EXHIBIT 10.7(d)
EXHIBIT 10.7(d)
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") made as of the 31st day of March,
1998 by and between Lynrise Air Lease, Inc. f/k/a Shorts Air Lease, Inc., a
Delaware corporation having an office at 0000 00xx Xxxxxx, X.X., Xxxxx 0000,
Xxxxxxxxxx, X.X. 00000 ("Lynrise") and CCAIR, Inc., a Delaware corporation
having an office at 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, XX 00000-0000 ("CCAIR").
W I T N E S S E T H
WHEREAS, Lynrise has entered into a Settlement Agreement with CCAIR of
even date herewith (the "Settlement Agreement") with respect to obligations owed
by CCAIR, as lessee, to Lynrise, as lessor, under nine separate leases (the
"Aircraft Leases") of nine Model SD3-60-300 Aircraft bearing FAA registration
marks N121PC, N722PC, N729PC, N360PC, N742CC, N747HH, N748CC, N153CC and N159CC
(the "Aircraft");
WHEREAS, CCAIR is currently indebted to Lynrise in the aggregate amount of
$9,915,012 for rental payments, maintenance and repair obligations and other
obligations under the Aircraft Leases after taking into account Lynrise's duty
to mitigate damages and any other discounts, offsets, credits and obligations of
Lynrise under the Aircraft Leases (the "Lease Obligations");
WHEREAS, pursuant to the Settlement Agreement, CCAIR has redelivered the
Aircraft to Lynrise and has tendered its satisfaction of the Lease Obligations
(i) an inventory of spare parts which CCAIR has sold to Lynrise in exchange for
a $130,000 credit against the Lease Obligations, (ii) maintenance records with
respect to the Aircraft, (iii) the Landing Gear and Engine (as such terms are
defined in the Settlement Agreement), and (iv) a Note issued as of the date
hereof by CCAIR in the original principal amount of $9,785,012 and having a
stated
EXHIBIT 10.7(d)
maturity of August 31, 1998, evidencing the balance of the Lease Obligations
(the "Short Term Note");
WHEREAS, under the terms of the Settlement Agreement, Lynrise has agreed
to grant to CCAIR an option to purchase the Short Term Note upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreement herein contained and other good and valuable consideration each to the
other in hand paid, the receipt and legal sufficiency whereof is hereby
acknowledged, the parties hereto covenant and agree as follows:
1. Reference to Settlement Agreement: Definitions. Terms used herein
and not defined herein are used as defined in the Settlement Agreement.
2. Grant of Option. In consideration of TEN DOLLARS ($10.00) and other
good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, Lynrise does hereby grant, bargain and sell to CCAIR an option
(the "Option") to purchase all of Lynrise's right, title and interest in and to
the Short Term Note and the indebtedness evidenced thereby for an amount equal
to the Purchase Price as determined under Section 3 hereof and upon the terms
and conditions set forth in this Agreement.
3. Purchase Price. The purchase price shall consist of the following
(the "Purchase Price"):
(a) a payment of ONE MILLION EIGHT HUNDRED FIVE THOUSAND TWELVE
DOLLARS ($1,805,012) plus interest thereon from the date hereof through the
Closing Date (as hereinafter defined) at a rate of seven percent (7%) per annum
calculated based on a 360 day year and actual days elapsed (the "Option
Payment") less the amount, if any, of the Records Credit (as such term is
defined in the Settlement Agreement);
EXHIBIT 10.7(d)
(b) delivery to Lynrise of a 7% Convertible Subordinated Note due
2004 in the original principal amount of SEVEN MILLION NINE HUNDRED TWENTY
THOUSAND DOLLARS ($7,920,000) in the form attached hereto as Exhibit A (the
"Convertible Note") and a Registration Rights Agreement in the form attached
hereto as Exhibit B (the "Registration Rights Agreement").
The Option Payment may be made at CCAIR's election (i) in cash as provided in
Section 6.(b)(i) hereof, (ii) in CCAIR common stock par value $.01 per share,
which shall be immediately salable in the public market without restriction (the
"Common Stock") in quantities sufficient to generate cash proceeds, net of any
expenses paid or incurred by Lynrise, including any commissions or compensations
paid to brokers or others performing similar services in connection with such
sale ("Net Cash Proceeds") to Lynrise equal to the Option Payment as provided in
Section 5 hereof, or (iii) in cash and Common Stock as provided in Section 5 and
Section 6(b)(i) hereof.
