan Instruments and the loan
instruments evidencing the Raytheon Purchase Money Collateral Indebtedness)
and Coast shall have a subordinate security interest and lien therein (with
the exceptions of the Raytheon Primary Collateral consisting of Embraer
Brasilia Type Engines, Propellers and Spare Parts and the Raytheon Purchase
Money Collateral), subject to the provisions of paragraph 6 hereof.
5. TERMINATION OF LIENS AND SECURITY INTERESTS IN THE RAYTHEON PRIMARY
COLLATERAL. Upon full satisfaction of the the Raytheon Obligations as a
result of the Paydown, the Inventory Repurchase and the Term Out, if
applicable, Raytheon and Coast each agree that they will release their liens
and security interests in the Raytheon Primary Collateral and the Coast
Inventory Collateral. Raytheon and Coast each agree that they will execute
and deliver to Borrower such terminations or other instruments as may be
required by Borrower to give effect to said terminations.
6. INSURANCE PROCEEDS. Notwithstanding the foregoing, proceeds of
insurance shall be paid as follows:
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(a) insurance proceeds with respect to the Coast Primary Collateral
shall be paid (i) first, to Coast until the Coast Obligations are paid in
full and all commitments on the part of Coast to make loans to Borrower are
terminated, and (ii) second, to Borrower:
(b) insurance proceeds with respect to the Raytheon Primary
Collateral (other than Embraer Brasilia collateral) shall be paid (i) first,
to Raytheon until the Raytheon Obligations are paid in full and all
commitments on the part of Raytheon to make loans to Borrower are terminated,
(ii) second, to Coast until the Coast Obligations are paid in full and all
commitments on the part of Coast to make loans to Borrower are terminated,
and (iii) third, to Borrower.
(c) insurance proceeds with respect to the Coast Inventory Collateral
shall be paid (i) first, to the party holding the first security interest in
such property until the indebtedness secured by such security interest is
paid in full and commitments on the part of such secured party to makes loans
to Borrower are terminated, (ii) second, to Coast until the Coast Obligations
are paid in full and all commitments on the part of Coast to make loans to
Borrower are terminated, and (iii) third, to Borrower.
Notwithstanding the foregoing, the Borrower and Coast agree that, in the
event of a conflict between the terms of this Paragraph 7 and the Coast Loan
Agreement, the provisions of the Coast Loan Agreement shall control with
respect to insurance proceeds to be paid to Coast or the Borrower.
7. LIEN ENFORCEMENT ACTIONS.
(a) COAST. Nothing contained herein shall restrict Coast's right to
enforce its liens or security interests and exercise any other right or
remedy with respect to the Coast Primary Collateral or Coast Inventory
Collateral in accordance with the provisions of the Coast Loan Instruments
and applicable law. Prior to the payment in full of the Raytheon Obligations,
Coast shall not, without the prior written consent of Raytheon, take any
action to enforce its liens and security interests with respect to the
Raytheon Primary Collateral.
(b) RAYTHEON. Nothing contained herein shall restrict Raytheon's
right to enforce its liens and security interests or exercise any other right
or remedy with respect to the Raytheon Primary Collateral or Raytheon
Purchase Money Collateral in accordance with the provisions of the Raytheon
Loan Instruments, the agreements and instruments evidencing purchase money
debt of the Borrower to Raytheon, and applicable law.
(c) NOTICE OF LIEN ENFORCEMENT ACTION. Simultaneously with the
commencement by either party hereto of any action to enforce its liens and
security interests in any of the Collateral, such party shall send to the
other party written notice of its commencement of such action; provided,
however, that the failure to give such notice for any reason whatsoever shall
not be deemed to be a breach of this Agreement and shall not affect the
rights of the parties hereunder in any way whatsoever.
8. CONTINUED EFFECTIVENESS OF THIS AGREEMENT. The terms of this
Agreement and the rights and obligations of the Lenders arising hereunder
shall not be affected, modified or impaired in any manner or to any extent
by: (a) any amendment, modification or termination of
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or supplement to any Debt Instrument; (b) the validity or enforceability of
any Debt Instrument; (c) any exercise or nonexercise of any right, power or
remedy under or in respect of any of the Obligations, or the Debt Instruments
or arising at law; or (d) any waiver, consent, release, indulgence,
extension, renewal, modification, delay or other action, inaction or omission
in respect thereof, whether or not any of the parties hereto shall have
consented thereto.
