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Exhibit 10.82
SUPPLEMENTAL AGREEMENT NO. 05/22/96
BEECHCRAFT 1900D AIRLINER ACQUISITION MASTER AGREEMENT
BETWEEN
MESA AIR GROUP, INC
(f/k/a MESA AIRLINES, INC.,)
RAYTHEON AIRCRAFT COMPANY
(f/k/a BEECH AIRCRAFT CORPORATION)
AND
RAYTHEON AIRCRAFT CREDIT CORPORATION
(f/k/a BEECH ACCEPTANCE CORPORATION, INC.)
DATE: MAY 28, 1996
[Confidential portions of this exhibit have been deleted and
filed separately with the Securities and Exchange Commission]
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SUPPLEMENTAL AGREEMENT NO. 05/22/96
BEECHCRAFT 1900D AIRLINER ACQUISITION MASTER AGREEMENT
On this ____ day of May, 1996, this Supplemental Agreement No. 05/22/96
(hereafter "Supplemental Agreement") is made and entered into at Wichita,
Kansas, by and between MESA AIR GROUP, INC. f/k/a MESA AIRLINES, INC., with its
principal place of business at 0000 Xxxx 00xx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000 (hereafter "Mesa"), RAYTHEON AIRCRAFT COMPANY f/k/a BEECH AIRCRAFT
CORPORATION, with its principal place of business at 00000 Xxxx Xxxxxxx,
Xxxxxxx, Xxxxxx 00000 (hereafter "RAC"), and RAYTHEON AIRCRAFT CREDIT
CORPORATION f/k/a Beech Acceptance Corporation, Inc., with its principal place
of business at 00000 Xxxx Xxxxxxx, Xxxxxxx, Xxxxxx 00000 (hereafter "RACC").
WITNESSETH:
WHEREAS, the parties have previously entered into a Beechcraft 1900D
Airliner Acquisition Master Agreement dated September 18, 1991 (hereafter
"Master Agreement"), under the provisions of which Mesa agreed, among other
things, to acquire fifty-eight (58) new Beechcraft Model 1900D Airliner
airplanes either by purchase from RAC or lease from RACC (hereinafter
occasionally referred to as "1900D Airliner Units 1 through 58"); and
WHEREAS, certain provisions of the 1900D Master Agreement were previously
amended by the parties in accordance with Supplemental Agreement No. 08/21/92
dated August 21, 1992; and
WHEREAS, certain additional provisions of the 1900D Master Agreement were
previously amended by the parties in accordance with Supplement No. 1 dated
March 3, 1993, pursuant to which Mesa agreed to purchase and RAC agreed to sell
twenty (20) additional Beechcraft Model 1900D Airliner airplanes (hereinafter
occasionally referred to as "1900D Airliner Units 59 through 78"); and
WHEREAS, certain additional provisions of the 1900D Master Agreement were
previously amended by the parties in accordance with Supplemental Agreement No.
09/01/94 dated September 1, 1994, wherein certain additional provisions and
Appendices pertaining to Mesa's lease of 1900D Airliners from RACC were amended;
and
WHEREAS, certain additional provisions of the 1900D Master Agreement were
previously amended by the parties in accordance with Supplement No. 09/30/94
dated September 30, 1994 pursuant to which Mesa agreed to either purchase from
RAC or lease from RACC forty (40) additional Beechcraft Model 1900D Airliner
airplanes (hereinafter occasionally referred to as "1900D Airliner Units 79
through 118"); and
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WHEREAS, certain provisions of the 1900D Master Agreement were previously
amended by the parties in accordance with Supplemental Agreement No. 12/14/95
dated May 28, 1996; and
WHEREAS, certain provisions of the 1900D Master Agreement were previously
amended by the parties in accordance with Supplemental Agreement No. 05/15/96
dated May 28, 1996; and
WHEREAS, Mesa has sixty-six (66) 1900D Airliners that are leased from RACC
and said 1900D Airliners are listed by Serial Number on Exhibit "A" to this
Supplemental Agreement; and
WHEREAS, Mesa desires to exercise its right to purchase these 1900D
Airliners provided in Article 17 of the Beechcraft 1900D Airliner Lease
Agreements; and
WHEREAS, the option to purchase provided in Article 17 of the Beechcraft
1900D Airliner Lease Agreements is exercisable on or after thirty-six (36)
months of the lease term and sixty-four (64) of the Beechcraft 1900D Airliner
Lease Agreements have not yet reached the thirty-sixth (36th) month of their
lease terms; and
WHEREAS, RAC and RACC are willing to waive the thirty-sixth (36th) month
requirement and provide debt financing in consideration for the retention of
[*] of the lease deposit for each of the sixty-three (63) 1900D Airliners.
WHEREAS, RACC has agreed to finance the purchase of these
sixty-six (66) 1900D Airliners by Mesa; and
WHEREAS, RACC, RAC and Mesa wish to have the conversion of these sixty-six
(66) leases to purchases effective on May 31, 1996; and
WHEREAS, RAC will be returning seventeen (17) 1900C Airliners pursuant to
the schedule set forth in the Letter of Agreement 191-96-DPT-073 dated April
25, 1996 between Mesa, RAC and RACC;
NOW, THEREFORE, for and in consideration of the above-stated recitals and
the mutual promises, covenants and agreements set forth herein, the parties
hereby agree as follows:
SECTION 1: AMENDMENTS TO 1900D MASTER AGREEMENT
1.1 Appendix 3.2(A): Appendix 3.2(A) of the Master Agreement entitled
"Form of Negotiable Promissory Note" will be revised as set forth in
the amended Appendix 3.2(A) attached hereto but only in so far as it
concerns the 1900D Airliner Units identified in Exhibit "A" attached
hereto.
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
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1.2 Appendix 3.2(B): Appendix 3.2(B) of the Master Agreement entitled
"Form of Aircraft Security Agreement" will be revised as set forth
in the amended Appendix 3.2(B) attached hereto but only in so far as
it concerns the 1900D Airliner Units identified in Exhibit "A"
attached hereto.
1.3 Appendix 3.2(C): Appendix 3.2(C) of the Master Agreement entitled
"Prorated Stipulated Values" is hereby added to the Master
Agreement, and it contains the "Total Purchase Price" for each
respective 1900D Airliner listed by Serial Number.
1.4 Appendix 3.6(B): Appendix 3.6(B) of the Master Agreement entitled
"Terms of Payment and Financing for 1900D Airliner" will be revised
as set forth in the amended Appendix 3.6(B) attached hereto but only
in so far as it concerns the 1900D Airliner Units identified in
Exhibit "A" attached hereto.
SECTION 2: AMENDMENT TO 1900D AIRLINER LEASE AGREEMENT
2.1 Article 17: Mesa and RACC agree that the purchase price of the
sixty-six (66) 1900D Airliners will be determined by Appendix 3.2(C)
of the Master Agreement entitled "Prorated Stipulated Value" and not
in accordance with the Stipulated Aircraft Value specified in
Exhibit "G" of the Beechcraft 1900D Airliner Lease Agreement.
SECTION 3: 1900D AIRLINER LEASE TERMINATIONS
3.1 Mesa and RACC agree to terminate the leases for the 1900D Airliners
listed in Exhibit "A" of this Supplemental Agreement on or about May
31, 1996 in conjunction with the purchase by Mesa of the 1900D
Airliners and financing of these 1900D Airliners by RACC effective
May 31, 1996.
3.2 RACC agrees to transfer title to each of the 1900D Airliners to Mesa
effective on or about May 31, 1996 or the date of the applicable
lease termination and finance transaction.
SECTION 4: FINANCE CONVERSION PROVISIONS
4.1 The terms and conditions pertaining to Mesa's payment of the Total
Purchase Price are set forth in Appendix 3.6(B) attached hereto.
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4.2 The terms and conditions of financing to be provided by RACC in
conjunction with Mesa's purchase of the 1900D Airliners are set
forth in Appendix 3.6(B) attached hereto and in the Negotiable
Promissory Note and the Aircraft Security Agreement forms attached
hereto as, respectively, Appendices 3.2(A) and 3.2(B). Specific
financial agreements reached between RAC, RACC and Mesa with regard
to this conversion transaction are also contained in Appendix 3.6(B)
attached hereto.