4. Term of Option. The Option shall be effective from and after the date
of execution and delivery of this Agreement and the Settlement Agreement by the
parties hereto and shall expire (unless sooner terminated) on the earliest to
occur of the following (the "Option Expiration Date"): (a) August 31, 1998, or
(b) the Option Termination Date (as hereinafter defined).
5. Election to Deliver Stock for Credit Against Option Payment: Exercise
of Option. If CCAIR elects to make the Option Payment, in whole or part, by
delivering Common Stock to Lynrise, CCAIR, on or before August 15, 1998, shall
deliver notice of such election to Lynrise (which for purposes of this
Agreement, shall constitute delivery by CCAIR of the Option Notice as required
by this Paragraph 5) accompanied by stock certificates for such Common
EXHIBIT 10.7(d)
Stock issued in the name of Lynrise. Upon timely receipt of such notice of
election and certificates for such Common Stock, Lynrise shall use reasonable
efforts to sell all Common Stock so issued in the public market. During the week
of August 24, 1998 through August 28, 1998, Lynrise shall provide CCAIR with an
accounting of the Net Cash Proceeds received by Lynrise from the sale of such
Common Stock and shall return to CCAIR any stock certificates for Common Stock
not sold. Upon receipt, Lynrise shall apply such net Cash Proceeds as a
prepayment of interest and principal on the indebtedness evidenced by the Short
Term Note and, if CCAIR has timely satisfied the conditions to Closing set forth
in Section 6(b) hereof, CCAIR shall be entitled to a credit against the Option
Payment in the aggregate amount of such Net Cash Proceeds. The Option may be
exercised by CCAIR by timely delivering stock certificates for Common Stock to
Lynrise as provided in this Section 5 or by delivering to Lynrise written
notice, in the manner hereinafter set forth for the giving of Notices, such that
the notice is received by Lynrise on or before the Option Expiration Date (the
"Option Notice"). The Option Notice shall state that CCAIR desires to purchase
the Short Term Note in accordance with the terms hereof. If CCAIR elects to
exercise the Option by delivering Common Stock to Lynrise and Lynrise has used
reasonable efforts to sell the Common Stock in the public market, CCAIR shall
bear any risk that the Common Stock cannot be sold in the public market prior to
the Closing or that the Net Cash Proceeds received from such sale are less than
the amount of the Option Payment. As used herein, "reasonable efforts" to sell
the Common Stock shall mean delivery of certificates for the Common Stock to a
broker within three business of receipt of such certificates with instructions
to sell the Common Stock.
6. Closing. (a) If CCAIR timely delivers the Option Notice in accordance
with the terms hereof and the conditions to Lynrise's obligation to close
hereunder are timely satisfied, then Lynrise shall be, and remain, obligated to
assign to CCAIR all of Lynrise's right, title and
EXHIBIT 10.7(d)
interest in, to and under the Short Term Note (the "Assignment") in accordance
with the terms of this Agreement. The closing of the Assignment (the "Closing")
shall take place on the fifth business day after receipt by Lynrise of the
Option Notice (the "Closing Date") at the offices of Ropes & Xxxx, One Xxxxxxxx
Square, 0000 X Xxxxxx X.X., Xxxxx 000 Xxxx, Xxxxxxxxxx, X.X. 0000-0000. At the
Closing, Lynrise shall sell, transfer, assign, grant, set over and convey to
CCAIR, and its successors and assigns, without recourse, representation or
warranty of any kind except as set forth in Section 8 hereof, all of Lynrise's
right, title and interest in, to and under the Short Term Note in accordance
with the terms of this Agreement for and in consideration of the Purchase Price.
(b) At the Closing, and as a condition to Lynrise's obligation to close:
(i) CCAIR shall deliver to Lynrise an amount equal to the Option
Payment (less any credit against the Option Payment as provided in Section
5 hereof in respect of Net Cash Proceeds previously received by Lynrise by
federal funds wire transfer in accordance with the wire instructions set
forth on Exhibit C hereto;
(ii) CCAIR shall deliver to Lynrise the Convertible Note and the
Registration Rights Agreement;
(iii) CCAIR shall deliver to Lynrise a comprehensive release of any
and all claims of CCAIR against Lynrise in the form of the release
attached as Exhibit D hereto;
(iv) the representations and warranties of CCAIR contained in
Section 9 hereof shall be true and correct in all material respects as of
the Closing Date; and
(v) no breach of the terms and provisions of this Agreement by CCAIR
shall have occurred and be continuing as of the Closing Date.