9. Miscellaneous.
(a) DEFAULTS. Concurrently with the providing of written notice to
Borrower of its failure to pay the applicable Obligations owed to such Lender
pursuant to the applicable Debt Instruments, such Lender will provide the
other Lender with a copy of such written notice to Borrower; provided,
however, that the failure to give such notice for any reason whatsoever shall
not be deemed to be a breach of this Agreement and shall not affect the
rights of the parties hereunder in any way whatsoever.
(b) CONFLICTS. In the event of any conflict between any term,
covenant or condition of this Agreement and any term, covenant or condition
of any of the Debt Instruments, and except as provided in Paragraph 7 hereof,
the provisions of this Agreement shall govern and be controlling.
(c) NOTICES. Any notices required or permitted to be given
hereunder shall be validly given if set forth in writing and delivered by
telecopy, by hand or commercial messenger against receipt or mailed, either
by overnight express carrier or by certified mail, postage prepaid, return
receipt requested, addressed to the parties hereto at their respective
addresses as set forth on the signature page of this Agreement. Any notice
hereunder shall be deemed given (i) on the day which it is delivered by
telecopy, by hand or such commercial messenger service, (ii) if sent by
overnight express carrier, on the business day immediately after the day sent
or, if such day is not a business day, on the next business day, or (iii) if
sent by mail, on the earlier of actual receipt by the receipt by the
recipient or three (3) business days after the day deposited in the mails,
postage prepaid. Any party hereto may designate any other address to which
any notices shall be given by notice duly given hereunder; provided, however,
that any such notice of other address shall be deemed to have been given
hereunder only when actually received by the party to which addressed.
(d) AMENDMENT OF AGREEMENT; ENTIRE AGREEMENT, ETC. This Agreement
may be amended or modified by written instrument only, signed by each of the
parties hereto. No waiver of any term or provision of this Agreement shall be
effective unless it is in writing, making specific reference to this
Agreement and signed by the party against which such waiver is sought to be
enforced. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.
This Agreement may be signed in one or more counterparts which, when taken
together, shall constitute one and the same document.
(e) TRANSFER OF OBLIGATIONS; EXECUTION OF IDENTICAL AGREEMENT.
Prior to the consummation of any sale, assignment, disposition or other
transfer of any of the Obligations, the transferor of such Obligations as a
condition precedent to the rights of any transferee to succeed to such
transferor's position, shall cause such transferee to execute and
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deliver to the other parties to this Agreement an agreement (substantially
identical to this Agreement or otherwise in form and substance satisfactory
to such parties) providing for the continued effectiveness of all of the
rights of such other parties under this Agreement.
(f) TERMINATION; EFFECT. This Agreement shall terminate upon
payment in full of the Obligations owing to either Lender, provided that all
commitments on the part of such Lender to make further loans to Borrower have
been terminated.
This Agreement has been executed and delivered by each of the parties
hereto by a duly authorized officer of each such party on the date first set
forth above.
RAYTHEON:
RAYTHEON AIRCRAFT CREDIT CORPORATION,
a Kansas corporation
By: /s/ Xxxx X. Xxxxx
-------------------------------------------
Title: VP
----------------------------------------
Address: 0000 X. Xxxxxxx
Xxxxxxx, Xxxxxx 00000
COAST:
COAST BUSINESS CREDIT, a division
of Southern Pacific Bank
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------------
Title: CFO
----------------------------------------
Address: 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
BORROWER:
GREAT LAKES AVIATION, LTD.,
an Iowa corporation
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Title: CFO
----------------------------------------
Address: 0000 000xx Xxxxxx
Xxxxxxx, Xxxx 00000
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EXHIBIT "A"
[Raytheon Financing Statements to be Terminated]
Filing Number Location
------------- --------
K758078 Iowa Secretary of State
3716398 Illinois Secretary of State
738440 Nebraska Secretary of State
19972059196 Colorado Secretary of State
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