4.3 As a fee for completing this conversion transaction, it is agreed
that RAC shall retain [*] of the [*] Lease Deposit applicable to
sixty-three (63) of the 1900D Airliners identified in Exhibit "A"
attached hereto (excluding 1900D Airliner Serial No.'s XX-0, XX-00,
and UE-51). The remaining [*] of the [*] Lease Deposit applicable to
these sixty-three (63) 1900D Airliners will be credited to the
Principal Reduction Amount as shown in Appendix 3.6(B) attached
hereto. With regard to 1900D Airliner Serial No.'s XX-0, XX-00, and
UE-51, the entire [*] Lease Deposit applicable to these three (3)
1900D Airliners will be credited to the Principal Reduction Amount.
4.4 Mesa shall be financing with RACC [*] of the Total Purchase Price of
each 1900D Airliner; therefore, the Total Purchase Price for each
1900D Airliner equals the Principal Sum as defined in each
Negotiable Promissory Note. Immediately upon execution of the
Negotiable Promissory Notes for the sixty-six (66) 1900D Airliners
by Mesa, Mesa shall pay RACC a Principal Reduction Payment in an
amount sufficient to reduce the Principal Sum to [*] of the price of
the 1900D Airliner at the time the 1900D Airliner was originally
delivered. RACC agrees to credit towards this Principal Reduction
Payment so much of the Lease Deposits as is due Mesa upon
termination of the sixty-six (66) leases (reference 4.3 above). In
addition, with respect to the lease deposits of the seventeen (17)
1900C Airliners Mesa will be returning pursuant to the Master
Agreement, RACC will credit Mesa [*] per 1900D Airliner) towards
this Principal Reduction Payment. For twenty-three (23) of the 1900D
Airliners, the credit provided by the Lease Deposits is sufficient
to reduce the Principal Sum to [*] percent of the price of the 1900D
at the time of its delivery. For the remaining forty-three (43)
1900D Airliners, a lump sum payment of [*] (reference Appendix
3.2(C)) shall be paid by Mesa to RACC on May 31, 1996 by wire
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
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transfer to the following account: RAYTHEON AIRCRAFT CREDIT
CORPORATION, Bank IV, Kansas, N.A., ABA Routing [*], RACC account
[*].
SECTION 5: ADDITIONAL PROVISIONS
5.1 Scope of Amendment: Except as specifically amended by this
Supplemental Agreement, all remaining provisions of the 1900D Master
Agreement and all prior amendments thereto will remain unchanged and
in full force and effect. The amended terms and conditions as set
forth in this Supplemental Agreement will be applicable with respect
to all the 1900D Airliners listed in Exhibit "A" to this
Supplemental Agreement.
5.2 Defined Terms: All capitalized terms used in this Supplemental
Agreement which are not specifically defined herein will have the
same meaning as ascribed to said terms in the 1900D Master Agreement
and/or the various Appendices attached thereto.
5.3 Entire Agreement: This Supplemental Agreement constitutes the entire
agreement of the parties and supersedes any and all prior agreements
between the parties, both written and oral, with respect to the
transactions herein contemplated, and specifically supersedes all of
RAC's and RACC's proposals and presentations to Mesa prior to the
date hereof pertaining to the various matters addressed and amended
herein, including the Letter of Understanding between Mesa and RAC
dated April 12, 1996.
5.4 The parties agree to: 1) terminate each of the Lease
Agreements for the 1900D Airliners listed in Exhibit "A";
2) execute any and all Bills of Sale, Promissory Notes,
and Security Agreements; and 3) execute any other
documents necessary to effectuate the provisions of this
Supplemental Agreement.
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
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IN WITNESS OF the mutual promises, covenants and agreements set forth herein,
the parties have caused their duly authorized officers to execute this
Supplemental Agreement at Wichita, Kansas, as of the day and year first written
above.
MESA AIR GROUP, INC.
(f/k/a Mesa Airlines, Inc.)
By: /s/ W. Xxxxxxx Xxxxxxx
________________________________
W. Xxxxxxx Xxxxxxx
Date of Execution: May 28, 1996
"Mesa"
RAYTHEON AIRCRAFT COMPANY
(f/k/a Beech Aircraft Corporation)
By: /s/ Xxxxxxx X. Xxxxxxx
________________________________
Xxxxxxx X. Xxxxxxx, Vice President
- Airline Sales
Date of Execution: 5/24/96
"RAC"
RAYTHEON AIRCRAFT CREDIT CORPORATION (f/k/a Beech
Acceptance Corporation, Inc.)
By: /s/ Xxxx X. Xxxxx
________________________________
Xxxx X. Xxxxx, Vice President
Date of Execution: 5/24/96
"RACC"
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Appendix 3.2(A)
APPENDIX 3.2(A)
FORM OF NEGOTIABLE PROMISSORY NOTE
[See attached form.]
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Page 1 of 7
AIRLINER
NEGOTIABLE PROMISSORY NOTE
DATE: MAY 28, 1996
Table 1: PARTIES AND TERMS
(a) SECURED PARTY: (c) DEBTOR:
Raytheon Aircraft Credit Corporation Mesa Air Group, Inc.
X.X. Xxx 00 0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxx 00000 Xxxxxxxxxx, Xxx Xxxxxx 00000
(b) AIRCRAFT: (d) COMMENCEMENT DATE: May 31, 1996
Manufacturer: Raytheon Aircraft Company (e) PRINCIPAL SUM: $____________
Model: Beech 1900D Airliner (f) FINANCING TERM: ____ months
Serial No.: UE-______ (g) DUE DATE:
Reg. No.: N________
(h) LIABILITY INSURANCE: [*]
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Debtor unconditionally promises to pay to the
order of Secured Party, or its assigns, the Principal Sum, together with
accrued interest at the applicable Interest Rate specified in Table 2 (see
Section 3) and such other charges and fees as herein provided. This Negotiable
Promissory Note is sometimes hereinafter referred to as the "Promissory Note"
or "Agreement".
The Principal Sum and accrued interest shall be repaid by Debtor during the
Financing Term in accordance with the terms and subject to the conditions
specified below:
1. Interest Rate. In addition to Debtor's repayment of the Principal Sum, Debtor
shall pay interest to Secured Party on the unpaid balance of the Principal Sum
at the applicable rate of interest, if any, specified in Table 2. Debtor's
payment of accrued interest shall be made in conjunction with its monthly
payments of principal as specified in Table 2. The term [*] as used in Table 2
and elsewhere in this agreement refers to the interest rate that is [*]. The
effective rate of interest shall be adjusted on the first business day of each
calendar year quarter (i.e., January 1, April 1, July 1 and October 1) to
reflect any increase or decrease in the [*] as of that date, plus the percent
per annum specified in Table 2.
The annual rate of interest applicable hereunder from time to time, as
specified above, is sometimes referred to herein as the "Interest Rate". All
interest shall be calculated on the basis of a 360-day year and actual days
outstanding. Notwithstanding anything set forth herein to the contrary, in no
event shall the Interest Rate payable hereunder be higher than the maximum
amount permitted under applicable law.
2. Payment of Principal and Interest. The Principal Sum shall be repaid by
Debtor to Secured Party, together with accrued interest at the applicable
Interest Rate specified in Table 2, in consecutive monthly installments during
the Financing Term specified in Table 1(f). Debtor's first monthly installment
payment shall be due and payable one month following the Commencement Date
identified in Table 1(d). Each subsequent monthly installment payment shall be
paid by Debtor on the same date of each succeeding calendar month. The final
monthly installment payment shall be due and payable on the Due Date.
3. Payments. The amount of Debtor's monthly payments of principal and accrued
interest are specified below in Table 2. The following definitions apply to the
"Payment Type" which may be specified in Table 2:
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
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Page 2 of 7
a) May 31, 1996 payment - This Principal Reduction Payment shall be an
amount sufficient to reduce the principal Sum to [*] of the price of
the 1900D Airliner at the time the 1900D Airliner was originally
delivered. Mesa will receive a credit for $[*] of the lease deposit
Mesa has paid on this 1900D Airliner. In addition, a per aircraft
prorated credit will be received from returned 1900C Airliner lease
deposits in the amount of $_______. If the total lease deposit
credits are not sufficient to reduce the Principal Sum to [*] of the
price of the 1900D at the time of its original delivery, the
difference, or $______, will be paid by Mesa on May 31, 1996, in a
lump sum via wire transfer to the following account: RAYTHEON
AIRCRAFT CREDIT CORPORATION, Bank IV, Kansas, N.A., ABA Routing #[*]
RACC Account No. [*].
b) FIXED - Debtor's monthly payments to Secured Party will remain fixed
at the specified payment amount for the specified period.
c) VARIABLE - The amount of Debtor's monthly payment of principal and
accrued interest shall be calculated by Secured Party, and advised to
Debtor in writing, at the beginning of each calendar year quarter,
based upon the LIBOR in effect on the first business day of said
quarter plus the specified percent per annum. Each of Debtor's
monthly payments during this period shall be sufficient in amount to
fully amortize the Principal Sum, less any Balloon Payment, on the
Due Date.
d) BALLOON - an amount payable as a Balloon Payment.
TABLE 2: PAYMENT AND INTEREST SCHEDULE
PAYMENT PAYMENT AMOUNT INTEREST RATE
AND TYPE PER ANNUM
May 31, 1996 Payment $_________ Zero
__-__("Fixed Payment [*] Fixed [*]
Period")
__-___("Variable Variable [*] Plus [*]%
Payment Period")
___ Last Month of Variable [*] Plus [*]%
Term Plus
$[*] Balloon
THE ACTUAL PAYMENT WILL BE CALCULATED AND ADVISED TO DEBTOR IN ACCORDANCE WITH
SECTION 3(b).
4. Fixed Interest Rate Option during Fixed Payment Period ("Option"). During
the Fixed Payment Period Mesa may elect to convert to a fixed interest rate by
providing RACC with written notice of its intention to convert to a fixed
interest rate seven (7) days prior to the conversion to the fixed interest
rate. Mesa is entitled to receive this fixed interest rate for any full months
remaining during the Fixed Payment Period of the Financing Term commencing
after the conversion referred to above. The fixed interest rate will be [*]
basis points over the composite U.S. government treasury interest rate yield
for the term of the Fixed Payment Period plus [*] additional basis points, or
[*] basis points over the above noted composite U.S. government treasury
interest rate yield. The fixed interest rate will be determined seven (7) days
after Mesa provides RACC with written notice of its intention to convert to a
fixed interest rate. The monthly payments due and payable to RACC during the
Option period will remain at $[*]. If Mesa elects to convert to a fixed
interest rate and then does not continue to finance the 1900D Airliner through
the Fixed Payment period, Mesa will pay RACC for any costs RACC may incur as a
result of the early termination of the financing. These costs, hereinafter
referred to as "Breakage Costs", are described in Section 5.
5. Breakage Costs. In order to provide fixed interest rate financing to Mesa,
RACC will enter into a "VARIABLE FOR FIXED INTEREST RATE SWAP AGREEMENT" with a
financial institution. If Mesa does not continue to
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
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Page 3 of 7
finance the 1900D Airliner at the fixed interest rate through the Fixed Payment
Period, that portion of said financing which would cease to be operative for the
remaining portion of the Fixed Payment Period will be subject to an "Unwinding".
Such Unwinding will be achieved by RACC entering into an offsetting "FIXED FOR
VARIABLE INTEREST RATE SWAP AGREEMENT" for the unused portion of the original
"VARIABLE FOR FIXED INTEREST RATE SWAP AGREEMENT". The swaps referred to above
are based upon the prevailing U.S. treasury bills, note and/or bond interest
rate yields for specific maturities at the time of entering into such swap
agreements plus a swap spread, which are both determined by the financial market
to adjust for the difference between a commercial borrower and the sovereign
undertaking of the U.S. Government and the duration of the swap. Accordingly, to
Unwind a VARIABLE FOR FIXED INTEREST RATE SWAP AGREEMENT, RACC would enter into
a FIXED FOR VARIABLE INTEREST RATE SWAP AGREEMENT with the variable interest
rate components offsetting each other since the components are based on the same
benchmark, i.e., Thirty (30) Day [*]. A cost may result due to the difference
between the fixed interest rate yield and swap spread components of the VARIABLE
FOR FIXED INTEREST RATE SWAP AGREEMENT and the FIXED FOR VARIABLE INTEREST RATE
SWAP AGREEMENT.
If a cost results due to the difference described above, RACC will provide Mesa
written notice of the Breakage Costs due RACC as a result of Mesa's termination
of the fixed interest rate financing. Said notice will be provided Mesa within
ten (10) days following termination of the fixed interest rate financing with
RACC.
Payment of the Breakage Costs are due and payable to RACC immediately upon
receipt of said notice by Mesa.
6. Repayment and Prepayment. The aforesaid payments of principal and interest
shall be made to Secured Party at its office in Wichita, Kansas. All payments
shall be due and payable, without demand or notice to Debtor, in strict
accordance with the aforesaid monthly schedule of payments. Any payment due on a
non-business day may be made on the next succeeding business day. Debtor's
payments hereunder, when received, shall be applied first to the payment of
accrued interest (computed upon the unpaid balance of the Principal Sum) and any
late payment charges owed as of the date such payment is received by Secured
Party (if any), and the remainder of Debtor's payment shall be applied to
payment of the unpaid Principal Sum. The unpaid Principal Sum and all accrued
interest and late payment charges due hereunder must be paid in full on the Due
Date. Debtor may prepay the unpaid balance of the Principal Sum in part or in
full at any time and without any penalty, except as provided in Section 5.
7. Late Payment Charge. In the event Debtor is more than [*] days late in
making any payment due hereunder as specified above, a late payment charge in an
amount equal to [*] of the amount of the delayed payment shall be assessed
against Debtor and added to the amount of the delayed payment due hereunder for
the purpose of defraying Secured Party's expenses incident to handling the
delinquent payment. Any late payment charge assessed against Debtor shall be
immediately due and payable to Secured Party. The late payment charge shall be
in addition to, and not in lieu of, any other remedy provided to Secured Party
in this Agreement for default by Debtor.
8. Secured Transaction. To secure the payment of Debtor's obligation hereunder
and any and all other indebtedness owed by Debtor to Secured Party (whether now
existing or hereafter arising), as well as any renewals, extensions or changes
in the form of said obligations or indebtedness, Debtor has contemporaneously
herewith executed an Aircraft Security Agreement (hereinafter "Security
Agreement") granting to Secured Party a security interest in the property set
forth therein, together with all instruments, avionics, equipment, parts and
accessories attached to or installed in said aircraft; all aircraft and engine
log books; all additions, accessions and substitutions of any of the foregoing
property; all of Debtor's inventory (whether now existing or hereafter acquired)
of 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 the Aircraft described in
Table 1(b) not to exceed an aggregate of $[*] per Aircraft, all unearned
insurance premiums and insurance proceeds of any of the foregoing property; and
the proceeds of all of the foregoing property.
"[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]"
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Page 4 of 7
The above-mentioned property is hereinafter collectively referred to (as
appropriate within the context of this Agreement) as either the "Aircraft" or
the "Collateral".
Secured Party's security interest in the Collateral is a purchase money
security interest under the Kansas Uniform Commercial Code. The proceeds of
this loan (i.e., the Principal Sum) will be used by Debtor to purchase the
Collateral described therein.
9. PURPOSE OF LOAN. Debtor warrants and represents to Secured Party that this
loan is for business, commercial or agricultural purposes and not primarily for
personal, family or household purposes.
10. DEBTOR'S DEFAULT. The parties agree that the occurrence of any of the
following events shall constitute an "Event of Default":
(a) Debtor's failure to make any timely payment of either principal,
interest, late payment charges required hereunder, or Debtor's failure
to make any payment required under any other promissory note, security
agreement or lease agreement between Debtor and Secured Party, if such
failure continues for a period of [*] days beyond the due date of such
payment.
(b) Debtor's failure to perform any promise, agreement, obligation,
warranty or covenant made by it herein or in the Security Agreement if
such failure continues for a period of [*] days after the Secured Party
has given Debtor notice of such failure;
(c) Debtor's failure to maintain the insurance coverage as specified in
the Security Agreement;
(d) any material misrepresentation made by Debtor to Secured Party in
connection with the Security Agreement or this Agreement;
(e) entry of a money judgment against Debtor, if such judgment is
nonappealable and remains undischarged or unstayed for a period in
excess of [*] days;
(f) dissolution, termination of existence, insolvency, business failure,
inability to pay debts 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;
(g) appointment of a receiver of any material part or all of Debtor's
assets if such appointment or proceeding continues for a period of more
than [*] days;
(h) Debtor entering into any transaction, without the prior written
consent of Secured Party, 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; which
transaction would reasonably justify Secured Party is deeming itself
insecure; provided, however, that this subparagraph (h) shall not apply
to any transaction involving Debtor and any "Permitted Assignee"
(reference 17 below);
(i) default in the payment by Debtor of any indebtedness for borrowed
money owed to any creditor resulting in the acceleration of a material
amount of indebtedness that would reasonably justify Secured Party in
deeming itself insecure, unless such default is being disputed by Debtor
in good faith;
(j) the prospect of payment, performance or realization on the
Collateral is significantly impaired;
"[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]"
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(k) Debtor's ceasing to be licensed pursuant to U.S. law to operate a
commercial air service; or
(l) the occurrence of a [*].
Should an Event of Default occur, Secured Party may employ all remedies allowed
by law, including declaring all indebtedness owned hereunder, [*], immediately
due and payable. Additionally, Secured Party may require Debtor to [*]. 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 of the
Collateral is to be made shall be met if such notice is mailed, postage prepaid,
to Debtor's address, as specified herein, at least [*] days before the time of
the sale or disposition. After deduction of all reasonable expenses incurred in
realizing on Secured Party's security interest, and after the payment of all
principal, interest and late payment charges due under this Agreement, the
balance of the proceeds of sale, if any, may be applied to the [*]. Debtor shall
be liable for any deficiency in its financial obligation under this Agreement
after application of such proceeds. Debtor agrees to pay the reasonable
attorneys' fees incurred by Secured Party to repossess the Collateral as well as
the attorneys' fees incurred in pursuing and collecting any deficiency. If,
after a default by Debtor, the Collateral is returned to or recovered by Secured
Party, Debtor agrees that Secured Party may fly or otherwise move the Collateral
for demonstration and other purposes reasonably related to a proposed public or
private sale or other disposition of the Collateral.
11. Obligation to Make Payments. Debtor acknowledges and agrees that its
obligation to make all payments due and owing under the provisions hereof shall
be [*].
12. Waivers. Debtor hereby waives any requirements pertaining to presentment,
demand for payment, notice of dishonor, and all other notices or demands in
connection with the delivery, acceptance, performance, default or endorsement
of this Promissory Note. No waiver of any covenant, warranty or condition of
this Agreement, nor of any breach or default hereunder, shall be effective for
any purpose whatsoever unless such waiver is in writing and signed by an
officer of Secured Party. It is expressly agreed that Secured Party's waiver of
any breach or default by Debtor shall constitute a waiver only as to such
particular breach or default and not a waiver of any future breach or default.
13. Legal, Valid, Binding and Enforceable Obligation. Debtor represents and
warrants to Secured Party that this Promissory Note, upon execution and
delivery, will constitute the legal, valid and binding obligation of Debtor and
shall be enforceable in accordance with its terms. Debtor agrees to furnish
Secured Party with written legal opinions, satisfactory in form and substance
to Secured Party, verifying the aforesaid representation and warranty.
14. Changes of Address. Debtor shall immediately notify Secured Party in
writing of any change of address from that shown in Table 1(c) in this
Agreement.
15. 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 TRANSACTION, INCLUDING ANY ACTIONS UNDERTAKEN BY SECURED PARTY
SHOULD AN "EVENT
"[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]"
14
Page 6 of 7
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 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,
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.
16. ENFORCEABILITY. The provisions of this Agreement shall be severable and, if
any provisions are for any reason determined to be invalid, void or
unenforceable, in whole or in part, the remaining provisions shall remain in
full force and effect; provided that the purpose of the remaining valid,
effective and enforceable provisions is not frustrated; and provided further
that no party is substantially and materially prejudiced thereby.
17. ASSIGNABILITY. Secured Party shall have the absolute right to assign,
transfer or sell any of its rights under this Promissory Note to any party of
its choosing upon giving written notice thereof to Debtor. If under any
assignment the Assignor (Secured Party) shall continue to be the party for
collection of Debtor's monthly payments of principal and interest owned
hereunder, no Assignee may declare a default for non-payment of the monthly
payments or interfere in Debtor's peaceful possession of the Aircraft for
non-payment of such monthly payments, so long as Debtor has not failed to pay
Assignor (Secured Party), when due, any monthly payment owned hereunder. Debtor
may not assign, or delegate any of its rights or obligations hereunder without
the prior written consent of Secured Party; provided however, that Debtor may
assign its rights and obligations hereunder to (a) any of its wholly-owned
subsidiaries, (b) its parent company if Debtor is a wholly-owned subsidiary
thereof, or (c) any other company which is a wholly-owned subsidiary of the
aforesaid parent company (collectively "Permitted Assignee"), subject to the
condition that Debtor shall remain primarily liable hereunder, both jointly and
severally, with any such Permitted Assignee.
18. BINDING AGREEMENT. All obligations of Debtor hereunder shall bind the
heirs, legal representatives, successors and assigns of Debtor. If there be
more than one Debtor hereunder, their liabilities shall be joint and several.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns.
19. ENTIRE AGREEMENT. This Agreement and the Security Agreement constitutes the
entire agreement between and among the parties with respect to the subject
matter hereof. There are no verbal understandings, agreements, representations
or warranties between the parties which are not expressly set forth herein.
This Agreement shall not be changed orally, but only in writing signed by the
parties hereto.
20. 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. Notices sent by registered or certified mail shall be deemed given on
the third day after the date of postmark. Until changed by written notice given
by either party, the addresses of the parties shall be as stated in Table 1(a)
and (c) of the Agreement. The designated addresses of both parties must be
located with the United States of America.
15
Page 7 of 7
In witness of the foregoing, Debtor has caused its duly authorized
officer to execute and deliver this Agreement at Wichita, Kansas on the Date
herein stated.
Mesa Air Group, Inc.
By:__________________________
W. Xxxxxxx Xxxxxxx, CFO
"Debtor"
STATE OF KANSAS)
) ss:
COUNTY OF SEDGWICK )
This instrument was acknowledged before me on the 28th day of May, 1996 by
W. Xxxxxxx Xxxxxxx, who is the CFO of Mesa Air Group, Inc., on behalf of the
corporation.
Notary Public ______________________
My Commission Expires: __________________
16
APPENDIX 3.2(B)
APPENDIX 3.2(B)
FORM OF AIRCRAFT SECURITY AGREEMENT
[See attached form.]
17
Page 1 of 9
AIRLINER
AIRCRAFT SECURITY AGREEMENT
AND
ENCUMBRANCE AGAINST AIR CARRIER AIRCRAFT ENGINES,
PROPELLERS, APPLIANCES AND SPARE PARTS
[Pursuant to 14 CFR Section 49.51 et seq.]
Date:____________________
TABLE 1
------------------------------------------------------------------------------
(a) SECURED PARTY: (b) DEBTOR/OWNER:
Raytheon Aircraft Credit Corporation Mesa Air Group, Inc.
X.X. Xxx 00 0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxx 00000 Farmington, New Mexico
------------------------------------------------------------------------------
(c) AIRCRAFT OPERATOR: (d) SPARE PARTS LOCATION:
Mesa Air Group, Inc. See Exhibit "A"
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx
------------------------------------------------------------------------------
(e) REQUIRED LIABILITY INSURANCE: $[*]
------------------------------------------------------------------------------
TABLE 2
------------------------------------------------------------------------------
AIRCRAFT ENGINES PROPELLERS
--------------------------- ----------------- -----------------
Manufacturer Beechcraft Aircraft Corp. Xxxxx & Xxxxxxx Xxxxxxxx
Model Beech Model 1900D Airliner PT6A-67D, 1280SHP HC-E4A-31
Serial No. UE-____ PCE-____ & PCE-____ HJ-____ & HJ-____
Reg No. N______
------------------------------------------------------------------------------
This Security Agreement is made and entered into on the date specified above,
by and between Debtor and Secured Party. This Security Agreement is sometimes
hereinafter referred to as the "Security Agreement" or the "Agreement".
In consideration of the mutual promises, covenants and representations
set forth herein and pursuant to the provisions of the Beechcraft 1900D
Airliner Acquisition Master Agreement as amended, between Debtor, Secured Party
and Raytheon Aircraft Company dated September 18, 1991 (hereinafter "1900D
Master Agreement"), the parties hereto agree as follows:
1. GRANT OF SECURITY INTEREST. To secure the payment of Debtor's obligation
under that certain Negotiable Promissory Note (hereinafter "Promissory Note")
executed in conjunction with this Security Agreement and dated of even date
herewith, together with any and all other indebtedness owned by Debtor to
Secured Party (whether now existing or hereafter arising), as well as any
renewals, extensions or changes in the form of said obligation or indebtedness,
Debtor grants to Secured Party a security interest in the property described in
Table 2 of this Agreement together with all instruments, avionics, equipment,
parts and accessories attached to or installed in said aircraft; all aircraft
and engine log books; all additions, accessions and substitutions of any of the
foregoing property; all unearned insurance premiums and insurance proceeds of
any of the foregoing property; and the proceeds of all of the foregoing
property. The above-described airplane is hereinafter referred to as the
"Aircraft".
Debtor and Secured Party hereby acknowledge and agree that a portion of
the loan proceeds due under the Promissory Note will be used by Debtor to
purchase certain 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 1900D type airplanes not to exceed an aggregate of $[*] per Aircraft
(hereinafter collectively "Spare
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
18
Page 2 of 9
Parts"). Thus, Debtor further grants to Secured Party a security interest in
all of the aforesaid Spare Parts, whether now existing or hereafter acquired. In
order to allow Secured Party to record and perfect its security interest in the
Spare Parts pursuant to 14 CFR Section 49.51 et seq., Debtor hereby covenants
and agrees that:
(a) Debtor is an air carrier certificated under Section 604(b) of the
Federal Aviation Act of 1958; and
(b) All of the above-mentioned Spare Parts will at all times and until
installed or used (in the ordinary course of Debtor's business) in
an aircraft belonging to Debtor, be located and stored at Debtor's
maintenance facility and/or hangar located at Debtor's facilities
or hangers at the locations described in Exhibit "A" of the
Agreement. Debtor shall not warehouse, inventory or store any of
the Spare Parts at any other location without first obtaining the
written consent of Secured Part and without first executing and
filing with the FAA Registry a certificate pursuant to applicable
sections of the Code of Federal Regulations (or otherwise
acceptable to Secured Party) evidencing such change of location and
such other documents as may be required by Secured Party.
The above-described Aircraft and other items of personal property
described in this Section 1 are sometimes hereinafter collectively referred to
as the "Collateral". Secured Party's security interest in the Collateral is a
purchase money security interest under the Kansas Uniform Commercial Code. The
loan proceeds (i.e., Principal Sum) specified in the Promissory Note will be
used by Debtor to purchase the above-described Collateral.
2. Debtor's Warranty of Title. Except for the security interest
granted herein, Debtor warrants that it is (or, to the extent the Collateral is
to be acquired hereafter, will be) the owner of the Collateral free from any
security interest, lien or encumbrance arising subsequent to the transfer of
title to the Collateral from Secured Party to Debtor. Debtor further warrants
that it will defend the Collateral against all claims and demands of any person
claiming any interest therein by virtue of any such security interest, lien or
encumbrance.
3. Debtor Will Execute and Deliver Documents. At Secured Party's
request, Debtor shall promptly furnish such information and execute and deliver
such documents and do all such acts and things as Secured Party may reasonably
request as are necessary or appropriate to assist Secured Party in establishing
and maintaining a valid security interest in the Collateral and to assure that
the Aircraft is properly titled and registered and that the security interest
granted hereby is perfected to Secured Party's satisfaction. Debtor will pay
the cost of filing all appropriate documents in all public offices where Secured
Party deems such filings necessary or desirable.
4. Operation, Maintenance and Repair. Debtor shall use, operate,
maintain, store and repair the Collateral and retain actual control and
possession thereof in accordance with each of the following provisions:
(a) Debtor shall use, operate, maintain, store and repair the
Collateral, and all parts thereof, properly, carefully and in
complete compliance with all applicable statutes, ordinances,
regulations, policies of insurance, manufacturer's recommendations
and manufacturer's operating and maintenance manuals and handbooks.
(b) Debtor shall only allow properly qualified and licensed pilots to
operate the Aircraft.
(c) Debtor shall be responsible for and pay all expenses of owning and
operating the Aircraft, including but not limited to storage, fuel,
lubricants, service, inspections, overhauls, replacements,
maintenance and repairs, all of which shall be accomplished in
compliance with the manufacturer's operating and maintenance
manuals and handbooks, U.S. Federal Aviation Administration
(hereinafter "FAA") rules and regulations and Debtor's FAA approved
maintenance program. Debtor shall properly maintain all records
pertaining to the maintenance, operation and repair of the
Aircraft.
19
Page 3 of 9
(d) Debtor shall at all times maintain the Aircraft in an airworthy
condition and in good working order and shall make no
modifications to the Aircraft which have the effect of reducing
its value as a regional air transport.
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 Secured Party, including Comprehensive
Ground and Flight Coverage and Fire and Extended Risk Coverage,
both In-Flight and Not In-Flight, in amounts not less than [*].
All policies of insurance carried in accordance with this
paragraph (a) shall name Secured Party as a Loss Payee and
provide that the insurance proceeds from any loss involving the
Aircraft shall be payable as follows: (1) any loss not exceeding
U.S. [*] shall be payable solely to Debtor with notice to
Secured Party, (2) any loss exceeding U.S. [*] shall be jointly
payable to Secured Party and Debtor, and (3) any total loss of
the Aircraft shall be payable solely to Secured Party up to the
amount of the unpaid Principal Sum and accrued interest and any
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, malice, sabotage, conversion or theft, and for war
risks when operating the Aircraft outside of the United States.
The policies shall also specify that (i) any losses shall be
adjusted by the insurer with Debtor, with notice thereof being
provided to Secured Party and the Aircraft manufacturer, and
(ii) Secured Party 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
Secured Party, with limits no less than the amount prescribed in
Table 1(e) of this Agreement of combined single limit per
occurrence, for bodily injury and property damage (including
passengers). All policies of insurance carried in accordance
with this subsection (b) shall name Debtor as the primary
insured and Secured Party as an additional insured thereunder.
All insurance policies maintained by Debtor in accordance with
subsections (a) and (b) above shall also comply with each of the following
requirements:
(1) be issued by insurers of recognized responsibility which are
satisfactory to Secured Party;
(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 Secured Party until [*] days after
Secured Party'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 Secured Party in such
policies, the insurance shall not be invalidated by any action
or inaction of Debtor (or any "Permitted Lessee" as defined
below in Section 11) and shall insure Secured Party regardless
of any breach or violation by Debtor (or any Permitted Lessee)
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 Secured Party with respect to its
interest in the Aircraft;
"[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]"
20
Page 4 of 9
(5) waive any right of subrogation of the insurer against
Secured Party; provided, however, that the right of
subrogation shall not be waived with respect to any acts
or omissions on the part of Secured Party 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 Secured Party shall have no obligation or
liability for premiums, commissions, assessments or
calls in connection with such insurance policies.
Debtor shall furnish to Secured Party evidence of the aforesaid insurance
coverage in certificate form. Evidence of renewal of each policy shall
thereafter be furnished to Secured Party in certificate form. Debtor covenants
that it will not do any act or voluntarily suffer or permit any act to be done
whereby an insurance required hereunder shall or may be suspended, impaired or
defeated.
6. Debtor's Possession. Debtor may have possession of the
Collateral and use in any lawful manner not inconsistent with this Agreement,
except when an Event of Default has occurred and is continuing. In the event
Debtor fails to undertake any of the following actions within [*] days after
receipt of Secured Party's written demand for such action, Secured party, at its
option and without assuming any obligation to do so, may discharge taxes, liens,
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 necessary filing or
recording fees. Any amounts paid by Secured Party under the preceding sentence
shall be added to the unpaid principal balance under the Promissory Note, shall
be secured by the Collateral, and shall be payable by Debtor upon demand by
Secured Party together with interest at the rate provided for in the Promissory
Note until paid in full.
7. Debtor's Covenants. As long as this Agreement remains in
effect, Debtor shall furnish Secured Party with such information concerning the
location, condition, use and operation of the Aircraft as Secured Party may
reasonably request, and Debtor shall permit any person designated by Secured
Party in writing to inspect the Collateral, wherever located, and all records
and manuals maintained in connection therewith and to make copies of such
records, and to visit and inspect the properties and facilities of Debtor,
provided such visits do not unreasonably interfere with the operations of
Debtor, and to discuss the affairs, finances and accounts of Debtor with the
principal financial officers of Debtor, all at such reasonable times and as
often as Secured Party may reasonably request. Secured Party shall have no duty
to make any such inspection and shall not incur any liability or obligation or
be deemed to have waived any right by reason of not making any such inspection.
Debtor shall also furnish Secured Party with the following:
(a) within fifteen (15) days after such report is filed, a copy of
Debtor's quarterly report to the U.S. Securities and Exchange
Commission on Form 10-Q;
(b) within fifteen (15) days after such report is filed, a copy of
Debtor's annual report to the U.S. Securities and Exchange
Commission on Form 10-K; and
(c) from time to time, such other information as Secured Party may
reasonably request with respect to the financial condition and
operations of Debtor in order to determine whether the
covenants, terms and provisions of this Agreement have been
complied with by Debtor; provided that Debtor shall be allowed a
reasonable amount of time in which to respond to any such
request from Secured Party.
(d) from time to time, such other information as Secured Party may
reasonably request with respect to the financial condition and
operations of Debtor in order to determine whether the
covenants, terms
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
21
Page 5 of 9
and provisions of this Agreement have been complied with by
Debtor; provided that Debtor shall be allowed a reasonable
amount of time in which to respond to any such request from
Secured Party.
8. Debtor's Default. The parties agree that the occurrence of any
of the following events shall constitute an "Event of Default":
(a) Debtor's failure to make any timely payment of either principal,
interest or late payment charges required under the Promissory
Note, or Debtor's failure make any payment required under any
other promissory note, security agreement or lease agreement
between Debtor and Secured Party, if such failure continues for
a period of [*] days beyond the due date of such payment;
(b) Debtor's failure to perform any promise, agreement, obligation,
warranty or covenant made by it herein or in the Promissory
Note, if such failure continues for a period of [*] days after
Secured Party has given Debtor notice of such failure;
(c) Debtor's failure to maintain the insurance coverage as
specified above in Section 5;
(d) any material misrepresentation made by Debtor to secured Party
in connection with the Promissory Note or this Agreement;
(e) entry of a money judgment against Debtor, if such judgment is
nonappealable and remains undischarged or unstayed for a period
in excess of [*] days;
(f) dissolution, termination of existence, insolvency, business
failure, inability to pay debts 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;
(g) appointment of a receiver of any material part or all of
Debtor's, if such appointment or proceeding continues for period
of more than [*] days;
(h) Debtor entering into any transaction, without the prior written
consent of Secured Party, 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);), which transaction would reasonably justify
Secured Party in deeming itself insecure; provided, however,
that this subparagraph (h) shall not apply to any transaction
involving Debtor and (a) any of its wholly-owned subsidiaries,
(b) its parent company if Debtor is a wholly-owned subsidiary
thereof, or (c) any other company which is a wholly-owned
subsidiary of the aforesaid parent company;
(i) default in the payment by Debtor of any indebtedness for
borrowed money [*]
(j) the prospect of payment, performance or realization on the
Collateral is significantly impaired;
(k) Debtor's (or its Permitted Lessee) ceasing to be licensed
pursuant to U.S. law to operate a commercial air service; or
(l) the occurrence of a [*].
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
22
Page 6 of 9
Should an Event of Default occur, Secured Party may employ all remedies allowed
by law, including declaring all indebtedness owed under the Promissory Note, [*]
immediately due and payable. Additionally, Secured Party may require Debtor to
[*]. 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 of the Collateral is to be made shall be met if such notice is
mailed, postage prepaid, to Debtor's address, as specified herein, at least [*]
days before the time of the sale or disposition. After deduction of all
reasonable expenses incurred in realizing on this security interest, and after
the payment of all principal, interest and late payment charges due under the
Promissory Note, the balance of the proceeds of sale, if any, may be applied to
the payment of [*]. Debtor shall be liable for any deficiency in its financial
obligation under the Promissory Note and this Agreement after application of
such proceeds. Debtor agrees to pay the reasonable attorneys' fees incurred by
Secured Party to repossess the Collateral as well as the attorneys' fees
incurred in pursuing and collecting any deficiency. If, after a default by
Debtor, the Collateral is returned to or recovered by Secured Party, Debtor
agrees that Secured Party may fly or otherwise move the Collateral for
demonstration and other purposes reasonably related to a proposed public or
private sale or other disposition of the Collateral.
9. Damage or Destruction. In the event of the loss, theft or
confiscation of the Aircraft, or the substantial damage or destruction of the
Aircraft to such an extent that repair thereof is impracticable (as determined
by Secured Party in accordance with accepted industry standards), then Debtor
shall pay to Secured Party the outstanding indebtedness of principal and
accrued interest due under the Promissory Note, without prepayment penalty,
within [*] days after demand by Secured Party.
In the event that, following damage to the Aircraft, repair thereof is
determined to be practical (as determined by Secured Party in accordance with
accepted industry standards), then Debtor shall promptly repair and restore the
Aircraft to its condition immediately prior to the damage. All insurance
proceeds paid to Secured Party as a result of such damage pursuant to Section 5
hereof shall be available to reimburse Debtor for the reasonable costs of all
required repairs, provided that no Event of Default has occurred and is
continuing. Debtor shall furnish evidence satisfactory to Secured Party that the
sums requested as reimbursement represent sums actually paid by Debtor or
justly due for labor and materials. If requested by Secured Party, Debtor shall
also furnish appropriate lien waivers. Any insurance proceeds remaining after
all required repairs have been completed shall be immediately paid over to
Debtor so long as no Event of Default has occurred and/or is continuing.
10. Waivers. No waiver of any covenant, warranty or condition of
this Agreement, nor of any breach or default hereunder, shall be effective for
any purpose whatsoever unless such waiver is in writing and signed by an
officer of Secured Party. It is expressly agreed that Secured Party's waiver of
any breach or default by Debtor shall constitute a waiver only as to such
particular breach or default and not a waiver of any future breach or default.
11. Permitted Lessee. Debtor shall be allowed to lease the Aircraft
to another party ("Permitted Lessee"), subject to the condition precedent that
Secured Party expressly approves such lease in writing, which approval shall not
be unreasonably withheld or delayed by Secured Party. As a minimum, the terms of
any such lease shall provide that the rights of the Permitted Lessee to
possession of the Aircraft are subordinate to those of Secured Party hereunder
and shall further require the Permitted Lessee to perform all of Debtor's
obligations contained herein in Sections 4, 5, 6, 7, 9, 13, 14 and 16.
Contemporaneously with Secured Party's approval and the execution of such lease,
Debtor shall execute an assignment of the lease to Secured Party as additional
security for the payment of Debtor's obligations hereunder, which assignment
shall be in form and substance reasonably acceptable to Secured Party and shall
specifically provide that so long as no Event of Default has occurred or is
continuing, Debtor shall retain the right to receive payments of rent
thereunder.
12. Sale of Aircraft. Debtor shall be permitted, following [*] days'
advance written notice to Secured Party, to sell the Aircraft to another party
("Permitted Buyer"), provided that the Permitted Buyer agrees to
"[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION]"
23
Page 7 of 9
assume and discharge all of Debtor's promises, agreements, obligations,
liabilities, warranties, covenants and representations as expressed in this
Agreement, the Promissory Note and the 1900D Master Agreement as amended
referenced above. Notwithstanding any such sale, Debtor shall continue to be
primarily responsible hereunder, both jointly and severally, with any such
Permitted Buyer until such time as the Promissory Note is paid in full.
13. Liens. Debtor shall not, directly or indirectly, create, incur,
assume or suffer to exist any lien ("Lien") on or with respect to the
Collateral, or any part thereof, except:
(a) the Lien of Secured Party hereunder;
(b) Liens for taxes, assessments or other governmental charges owing by
Debtor, either not yet due or being contested in good faith (and for
the payment of which adequate reserves have been provided) and by
appropriate proceedings so long as such proceedings do not involve
any material danger of the sale, forfeiture or loss of the
Collateral or any part thereof;
(c) materialmen's, mechanic's, workmen's, repairmen's, employees' Liens
or any Lien of a similar nature arising in the ordinary course of
Debtor's business, which Lien secures an obligation that is not yet
delinquent or is being contested in good faith (and for the payment
of which adequate reserves have been provided) and by appropriate
proceedings so long as such proceedings do not involve any material
danger of the sale, forfeiture or loss of the Collateral or any part
thereof;
(d) Liens arising out of any judgment or award against Debtor, provided
that the judgment or award secured shall, within [*] days of
entry thereof, have been discharged, vacated, reversed or execution
thereof stayed pending appeal and shall have been discharged,
vacated or reversed within [*] days after the expiration of
such stay; and
(e) any other Lien with respect to which Debtor shall have provided a
bond or other means that precludes the holder of the Lien, in the
reasonable judgment of Secured Party, from taking any recourse
against the Collateral.
Debtor shall promptly, at no expense to Secured Party, take (or cause to be
taken) such action as may be necessary to duly discharge any Lien not excepted
above if the same shall arise at any time with respect to the Collateral or any
part thereof.
14. Taxes. Debtor shall pay or cause to be paid in the manner and at
the time required by applicable law, all federal, state and local taxes
(including sales, property, use, value-added, goods and service taxes),
assessments and governmental charges or levies imposed upon, or in respect of,
the Collateral, this Agreement, any payments made hereunder or under the
Promissory Note, or upon or in respect of Debtor or Debtor's income or profits,
or upon any property belonging to Debtor prior to the date on which penalties
attach thereto and all lawful claims which, if not paid, become a Lien upon the
property of Debtor (all of the above collectively "Taxes"). Debtor shall
indemnify and hold Secured Party harmless from liability for the payment of any
such Taxes.
15. Legal, Valid, Binding and Enforceable Obligation. Debtor represents
and warrants to Secured Party that this Security Agreement, upon execution and
delivery, will constitute the legal, valid and binding obligation of Debtor and
shall be enforceable in accordance with its terms. Debtor agrees to furnish
Secured Party with written legal opinions, satisfactory in form and substance
to Secured Party, verifying the aforesaid representation and warranty.
16. Changes of Address and Change of Base. Debtor shall immediately
notify Secured Party in writing of any change of addresses from that shown in
Tables 1(b), 1(c) or 1(d) of this Agreement. Debtor will at all times keep the
Aircraft based within the continental United States of America; provided,
however, that Secured Party will favorably consider a change of base for the
Aircraft to a location outside of the continental United States of America if
Debtor can furnish Secured Party with evidence satisfactory to Secured Party
that such a change of base location will
"[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION]"
24
Page 8 of 9
not result in any material change in Secured Party's ability to timely
repossess the Aircraft in the event of any breach or default hereunder by
Debtor.
17. 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 TRANSACTION, INCLUDING ANY ACTIONS UNDERTAKEN BY
SECURED PARTY 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 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, 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.
18. Enforceability. The provisions of this Agreement shall be
severable and, if any provisions are for any reason determined to be invalid,
void or unenforceable, in whole or in part, the remaining provisions shall
remain in full force and effect; provided that the purpose of the remaining
valid, effective and enforceable provisions is not frustrated; and provided
further that no party is substantially and materially prejudiced thereby.
19. Assignability. Secured Party shall have the absolute right to
assign, transfer or sell any of its rights under this Agreement to any party of
its choosing upon giving written notice thereof to Debtor. Debtor may not
assign or delegate any of its rights or obligations hereunder without the prior
written consent of Secured Party; provided, however, that Debtor may assign its
rights and obligations hereunder to (a) any of its wholly-owned subsidiaries,
(b) its parent company if Debtor is a wholly-owned subsidiary thereof, or (c)
any other company which is a wholly-owned subsidiary of the aforesaid parent
company (collectively "Permitted Assignee"), subject to the condition that
Debtor shall remain primarily liable hereunder, both jointly and severally,
with any such Permitted Assignee.
20. Binding Agreement. All obligations of Debtor hereunder shall
bind the heirs, legal representatives, successors and assigns of Debtor. If
there be more than one Debtor hereunder, their liabilities shall be joint and
several. All rights of Secured Party hereunder shall inure to the benefit of
its successors and assigns.
21. Entire Agreement. This Agreement and the Promissory Note
constitute the entire agreement between and among the parties with respect to
the subject matter hereof. There are not verbal understandings, agreements,
representations or warranties between the parties which are not expressly set
forth herein. This Agreement shall not be changed orally, but only in writing
signed by the parties hereto.
22. 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. Notices sent by registered or certified mail shall be deemed given
on the third day after the date of postmark. Until changed by written notice
given by either party, the addresses of the parties shall be as set forth in
Table 1(a) for the Secured Party and as set forth in Table 1(b) for the Debtor.
The designated addresses of both parties must be located within the United
States of America.
25
Page 9 of 9
In witness of the mutual promises, covenants and representations set
forth herein, the parties have caused this Agreement to by duly executed and
delivered at Wichita, Kansas, on the day and year first above written.
RAYTHEON AIRCRAFT CREDIT CORPORATION
By:
--------------------------------
Xxxx Xxxxx, Vice President
"Secured Party"
Mesa Air Group, Inc.
By:
--------------------------------
W. Xxxxxxx Xxxxxxx, CFO
"Debtor"
STATE OF KANSAS )
) ss:
COUNTY OF SEDGWICK )
This instrument was acknowledged before me on the 28th day of May,
1996, by W. Xxxxxxx Xxxxxxx who is the CFO on Mesa Air Group, Inc., on behalf
of the corporation.
---------------------------
Notary Public
My Commission Expires:
26
EXHIBIT "A"
TO SECURITY AGREEMENT
MESA AIR GROUP, INC.
SPARE PARTS LOCATIONS
Air Midwest Desert Turbine Service, Inc.
(US Air Express) 1140 West Navajo
0000 Xxx Xxxxx Xx. Xxxxxx #0
Xxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Desert Sun Airlines Four Corners Aviation
(America West Express) 1260 West Navajo
0000 X. Xxxxxxx Xxx Xxxxxxxxxx, XX 00000
Xxxxxxx, XX 00000
Florida Gulf Mesa A.L. Pilot Development
(US Air Express) 1296 West Navajo
00000 Xxxxx Xx. Xxxxxxxxxx, XX 00000
Xxxxxxxxxxxx, XX 00000
Liberty Express Regional Aircraft Services
(US Air Express) 0000 Xxxxx Xxxxx Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx Xxxxxxx Xxxxxx, XX 00000
X.X. Xxx 000
Xxxxx Xxxxx, XX 00000
Mountain West Airlines US Air Express Maintenance
(UAX-DEN, LAX/YV - ABQ/HPX-PHX) Reading Regional Airport
0000 X. Xxxxxx XX0 Xxx 0000
Xxxxxxxxxx, XX 00000 Xxxxxxx, Xxxxxxxxxxxx 00000
West Air, Inc. Mountain West Maintenance
(United Express) 000 Xxxxxxx 00
5588 Air Terminal Drive Hangar 24
Xxxxxx, XX 00000 Xxxxxxxx Xxxx, XX 00000
Mountain West Maintenance
0000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
27
Appendix 3.2(C)
APPENDIX 3.2(C)
PRORATED STIPULATED VALUES
[See attached form.]
28
APPENDIX 3.2 (C)
RAYTHEON AIRCRAFT CREDIT CORPORATION
PRORATED STIPULATED VALUE AND NEW LOAN BALANCE
FOR MESA AIR GROUP, INC.
AS OF MAY 31, 1996
[*]
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
Page 1
29
APPENDIX 3.2 (C)
RAYTHEON AIRCRAFT CREDIT CORPORATION
PRORATED STIPULATED VALUE AND NEW LOAN BALANCE FOR MESA AIR GROUP, INC.
AS OF MAY 31, 1996
[*]
---------------------------------------------------------------------------
(a) Total Purchase Price require June 1, 1996 payments being made per the
existing lease contracts.
Total Purchase Price Less Lease Deposit Credits as follows:
[*]
---------------------------------------------------------------------------
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
Page 2
30
Appendix 3.6(B)
APPENDIX 3.6(B)
TERMS OF PAYMENT AND FINANCING FOR 1900D AIRLINER
[See attached document.]
31
Appendix 3.6(B) Page 1 of 6
APPENDIX 3.6(B)
TERMS OF PAYMENT AND FINANCING FOR 1900D AIRLINER
1. Terms of Payment per 1900D
Total Purchase Price/Principal Sum $ (*) (1)
Less Principal Reduction Amount - (*) (2)
-------------------
Principal Sum Balance $ (*) (3)
(*) SEE APPENDIX 3.2(C) FOR UNIQUE AMOUNTS
APPLICABLE TO EACH 1900D AIRLINER
(1) The Total Purchase Price/Principal Sum of each 1900D Airliner is
taken from Appendix 3.2(C) of the Master Agreement.
(2) This Amount is calculated for each 1900D Airliner based upon
the Purchase Price/Principal Sum set forth in Appendix 3.2(C)
of the Master Agreement. The identified Principal Reduction
Payment shall be reduced by the credits identified in Article
4.3 and 4.4 of Supplemental Agreement No. 05/22/96 as set forth
in Appendix 3.2(C).
(3) This amount is the remaining principal sum balance less the
Principal Reduction Amount due on May 31, 1996. The terms and
conditions pertaining to financing and Mesa's payment of the
Principal Sum Balance are set forth below in Section 2 and
in the Negotiable Promissory Note and the Aircraft Security
Agreement forms for the 1900D Airliner.
2. Terms of Financing
(A) Financing Structure:
1. RAC will cause its wholly-owned subsidiary, Raytheon
Aircraft Credit Corporation ("RACC"), to finance the
Principal Sum Balance of each 1900D Airliner to be
purchased by Mesa in accordance with the terms and
conditions set forth below.
2. The exact Financing Term for each Negotiable
32
Appendix 3.6(B) Page 2 of 6
Promissory Note shall be calculated by subtracting the number of
months since the 1900D Airliner was delivered to Mesa (number of
months before May 31, 1996 that delivery occurred) from [*]
months. For example, if the 1900D Airliner was delivered to
Mesa [*] months prior to May 31, 1996, the Financing Term would
be [*] minus [*], or [*] months. The delivery dates for the
1900D Airliner are identified on Exhibit "A" to the Supplemental
Agreement No. 05/22/96. The Financing Term for each 1900D
Airliner shall commence on the date specified in the Negotiable
Promissory Note. All months payments shall be due and payable,
without demand or notice to Mesa, on the date specified in the
Negotiable Promissory Note.
3. The "Fixed Payment Period" shall be calculated by subtracting
the number of months since the 1900D Airliner was delivered to
Mesa (number of months before May 31, 1996 that delivery
occurred) from [*] months. For example, if the 1900D Airliner
was delivered to Mesa [*] months prior to May 31, 1996, the
Fixed Payment Period would be [*] minus [*], or [*] months. The
amount of the monthly payments due during the Fixed Payment
Period is [*] by agreement of RACC and Mesa. This amount shall
be applied first against interest owed RACC equal to the amount
of the current [*] in effect on the first business day of each
calendar year quarter (i.e., January 1, April 1, July 1 and
October 1), plus [*] and secondly against the unpaid balance of
the Principal Sum due under the Promissory Note, subject to the
condition that each such monthly payment must be paid by Mesa in
a timely manner.
4. Fixed Interest Rate Option during Fixed Payment Period
("Option"). During the Fixed Payment Period Mesa may elect to
convert to a fixed interest rate by providing RACC with written
notice of its intention to convert to a fixed interest rate
seven (7) days prior to the conversion to the fixed interest
rate. Mesa is entitled to receive this fixed interest rate for
any full months remaining
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
33
Appendix 3.6(B) Page 3 of 6
during the Fixed Payment period of the Financing Term commencing
after the conversion referenced above. The fixed interest rate
will be [*] for the term of the Fixed Payment Period plus [*]
basis points, or [*] basis points over the above noted [*]. The
fixed interest rate will be determined seven (7) days after Mesa
provides RACC with written notice of its intention to convert to
a fixed interest rate. The monthly payments due and payable to
RACC during the Option period will remain at $[*]. If Mesa
elects to convert to a fixed interest rate and then does not
continue to finance the 1900D Airliner through the Fixed Payment
Period, Mesa will pay RACC for any costs RACC may incur as a
result of the early termination of the financing. These costs,
hereinafter referred to as "Breakage Costs" are described below
in Paragraph (C).
5. The "Variable Payment Period" shall be calculated by subtracting
the number of months in the Fixed Payment Period from the number
of months in the Financing Term. For example, if the Fixed
Payment Period is [*] months and the Financing Term is [*]
months, the Variable Payment Period would be [*] months. The
annual rate of interest during the Variable Payment Period of
the Financing Term shall be equal to the current [*] Rate in
effect on the first business day of each calendar year quarter
(i.e., January 1, April 1, July 1 and October 1), plus [*]. The
rate of interest throughout the Financing Term shall increase or
decrease in accordance with the current 90-Day LIBOR Rate on the
first business day of each calendar year quarter plus [*]. Each
monthly payment during the Variable Payment Period of the
Financing Term shall be sufficient in amount to fully amortize
the unpaid balance of the Principal Sum on the Due Date less the
balloon payment due in the last month of the Financing Term.
6. A balloon payment of principal in an amount not to exceed U.S.
$[*] shall be due and payable to RACC in the last month of the
Financing Term in
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
34
Appendix 3.6(B) Page 4 of 6
addition to Mesa's regular monthly payment of principal and
interest. Additionally, all unpaid principal, interest and late
payment charges, shall be due and paid in full by Mesa in the
last month of the Financing Term (the "Due Date").
7. The Negotiable Promissory Note and the Aircraft Security
Agreement will be [*]
8. The Negotiable Promissory Note and the Aircraft Security
Agreement for each 1900D Airliner must be executed by Mesa and
submitted to and approved by RACC prior to delivery of each
respective 1900D Airliner.
(B) Amount of Mesa's Monthly Payments (per 1900D Airliner) during the
Financing Term:
Month Amount
----- ------
Fixed Payment Period (**) $ [*](1)
Variable Payment Period (**) $ (**)(2)
Last Month Of Financing $ [*](3)
(**) As defined in paragraph 2.(A)3 and 2.(A)5. above
(1) The amount of the monthly payments due during the Fixed Payment Period of
the Financing Term is fixed by agreement of Mesa and RACC. This amount
shall be first credited against interest owed RACC at the current [*] Rate
in effect on the first business day of each calendar year quarter (i.e.,
January 1, April 1, July 1 and October 1), plus [*] and then applied to
Mesa's payment of the Principal Sum due hereunder, subject to the condition
that Mesa must make each monthly payment in a timely manner.
(2) The amount of monthly payments of principal and interest due during the
Variable Payment Period of
[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]
35
Appendix 3.6(B) Page 5 of 6
the Financing Term is based upon the current [*] in effect on
the first business day of each calendar year quarter (i.e.,
January 1, April 1, July 1 and October 1), plus [*]. The rate
of interest throughout the Financing Term shall increase or
decrease in accordance with the current [*] Rate on the first
business day of each calendar year quarter plus [*]. Each
monthly payment during the Variable Payment Period of the
Financing Term shall be sufficient in amount to fully amortize
the unpaid balance of the Principal Sum on the Due Date less
the balloon payment due in the last month the Financing Term.
(3) One (1) balloon payment of principal in an amount not to exceed
U.S. $[*] is due and payable (in full) on the Due Date, in
addition to the regular monthly payment of principal and
interest. Additionally, all outstanding principal, interest
and late payment charges must be paid in full by Mesa on or
before the Due Date.
(C) Determination of Breakage Costs:
1. In order to provide fixed interest rate financing to Mesa, RACC
will enter into a "VARIABLE FOR FIXED INTEREST RATE SWAP
AGREEMENT" with a financial institution. If Mesa does not
continue to finance the 1900D Airliner at the fixed interest
rate through the Fixed Payment Period, that portion of said
financing which would cease to be operative for the remaining
portion of the Fixed Payment Period will be subject to an
"Unwinding". Such Unwinding will be achieved by RACC entering
into an offsetting "FIXED FOR VARIABLE INTEREST RATE SWAP
AGREEMENT" for the unused portion of the original "VARIABLE FOR
FIXED INTEREST RATE SWAP AGREEMENT". The swaps referred to
above are based upon the prevailing U.S. treasury bills, note
and/or bond interest rate yields for specific maturities at the
time of entering into such swap agreements plus a swap spread,
which are both determined by the financial market to adjust for
the difference between a commercial borrower and the sovereign
undertaking of the U.S. Government and the duration of the
swap. Accordingly, to Unwind a VARIABLE FOR FIXED INTEREST RATE
SWAP AGREEMENT, RACC would
"[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION]"
36
Appendix 3.6(B) Page 6 of 6
enter into a FIXED FOR VARIABLE INTEREST RATE SWAP AGREEMENT
with the variable interest rate components offsetting each other
since the components are based on the same benchmark, i.e., [*].
A cost may result due to the difference between the fixed
interest rate yield and swap spread components of the VARIABLE
FOR FIXED INTEREST RATE SWAP AGREEMENT and the FIXED FOR
VARIABLE INTEREST RATE SWAP AGREEMENT. If a cost results due to
the difference described above, RACC will provide Mesa written
notice of the Breakage Costs due RACC as a result of Mesa's
termination of the fixed interest rate financing. Said notice
will be provided Mesa within ten (10) days following termination
of the fixed interest rate financing with RACC.
2. Payment of the Breakfast Costs are due and payable to RACC by
Mesa immediately upon receipt of said notice by Mesa.
"[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
37
EXHIBIT A
(66)
1900D AIRLINERS
FROM LEASE
TO
PURCHASE
-------------------------------------------------------------------------------
ACTUAL
UNIT NO. SERIAL NO. DEL DATE
[*]
Supplemental Agreement No. 05/22/96
PAGE 1
"[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
38
(66) EXHIBIT A
1900D AIRLINERS
FROM LEASE
TO
PURCHASE
-------------------------------------------------------------------------------
ACTUAL
UNIT NO. SERIAL NO. DEL DATE
[*]
Supplemental Agreement No. 05/22/96
PAGE 2
"[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]"