(c) At the Closing, and as a condition to CCAIR's obligation to close
Lynrise shall deliver to CCAIR (i) the original Short Term Note marked as
"Canceled," and (ii) the excess, if
EXHIBIT 10.7(d)
any, of Net Cash Proceeds previously received by Lynrise over the amount of the
Option Payment.
7. Termination of Option. The Option may be terminated by Lynrise by
delivery of written notice of termination to CCAIR (the "Option Termination
Notice") in the manner hereinafter set forth for the giving of Notices, if on or
before May 29, 1998, CCAIR shall not have notified Lynrise in writing that
CCAIR's Board of Directors and stockholders (if required) have taken all
necessary action to authorize the issuance of Common Stock to Lynrise or the
sale of Common Stock or other securities in amounts sufficient to generate
proceeds to pay the Option Payment upon exercise of the Option, or CCAIR's Board
of Directors and stockholders have taken all necessary action to authorize an
agreement pursuant to which funds will be available to CCAIR in an amount
sufficient to pay the Option Payment upon exercise of the Option. This Agreement
shall be terminated on the date of delivery of the Option Termination Notice
(the "Option Termination Date").
8. Representations and Warranties of Lynrise.
Lynrise hereby represents and warrants to CCAIR, as of the date hereof and
the Closing Date that:
(a) Lynrise is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to enter into, execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. Neither the
execution, delivery or performance of this Agreement, not the sale of the Short
Term Note to CCAIR will result in any breach of any provision of, or constitute
a default (or an event which with notice or lapse of time or both would
constitute a default) under, any charter documents or bylaws of Lynrise, or any
agreement or
EXHIBIT 10.7(d)
instrument to which Lynrise is a party or by which it is bound, or any statute,
order, rule or regulation of any court or other governmental authority
applicable to it.
(b) This Agreement has been duly and validly authorized, executed
and delivered by Lynrise, and constitutes the legal, valid and binding
obligation of Lynrise enforceable against Lynrise in accordance with its terms.
(c) Lynrise is the only legal and beneficial owner of, and has good
title to, the Short Term Note; no other party has any legal or beneficial
interest in the Short Term Note. Lynrise has not pledged, encumbered, assigned,
transferred, conveyed, disposed of or terminated in whole or in part, any of its
right, title and interest.
(d) To Lynrise's knowledge, no registration with, or consent or
approval of, or any other action by, any federal, state or governmental agency,
authority, administrative or regulatory body, arbitrator, court or other
tribunal, foreign or domestic, is required for the execution, delivery and
performance of this Agreement by Lynrise or the sale by the Lynrise of the Short
Term Note.
9. Representations and Warranties of CCAIR.
CCAIR hereby represents and warrants to Lynrise, as of the date hereof and
the Closing Date that:
(a) CCAIR is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to enter into, execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. Neither the
execution, delivery or performance of this Agreement, nor the purchase of the
Short Term Note from Lynrise will result in any breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
would constitute a default) under, any charter documents or bylaws of CCAIR, or
any agreement
EXHIBIT 10.7(d)
or instrument to which CCAIR is a party or by which it is bound,
or any statute, order, rule or regulation of any court or other governmental
authority applicable to it.
(b) This Agreement has been duly and validly authorized, executed
and delivered by CCAIR and constitutes the legal, valid and binding obligation
of CCAIR, enforceable against CCAIR in accordance with its terms.
(c) To CCAIR's knowledge, no registration with, or consent or
approval of, or any other action by, any federal, state or governmental agency,
authority, administrative or regulatory body, arbitrator, court or other
tribunal, foreign or domestic, is required in connection with the execution,
delivery and performance of this Agreement by CCAIR or the purchase by CCAIR of
the Short Term Note.
10. Default.
(a) If Lynrise has tendered the Short Term Note to CCAIR, and CCAIR
defaults in its obligation timely to pay the purchase Price after delivering the
Option Notice, then Lynrise shall be entitled to terminate this Agreement,
collect amounts owed to Lynrise under the Short Term Note and exercise any other
remedies at law or in equity arising as a result of CCAIR's default hereunder.
(b) If CCAIR has timely delivered the Option Notice pursuant to
Section 5 hereof, tendered the Purchase Price, and satisfied the conditions to
Closing pursuant to Section 6(b) and Lynrise has failed to deliver the Short
Term Note to CCAIR or to perform other obligations pursuant to Section 6(c)
hereof, CCAIR shall be entitled to specific performance of this Agreement as its
sole and exclusive remedy.
11. Notices. All waivers, elections, notices, demands and consents which
either party may be required or may desire to give under this Option Agreement
("Notices") shall be in writing and shall be deemed to have been duly given when
(i) deposited in an official United
EXHIBIT 10.7(d)
States Postal Service office if mailed by certified mail, return receipt
requested, postage prepaid, or (ii) received, or refused, if delivered by
prepaid overnight delivery service, to the party to whom the same is so given or
made, at the address of such party as set forth below as follows:
To Lynrise: Lynrise Air Lease, Inc.
0000 00xx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention: Xx. Xxxxxxx Xxxxxxxx
With a copy to
Lynrise's attorneys: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
To CCAIR: CCAIR, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xx. Xxxxxxx Xxxx
With a copy to
CCAIR's attorneys: Xxxxxxxx, Xxxxxxxx & Xxxxxx
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, XX 00000-0000
Either party may designate by Notice to the other a new address to which
Notices shall thereafter be mailed or delivered.
12. Assignment. CCAIR shall not be entitled to assign its rights under
this Agreement, without the prior written consent of Lynrise, which Lynrise
shall be entitled to grant or withhold in its sole discretion. Any assignment
made in violation of the provisions of this Section 12 shall be null, void and
of no effect whatsoever.
13. Further Assurances. From and after the date hereof, Lynrise and CCAIR
each covenant and agree to execute and deliver all such documents and to take
all such further actions as the other party hereto may reasonably deem
necessary, from time to time, to carry out the intent and purposes of this
Agreement and to consummate the transactions contemplated hereby
EXHIBIT 10.7(d)
with each party's costs and expenses associated therewith, including legal
expenses, to be borne individually by each party, except as otherwise provided
in this Agreement. The provisions of this Section 13 shall survive the
expiration or sooner termination of this Agreement and the Closing.
14. Choice of Law. This Agreement shall be governed and construed in
accordance with the internal laws of the State of New York without giving effect
to the principles of conflicts of law.
15. Survival. All representations, warranties, and covenants made by the
parties hereto in this Agreement and the documents delivered at Closing shall be
considered to have been relied upon by the parties hereto, shall be true when
made and as of the Closing Date, and shall survive the execution, performance
and delivery of this Agreement and the Closing.
16. Successors and Assigns. Subject to the provisions of Section 12
hereof, this Agreement, including, without limitation, the representations,
warranties and covenants contained herein, shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns.
17. Counterpart Execution. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute one agreement binding both
parties hereto.
18. Amendments; Waivers.
(a) No amendment or waiver of any provision of this Agreement shall
be effective unless it is in writing and signed by Lynrise and CCAIR.
(b) No failure on the party of any party to exercise, and no delay
in exercising, any right hereunder or under any related document shall operate
as a waiver thereof by such party, nor shall any single or partial exercise of
any right hereunder or under any other related document preclude any other or
further exercise thereof or the exercise of any other right. The rights and
remedies of each party provided herein and in other related
EXHIBIT 10.7(d)
documents are cumulative and are in addition to, and not exclusive or in lieu
of, any rights or remedies provided by law (except as otherwise expressly set
forth herein) and are not conditioned or contingent on any attempt by such party
to exercise any of its rights under any other related document against the other
party or any other entity.
19. Integration. This Agreement, together with the exhibits hereto and the
documents delivered or executed in connection herewith, constitutes the entire
agreement and understanding between the parties hereto with respect to the grant
of an option to purchase the Short Term Note and supersedes all prior
agreements, understandings or representations pertaining thereto, whether oral
or written. There are no warranties, representations or other agreements between
the parties in connection with the subject matter hereof except as specifically
set forth or incorporated herein.
20. Captions and Headings. The section captions and headings in this
Agreement are for convenience only and are not intended to be full or accurate
descriptions of the contents thereof. The section captions shall not be deemed
to be part of this Agreement and in no way define, limit, extend or describe the
scope or intent of any provisions hereof.
IN WITNESS WHEREOF, CCAIR and Lynrise have executed this Option Agreement
as of the date and year first above written.
LYNRISE AIR LEASE, INC.
By: _____________________________________
Name:
Title:
CCAIR, INC.
By: _____________________________________
Name:
Title:
