EXHIBIT 10.15
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 31, 2002 (this "Agreement"),
between Great Lakes Aviation, Ltd., an Iowa corporation (the "Company"), and
Raytheon Aircraft Credit Corporation, a Kansas corporation (hereinafter,
"RACC").
WHEREAS, the Company has entered into a Restructuring Agreement dated as
of the date hereof (as amended and in effect from time to time, the
"Restructuring Agreement") with RACC, pursuant to which RACC, subject to the
terms and conditions contained therein, has agreed to accept the return of
certain aircraft and provide certain related financing, to restructure its
financing of certain existing aircraft and reduce lease payments on certain
aircraft; and
WHEREAS, it is a condition precedent to RACC's restructuring any loan or
otherwise extending credit to the Company under the Restructuring Agreement that
the Company execute and deliver to RACC a security agreement in substantially
the form hereof; and
WHEREAS, the Company wishes to grant a security interest in favor of
RACC as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without
definitions shall have the respective meanings provided therefor in the
Restructuring Agreement. The term "State", as used herein, means the State of
Kansas. All terms defined in the Uniform Commercial Code of the State and used
herein shall have the same definitions herein as specified therein. However, if
a term is defined in Article 9 of the Uniform Commercial Code of the State
differently than in another Article of the Uniform Commercial Code of the State,
the term has the meaning specified in Article 9.
2. Grant of Security Interest. The Company hereby grants to RACC,
to secure the payment and performance in full of all of the Obligations, a
security interest in and pledges and assigns to RACC the following properties,
assets and rights of the Company, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof (all of the
same being hereinafter called the "Collateral"): all personal and fixture
property of every kind and nature including without limitation all goods
(including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts (including
health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of
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credit is evidenced by a writing), commercial tort claims, securities and all
other investment property, supporting obligations, any other contract rights or
rights to the payment of money, insurance claims and proceeds, and all general
intangibles (including all payment intangibles). RACC acknowledges that the
attachment of its security interest in any commercial tort claim as original
collateral is subject to the Company's compliance with Section 4.7.
3. Authorization to File Financing Statements. The Company hereby
irrevocably authorizes RACC at any time and from time to time to file in any
filing office in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all
assets of the Company or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the Uniform Commercial Code of the State or such jurisdiction, or (ii) as
being of an equal or lesser scope or with greater detail, and (b) provide any
other information required by part 5 of Article 9 of the Uniform Commercial Code
of the State or such other jurisdiction for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether the
Company is an organization, the type of organization and any organizational
identification number issued to the Company and, (ii) in the case of a financing
statement filed as a fixture filing or indicating Collateral as as-extracted
collateral or timber to be cut, a sufficient description of real property to
which the Collateral relates. The Company agrees to furnish any such information
to RACC promptly upon RACC's request. The Company also ratifies its
authorization for RACC to have filed in any Uniform Commercial Code jurisdiction
any like initial financing statements or amendments thereto if filed prior to
the date hereof.
4. Other Actions. Further to insure the attachment, perfection and
first priority of, and the ability of RACC to enforce, RACC's security interest
in the Collateral, the Company agrees, in each case at the Company's expense, to
take the following actions with respect to the following Collateral and without
limitation on the Company's other obligations contained in this Agreement:
4.1. Promissory Notes and Tangible Chattel Paper. If the
Company shall, now or at any time hereafter, hold or acquire any
promissory notes or tangible chattel paper, the Company shall forthwith
endorse, assign and deliver the same to RACC, accompanied by such
instruments of transfer or assignment duly executed in blank as RACC may
from time to time specify.
4.2. Deposit Accounts. For each deposit account that the
Company, now or at any time hereafter, opens or maintains, the Company
shall, at RACC's request and option, pursuant to an agreement in form
and substance satisfactory to RACC, either (a) cause the depositary bank
to agree to comply, without further consent of the Company, at any time
with instructions from RACC to such depositary bank directing the
disposition of funds from time to
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time credited to such deposit account, or (b) arrange for RACC to become
the customer of the depositary bank with respect to the deposit account,
with the Company being permitted, only with the consent of RACC, to
exercise rights to withdraw funds from such deposit account. RACC agrees
with the Company that RACC shall not give any such instructions or
withhold any withdrawal rights from the Company, unless an Event of
Default has occurred and is continuing, or, if effect were given to any
withdrawal not otherwise permitted by the Transaction Documents, would
occur. The provisions of this paragraph shall not apply to (i) any
deposit account for which the Company, the depositary bank and RACC have
entered into a cash collateral agreement specially negotiated among the
Company, the depositary bank and RACC for the specific purpose set forth
therein and (ii) any deposit accounts specially and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of the Company's employees.
4.3. Investment Property. If the Company shall, now or at any
time hereafter, hold or acquire any certificated securities, the Company
shall forthwith endorse, assign and deliver the same to RACC,
accompanied by such instruments of transfer or assignment duly executed
in blank as RACC may from time to time specify. If any securities now or
hereafter acquired by the Company are uncertificated and are issued to
the Company or its nominee directly by the issuer thereof, the Company
shall immediately notify RACC thereof and, at RACC's request and option,
pursuant to an agreement in form and substance satisfactory to RACC,
either (a) cause the issuer to agree to comply, without further consent
of the Company or such nominee, at any time with instructions from RACC
as to such securities, or (b) arrange for RACC to become the registered
owner of the securities. If any securities, whether certificated or
uncertificated, or other investment property now or hereafter acquired
by the Company are held by the Company or its nominee through a
securities intermediary or commodity intermediary, the Company shall
immediately notify RACC thereof and, at RACC's request and option,
pursuant to an agreement in form and substance satisfactory to RACC,
either (i) cause such securities intermediary or (as the case may be)
commodity intermediary to agree to comply, in each case without further
consent of the Company or such nominee, at any time, with entitlement
orders or other instructions from RACC to such securities intermediary
as to such securities or other investment property, or (as the case may
be) to apply any value distributed on account of any commodity contract
as directed by RACC to such commodity intermediary, or (ii) in the case
of financial assets or other investment property held through a
securities intermediary, arrange for RACC to become the entitlement
holder with respect to such investment property, with the Company being
permitted, only with the consent of RACC, to exercise rights to withdraw
or otherwise deal with such investment property. RACC agrees with the
Company that RACC shall not give any
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such entitlement orders or instructions or directions to any such
issuer, securities intermediary or commodity intermediary, and shall not
withhold its consent to the exercise of any withdrawal or dealing rights
by the Company, unless an Event of Default has occurred and is
continuing, or, after giving effect to any such investment and
withdrawal rights not otherwise permitted by the Transaction Documents,
would occur. The provisions of this paragraph shall not apply to any
financial assets credited to a securities account for which RACC is the
securities intermediary.
4.4. Collateral in the Possession of a Bailee. If any
Collateral is, now or at any time hereafter, in the possession of a
bailee, the Company shall promptly notify RACC thereof and, at RACC's
request and option, shall promptly obtain an acknowledgement from the
bailee, in form and substance satisfactory to RACC, that the bailee
holds such Collateral for the benefit of RACC and such bailee's
agreement to comply without further consent of the Company, at any time
with instructions of RACC as to such Collateral. RACC agrees with the
Company that RACC shall not give any such instructions unless an Event
of Default has occurred and is continuing or would occur after taking
into account any action by the Company with respect to the bailee.
4.5. Electronic Chattel Paper and Transferable Records. If
the Company, now or at any time hereafter, holds or acquires an interest
in any electronic chattel paper or any "transferable record," as that
term is defined in Section 201 of the federal Electronic Signatures in
Global and National Commerce Act, or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction,
the Company shall promptly notify RACC thereof and, at the request and
option of RACC, shall take such action as RACC may reasonably request to
vest in RACC control, under Section 9-105 of the Uniform Commercial
Code, of such electronic chattel paper or control under Section 201 of
the federal Electronic Signatures in Global and National Commerce Act
or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such
transferable record. RACC agrees with the Company that RACC will
arrange, pursuant to procedures satisfactory to RACC and so long as such
procedures will not result in RACC's loss of control, for the Company to
make alterations to the electronic chattel paper or transferable record
permitted under UCC Section 9-105 or, as the case may be, Section 201 of
the federal Electronic Signatures in Global and National Commerce Act or
Section 16 of the Uniform Electronic Transactions Act for a party in
control to make without loss of control, unless an Event of Default has
occurred and is continuing or would occur after taking into account any
action by the Company with respect to such electronic chattel paper or
transferable record.
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4.6. Letter-of-Credit Rights. If the Company is, now or at
any time hereafter, a beneficiary under a letter of credit now or
hereafter, the Company shall promptly notify RACC thereof and, at the
request and option of RACC, the Company shall, pursuant to an agreement
in form and substance satisfactory to RACC, either (a) arrange for the
issuer and any confirmer or other nominated person of such letter of
credit to consent to an assignment to RACC of the proceeds of the letter
of credit or (b) arrange for RACC to become the transferee beneficiary
of the letter of credit, with RACC agreeing, in each case, that the
proceeds of the letter of credit are to be applied as provided in
Section 11(C) of the Restructuring Agreement.
4.7. Commercial Tort Claims. If the Company shall, now or at
any time hereafter, hold or acquire a commercial tort claim, the Company
shall immediately notify RACC in a writing signed by the Company of the
particulars thereof and grant to RACC in such writing a security
interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory to
RACC.
4.8. Other Actions as to any and all Collateral. The Company
further agrees, upon request of RACC and at RACC's option, to take any
and all other actions as RACC may determine to be necessary or useful
for the attachment, perfection and first priority of, and the ability of
RACC to enforce, RACC's security interest in any and all of the
Collateral, including, without limitation, (a) executing, delivering
and, where appropriate, filing financing statements and amendments
relating thereto under the Uniform Commercial Code, to the extent, if
any, that the Company's signature thereon is required therefor, (b)
causing RACC's name to be noted as secured party on any certificate of
title for a titled good if such notation is a condition to attachment,
perfection or priority of, or ability of RACC to enforce, RACC's
security interest in such Collateral, (c) complying with any provision
of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to
attachment, perfection or priority of, or ability of RACC to enforce,
RACC's security interest in such Collateral, (d) obtaining governmental
and other third party waivers, consents and approvals in form and
substance satisfactory to RACC, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral,
(e) obtaining waivers from mortgagees and landlords in form and
substance satisfactory to RACC and (f) taking all actions under any
earlier versions of the Uniform Commercial Code or under any other law,
as reasonably determined by RACC to be applicable in any relevant
Uniform Commercial Code or other jurisdiction, including any foreign
jurisdiction.
5. Representations and Warranties. The Company represents,
and warrants as follows:
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(a) The Company has previously delivered to RACC a
certificate signed by the Company and entitled "Perfection Certificate"
(the "Perfection Certificate"). The Company represents and warrants to
RACC as follows: (i) the Company's exact legal name is that indicated on
the Perfection Certificate and on the signature page hereof, (ii) the
Company is an organization of the type, and is organized in the
jurisdiction, set forth in the Perfection Certificate, (iii) the
Perfection Certificate accurately sets forth the Company's
organizational identification number or accurately states that the
Company has none, (iv) the Perfection Certificate accurately sets forth
the Company's place of business or, if more than one, its chief
executive office, as well as the Company's mailing address, if
different, (v) all other information set forth on the Perfection
Certificate pertaining to the Company is accurate and complete, and (vi)
there has been no change in any of such information since the date on
which the Perfection Certificate was signed by the Company.
(b) All filings, registrations and recordings necessary to
create, preserve, protect and perfect the security interest granted by
the Company to RACC hereby in respect of the Collateral of the Company
have been accomplished, and the security interest granted to RACC
pursuant to this Agreement in and to the Collateral of the Company will
constitute, a perfected security interest therein prior to the rights of
all other persons therein and subject to no other liens other than liens
granted to RACC pursuant to the Transaction Documents and liens set
forth on Schedule 5(b) (collectively, "Permitted Liens").
(c) The Company is, and as to Collateral acquired by it from
time to time after the date hereof the Company will be, the holder of
all Collateral granted by it free from any lien (other than Permitted
Liens). The Company shall defend the Collateral against any and all
claims and demands of all persons at any time claiming any interest
therein adverse to RACC (other than Permitted Liens).
(d) There is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction intended to
provide notice of a lien) covering or purporting to cover any interest
of any kind in the Collateral of the Company (other than financing
statements that relate to transactions for which all secured obligations
have been paid in full and there is no commitment on the part of any
person to advance funds or perform any obligation that would be secured
by the collateral described in such financing statements) and other than
the Permitted Liens, and so long as the Restructuring Agreement has not
been terminated or any of the Obligations remain unpaid, the Company
shall not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration
under the law of any jurisdiction intended to
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provide notice of a lien) relating to the Collateral of the Company,
except financing statements filed or to be filed in respect of and
covering the security interests granted hereby by the Company.
(e) As of the date hereof, the Company has no (i) agreements
providing the Company with the right to use, operate or occupy space in
any airport in the United States ("Gate Agreements"), (ii) route
authorities ("Routes"), or (iii) rights and operational authority
acquired or held by the Company in and to the operating authority
granted by the Federal Aviation Administration (the "FAA") pursuant to
Title 14 to conduct one Instrument Flight Rule (as defined under the
federal aviation regulations) landing or takeoff operating in a
specified time period ("Slots") that it has the right to pledge as
Collateral under this Agreement.
(f) The Company is a Citizen of the United States and a
Certificated Air Carrier. All licenses, permits, authorizations,
certificates of compliance, certificates of public convenience and
necessity and other certificates (including, without limitation, air
carrier operating certificates and operations specifications issued by
the FAA pursuant to 14 C.F.R. Part 121) which are required by the DOT or
the FAA and which are necessary for the conduct of the business of the
Company are in full force and duly issued to the Company. There are no
license fees owed on the Company's DOT or FAA licenses, certificates or
authorizations. The Company is in compliance with all material
requirements of the certificates and. authorizations issued to it by the
DOT or the FAA.
(f) The Company has full corporate power and authority and
legal right to pledge all the Collateral pursuant to this Agreement.
(g) No consent of any other party (including, without
limitation, stockholders or creditors of the Company), and no consent,
authorization, approval, or other action by, and (except in connection
with the perfection of the liens created hereby) no notice to or filing
with, any governmental authority or other person is required either (x)
for the pledge by the Company of the Collateral of the Company pursuant
to this Agreement or for the execution, delivery or performance of this
Agreement or (y) for the exercise by RACC of the rights provided for in
this Agreement or the remedies in respect of the Collateral pursuant to
this Agreement.
(h) The Company is the owner of or has other rights in or
power to transfer the Collateral, free from any right or claim of any
person or any adverse lien, security interest or other encumbrance,
except for the security interest created by this Agreement and other
Permitted Liens.
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(i) None of the Collateral constitutes, or is the proceeds
of, "farm products" as defined in Section 9-102(a)(34) of the Uniform
Commercial Code of the State.
(j) None of the account debtors or other persons obligated
on any of the Collateral is a governmental authority covered by the
Federal Assignment of Claims Act or like federal, state or local statute
or rule in respect of such Collateral.
(k) The Company holds no commercial tort claim except as
indicated on the Perfection Certificate.
(l) The Company has at all times operated its business in
compliance with all applicable provisions of the federal Fair Labor
Standards Act, as amended, and with all applicable provisions of
federal, state and local statutes and ordinances dealing with the
control, shipment, storage or disposal of hazardous materials or
substances.
6. Covenants Concerning Company's Legal Status. The Company
covenants with RACC as follows: (a) without providing at least thirty (30) days
prior written notice to RACC, the Company will not change its name, its place of
business or, if more than one, chief executive office, or its mailing address or
organizational identification number if it has one, (b) if the Company does not
have an organizational identification number and later obtains one, the Company
will forthwith notify RACC of such organizational identification number, and (c)
the Company will not change its type of organization, jurisdiction of
organization or other legal structure.
7. Covenants Concerning Collateral, Etc. The Company further
covenants with RACC as follows:
(a) The Collateral, to the extent not delivered to RACC
pursuant to Section 4, will be kept at those locations listed on the
Perfection Certificate and the Company will not remove the Collateral
from such locations, without providing at least thirty (30) days prior
written notice to RACC.
(b) Except for the security interest herein granted and
Permitted Liens, the Company shall be the owner of or have other rights
in the Collateral free from any right or claim of any other person or
any lien, security interest or other encumbrance, and the Company shall
defend the same against all claims and demands of all persons at any
time claiming the same or any interests therein adverse to RACC.
(c) The Company shall not pledge, mortgage or create, or
suffer to exist any right of any person in or claim by any person to the
Collateral, or
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any security interest, lien or other encumbrance in the Collateral in
favor of any person, other than RACC except for Permitted Liens.
(d) The Company will keep the Collateral in good order and
repair and will not use the same in violation of law or any policy of
insurance thereon.
(e) The Company will permit RACC, or its designee, to
inspect the Collateral at any reasonable time, wherever located.
(f) The Company will pay promptly when due all taxes,
assessments, governmental charges and levies upon the Collateral or
incurred in connection with the use or operation of the Collateral or
incurred in connection with this Agreement.
(g) The Company will continue to operate, its business in
compliance with all applicable provisions of the federal Fair Labor
Standards Act, as amended, and with all applicable provisions of
federal, state and local statutes and ordinances dealing with the
control, shipment, storage or disposal of hazardous materials or
substances.
(h) The Company will not sell or otherwise dispose, or offer
to sell or otherwise dispose, of the Collateral or any interest therein
except that for sales of inventory so long as no Event of Default has
occurred and is continuing, sales or other dispositions of obsolescent
items of equipment consistent with past practices and dispositions
permitted by the Restructuring Agreement shall be permitted.
(i) If at any time in the future the Company acquires any
Gate Agreements, Routes or Slots that are capable of being pledged to
RACC as Collateral, the Company shall provide prompt written notice to
RACC and take all action and sign all documents reasonably requested by
RACC to create and maintain a first-priority security interest in any
such Gate Agreements, Routes or Slots at such time or at any time
thereafter.
8. Insurance.
8.1. Maintenance of Insurance. In addition to any other
insurance required to be maintained in connection with the other
Transaction Documents, the Company will maintain with financially sound
and reputable insurers insurance with respect to its properties and
business against such casualties and contingencies as shall be in
accordance with general practices of businesses engaged in similar
activities in similar geographic areas. Such insurance shall be in such
minimum amounts that the Company will not be deemed a co-insurer under
applicable insurance laws, regulations and policies and otherwise shall
be in such amounts, contain such terms, be in
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such forms and be for such periods as may be reasonably satisfactory to
RACC. In addition, all such insurance shall be payable to RACC as loss
payee under a "standard" loss payee clause. Without limiting the
foregoing, the Company will (a) keep all of its physical property
insured with casualty or physical hazard insurance on an "all risks"
basis, with a full replacement cost endorsement and an "agreed amount"
clause in an amount equal to 100% of the full replacement cost of such
property, (b) maintain all such workers' compensation or similar
insurance as may be required by law and (c) maintain, in amounts and
with deductibles equal to those generally maintained by businesses
engaged in similar activities in similar geographic areas, general
public liability insurance against claims of bodily injury, death or
property damage occurring, on, in or about the properties of the
Company; business interruption insurance; and product liability
insurance.
8.2. Insurance Proceeds. Except as otherwise specifically
provided in any of the other Transaction Documents, the proceeds of any
casualty insurance in respect of any casualty loss of any of the
Collateral shall, subject to the rights, if any, of other parties with
an interest having priority in the property covered thereby, (a) so long
as no Default or Event of Default has occurred and is continuing and to
the extent that the amount of such proceeds is less than $50,000, be
disbursed to the Company for direct application by the Company solely to
the repair or replacement of the Company's property so damaged or
destroyed and (b) in all other circumstances, be held by RACC as cash
collateral for the Obligations. RACC may, at its sole option, disburse
from time to time all or any part of such proceeds so held as cash
collateral, upon such terms and conditions as RACC may reasonably
prescribe, for direct application by the Company solely to the repair or
replacement of the Company's property so damaged or destroyed, or RACC
may apply all or any part of such proceeds to the Obligations.
8.3. Continuation of Insurance. Except as otherwise
specifically provided in any of the other Transaction Documents, all
policies of insurance shall provide for at least thirty (30) days prior
written cancellation notice to RACC. In the event of failure by the
Company to provide and maintain insurance as herein provided, RACC may,
at its option, provide such insurance and charge the amount thereof to
the Company. The Company shall furnish RACC with certificates of
insurance and policies evidencing compliance with the foregoing
insurance provision.
9. Collateral Protection Expenses; Preservation of Collateral.
9.1. Expenses Incurred by Lender. In RACC's discretion, if
the Company fails to do so, RACC may discharge taxes and other
encumbrances at any time levied or placed on any of the Collateral, make
repairs thereto and pay any necessary filing fees or insurance premiums.
The Company
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agrees to reimburse RACC on demand for all expenditures so made. RACC
shall have no obligation to the Company to make any such expenditures,
nor shall the making thereof be construed as a waiver or cure of any
Default or Event of Default.
9.2. Lender's Obligations and Duties. Anything herein to the
contrary notwithstanding, the Company shall remain obligated and liable
under each contract or agreement comprised in the Collateral to be
observed or performed by the Company thereunder. RACC shall not have any
obligation or liability under any such contract or agreement by reason
of or arising out of this Agreement or the receipt by RACC of any
payment relating to any of the Collateral, nor shall RACC be obligated
in any manner to perform any of the obligations of the Company under or
pursuant to any such contract or agreement, to make inquiry as to the
nature or sufficiency of any payment received by RACC in respect of the
Collateral or as to the sufficiency of any performance by any party
under any such contract or agreement, to present or file any claim, to
take any action to enforce any performance or to collect the payment of
any amounts which may have been assigned to RACC or to which RACC may be
entitled at any time or times. RACC's sole duty with respect to the
custody, safe keeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Uniform Commercial Code of the
State or otherwise, shall be to deal with such Collateral in the same
manner as RACC deals with similar property for its own account.
10. Securities and Deposits. RACC may at any time following and
during the continuance of Event of Default, at its option, transfer to itself or
any nominee any securities constituting Collateral, receive any income thereon
and hold such income as additional Collateral or apply it to the Obligations.
Whether or not any Obligations are due, RACC may following and during the
continuance of an Event of Default demand, xxx for, collect, or make any
settlement or compromise which it deems desirable with respect to the
Collateral. Regardless of the adequacy of Collateral or any other security for
the Obligations, any deposits or other sums at any time credited by or due from
RACC to the Company may at any time be applied to or set off against any of the
Obligations.
11. Notification to Account Debtors and Other Persons Obligated on
Collateral. If an Event of Default shall have occurred and be continuing, the
Company shall, at the request and option of RACC, notify account debtors and
other persons obligated on any of the Collateral of the security interest of
RACC in any account, chattel paper, general intangible, instrument or other
Collateral and that payment thereof is to be made directly to RACC or to any
financial institution designated by RACC as RACC's agent therefor, and RACC may
itself, if Event of Default shall have occurred and be continuing, without
notice to or demand upon the Company, so notify account debtors and other
persons obligated on Collateral. After the making of such a request or the
giving of any such notification, the
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Company shall hold any proceeds of collection of accounts, chattel paper,
general intangibles, instruments and other Collateral received by the Company as
trustee for RACC without commingling the same with other funds of the Company
and shall turn the same over to RACC in the identical form received, together
with any necessary endorsements or assignments. RACC shall apply the proceeds of
collection of accounts, chattel paper, general intangibles, instruments and
other Collateral received by RACC to the Obligations, such proceeds to be
immediately credited after final payment in cash or other immediately available
funds of the items giving rise to them.
12. Power of Attorney.
12.1. Appointment and Powers of Lender. The Company hereby
irrevocably constitutes and appoints RACC and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the place
and stead of the Company or in RACC's own name, for the purpose of
carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments
that may be necessary or useful to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, hereby
gives said attorneys the power and right, on behalf of the Company,
without notice to or assent by the Company, to do the following:
(a) upon the occurrence and during the continuance
of an Event of Default, generally to sell, transfer, pledge,
make any agreement with respect to or otherwise dispose of or
deal with any of the Collateral in such manner as is consistent
with the Uniform Commercial Code of the State and as fully and
completely as though RACC were the absolute owner thereof for
all purposes, and to do, at the Company's expense, at any time,
or from time to time, all acts and things which RACC deems
necessary or useful to protect, preserve or realize upon the
Collateral and RACC's security interest therein, in order to
effect the intent of this Agreement, all no less fully and
effectively as the Company might do, including, without
limitation, (i) the filing and prosecuting of registration and
transfer applications with the appropriate federal, state or
local agencies or authorities with respect to trademarks,
copyrights and patentable inventions and processes, (ii) upon
written notice to the Company, the exercise of voting rights
with respect to voting securities, which rights may be
exercised, if RACC so elects, with a view to causing the
liquidation of assets of the issuer of any such securities and
(iii) the execution, delivery and recording, in connection with
any sale or other disposition of any Collateral, of the
endorsements, assignments or other instruments of conveyance or
transfer with respect to such Collateral; and
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(b) to the extent that the Company's authorization
given in Section 3 is not sufficient, to file such financing
statements with respect hereto, with or without the Company's
signature, or a photocopy of this Agreement in substitution for
a financing statement, as RACC may deem appropriate and to
execute in the Company's name such financing statements and
amendments thereto and continuation statements which may require
the Company's signature.
12.2. Ratification by Company. To the extent permitted by law,
the Company hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and is irrevocable.
12.3. No Duty on RACC. The powers conferred on RACC hereunder
are solely to protect its interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. RACC shall be
accountable only for the amounts that it actually receives as a result
of the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Company for
any act or failure to act, except for RACC's own gross negligence or
willful misconduct.
13. Rights and Remedies. RACC, without any notice or demand upon the
Company, may from time to time exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein, or otherwise
available to and to the extent not in violation of applicable law, including the
Federal Aviation Act, and if required, subject to the approval of the DOT and/or
the FAA or their respective successors or nominee, all the rights and remedies
of a secured party on default under the UCC in effect in all relevant
jurisdictions at the time of an Event of Default, including, without limitation,
the right to take possession of the Collateral, and for that purpose, RACC may,
so far as the Company can give authority therefor, enter upon any premises on
which the Collateral may be situated and remove the same therefrom. RACC may in
its discretion require the Company to assemble all or any part of the Collateral
at such location or locations within the jurisdiction(s) of the Company's
principal office(s) or at such other locations as RACC may reasonably designate.
RACC may also in its sole discretion, without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the RACC's offices or
elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as RACC may deem commercially reasonable. To
the extent not inconsistent with the Federal Aviation Act, the DOT and the FAA
requirements, RACC may be the purchaser of any or all of the Collateral at any
such sale and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at such sale, to use and apply any of the Obligations as a
credit on account of the purchase price of any Collateral payable by such person
at such sale.
-14-
Each purchaser at any such sale shall acquire the property sold absolutely free
from any claim or right on the purchase of the Company, and the Company hereby
waives, to the fullest extent permitted by law, all right of redemption, stay or
appraisal which it now has or may at any time in the future have under rule of
law or statute now existing or hereafter enacted. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, RACC shall give the Company at least five (5)
business days prior written notice of the time and place of any public sale of
Collateral or of the time after which any private sale or any other intended
disposition is to be made. The Company hereby acknowledges that five (5)
business days prior written notice of such sale or sales shall be reasonable
notice. RACC shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. RACC may adjourn public or private sale from
time to time by announcement at the time and place fixed therefore and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. The Company hereby waives, to the full extent permitted by law, any
claims against the RACC arising by reason of the fact that the price at which
any Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale. In addition, the Company waives
any and all rights that it may have to a judicial hearing in advance of the
enforcement of any of RACC's rights and remedies hereunder, including, without
limitation, its right following an Event of Default to take immediate possession
of the Collateral and to exercise its rights and remedies with respect thereto.
14. Standards for Exercising Rights and Remedies. To the extent that
applicable law imposes duties on RACC to exercise remedies in a commercially
reasonable manner, the Company acknowledges and agrees that it is not
commercially unreasonable for RACC (a) to fail to incur expenses reasonably
deemed significant by RACC to prepare Collateral for disposition or otherwise to
fail to complete raw material or work in process into finished goods or other
finished products for disposition, (b) to fail to obtain third party consents
for access to Collateral to be disposed of, or to obtain or, if not required by
other law, to fail to obtain governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of, (c) to
fail to exercise collection remedies against account debtors or other persons
obligated on Collateral or to fail to remove liens or encumbrances on or any
adverse claims against Collateral, (d) to exercise collection remedies against
account debtors and other persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (f) to
contact other persons, whether or not in the same business as the Company, for
expressions of interest in acquiring all or any portion of the Collateral, (g)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (h) to
dispose of Collateral by utilizing Internet sites that provide for the auction
of assets of the types included in
-15-
the Collateral or that have the reasonable capability of doing so, or that match
buyers and sellers of assets, (i) to dispose of assets in wholesale rather than
retail markets, (j) to disclaim disposition warranties, (k) to purchase
insurance or credit enhancements to insure RACC against risks of loss,
collection or disposition of Collateral or to provide to RACC a guaranteed
return from the collection or disposition of Collateral, or (l) to the extent
deemed appropriate by RACC, to obtain the services of brokers, investment
bankers, consultants and other professionals to assist RACC in the collection or
disposition of any of the Collateral. The Company acknowledges that the purpose
of this Section 14 is to provide non-exhaustive indications of what actions or
omissions by RACC would fulfill RACC's duties under the Uniform Commercial Code
of the State or any other relevant jurisdiction in RACC's exercise of remedies
against the Collateral and that other actions or omissions by RACC shall not be
deemed to fail to fulfill such duties solely on account of not being indicated
in this Section 14. Without limitation upon the foregoing, nothing contained in
this Section 14 shall be construed to grant any rights to the Company or to
impose any duties on RACC that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this Section 14.
15. No Waiver by Lender, etc. RACC shall not be deemed to have
waived any of its rights and remedies in respect of the Obligations or the
Collateral unless such waiver shall be in writing and signed by RACC. No delay
or omission on the part of RACC in exercising any right or remedy shall operate
as a waiver of such right or remedy or any other right or remedy. A waiver on
any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion. All rights and remedies of RACC with respect to
the Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as
RACC deems expedient.
16. Suretyship Waivers by Company. The Company waives demand,
notice, protest, notice of acceptance of this Agreement, notice of loans made,
credit extended, Collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of any description. With
respect to both the Obligations and the Collateral, the Company assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as RACC may deem advisable. RACC shall have no duty as to the
collection or protection of the Collateral or any income therefrom, the
preservation of rights against prior parties, or the preservation of any rights
pertaining thereto beyond the safe custody thereof as set forth in Section 9.2.
The Company further waives any and all other suretyship defenses.
-16-
17. Marshalling. RACC shall not be required to marshal any present
or future collateral security (including but not limited to the Collateral) for,
or other assurances of payment of, the Obligations or any of them or to resort
to such collateral security or other assurances of payment in any particular
order, and all of its rights and remedies hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and in
addition to all other rights and remedies, however existing or arising. To the
extent that it lawfully may, the Company hereby agrees that it will not invoke
any law relating to the marshalling of collateral which might cause delay in or
impede the enforcement of RACC's rights and remedies under this Agreement or
under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Company hereby irrevocably waives the benefits
of all such laws.
18. Proceeds of Dispositions; Expenses. The Company shall pay to
RACC on demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by RACC in protecting, preserving or enforcing
RACC's rights and remedies under or in respect of any of the Obligations or any
of the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale or other disposition of Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
in such order or preference as RACC may determine, proper allowance and
provision being made for any Obligations not then due. Upon the final payment
and satisfaction in full of all of the Obligations and after making any payments
required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial
Code of the State, any excess shall be returned to the Company. In the absence
of final payment and satisfaction in full of all of the Obligations, the Company
shall remain liable for any deficiency.
19. Overdue Amounts. Until paid, all amounts due and payable by the
Company hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the Default Interest Rate set
forth in the Restructuring Agreement.
20. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE. The Company agrees that any
action or claim arising out of any dispute in connection with this Agreement,
any rights or obligations hereunder or the performance or enforcement of such
rights or obligations may be brought in the courts of the State or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Company by
mail at the address specified in of the Restructuring Agreement. The Company
hereby waives any objection that it may now or
-17-
hereafter have to the venue of any such suit or any such court or that such suit
is brought in an inconvenient court.
21. Waiver of Jury Trial. THE COMPANY WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as
prohibited by law, the Company waives any right which it may have to claim or
recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. The Company (a) certifies that neither RACC nor any
representative, agent or attorney of RACC has represented, expressly or
otherwise, that RACC would not, in the event of litigation, seek to enforce the
foregoing waivers or other waivers contained in this Agreement and (b)
acknowledges that, in entering into the Restructuring Agreement and the other
Transaction Documents to which RACC is a party, RACC is relying upon, among
other things, the waivers and certifications contained in this Section 21.
22. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns permitted by the Restructuring Agreement; provided that the Company
may not transfer or assign any or all of its rights or obligations hereunder
without the prior written consent of RACC.
23. Miscellaneous. The headings of each section of this Agreement
are for convenience only and shall not define or limit the provisions thereof.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Company acknowledges receipt of a copy of this Agreement. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
[The remainder of this page is intentionally left blank.]
-18-
IN WITNESS WHEREOF, intending to be legally bound, the Company has
caused this Agreement to be duly executed as of the date first above written.
GREAT LAKES AVIATION, LTD.
By: /s/ Xxxxxxx X. Xxxxxx XX
------------------------
Title: CEO
----------------
Accepted:
RAYTHEON AIRCRAFT CREDIT
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Title: President
--------------
-19-
List of Schedules
Schedule 5(b) Existing Liens on Collateral
SCHEDULE 5(b)
EXISTING LIENS ON COLLATERAL/1//
DEBTOR: GREAT LAKES AVIATION, LTD.
JURISDICTION SECURED PARTY FILE NUMBER DATE FILED COLLATERAL
----------------------------------------------------------------------------------------------------------------------------------
Iowa Secretary of State CIT Group/Equipment Financing, K663105 7-11-95 Embraer model EMB-120ER bearing
Inc. ("CIT") United States registration number
N299UX and manufacturer's serial
number 120.299; two Xxxxx and
Whitney model PW-118A engines
having serial numbers PCE-115679
and PCE-115680; two Xxxxxxxx
Standard model 14RF-9 propellers
having serial numbers MFG-950302
and MFG-950402; any Replacement
Engine or Propeller
K950755 9-28-98 Release of engine PCE-115679
K954957 10-15-98 Amendment of Debtor's address
P084757 2-25-2000 Continuation
----------------------------------------------------------------------------------------------------------------------------------
CIT K682978 10-19-95 Embraer model EMB-120RT Brasilia
aircraft bearing United States
registration number N451UE and
manufacturer's serial number
120.108; two Xxxxx and Whitney
model PW-118 engines having serial
numbers PCE-115078 and PCE-115436;
two Xxxxxxxx Standard model 14RF-9
propellers having serial numbers
MFG-789 and MFG-1066; any
Replacement Engine or Propeller
P019578 6-1-99 Amendment of Debtor's address
P107619 5-30-2000 Continuation
----------------------------------------------------------------------------------------------------------------------------------
----------------
/1//Does not include liens naming Coast Business Credit as secured
party, which are to be terminated pursuant to Section 12(B)(22) of the
Restructuring Agreement.
JURISDICTION SECURED PARTY FILE NUMBER DATE FILED COLLATERAL
----------------------------------------------------------------------------------------------------------------------------------
CIT K688414 11-13-95 One Embraer model EMB-120RT
Brasilia aircraft (including
accessories and attachments)
bearing United States registration
number N452UE and manufacturer's
serial number 120.096; two Xxxxx
and Whitney model PW-118 engines
having serial numbers PCE-115434
and PCE-115440; two Xxxxxxxx
Standard model 14RF-9 propellers
having serial numbers MFG-567 and
MFG-1674; any Replacement Engine or
Propeller
K950754 9-28-98 Release of Engine PCE-115434
K950756 9-28-98 Amendment of Debtor's address
P107620 5-30-2000 Continuation
----------------------------------------------------------------------------------------------------------------------------------
CIT P301264 7-13-2001 One Embraer model EMB-120RT
Brasilia aircraft (including
accessories and attachments)
bearing United States registration
number N299UX and manufacturer's
serial number 120.299; two Xxxxx
and Whitney model PW-118A engines
having serial numbers PCE-115679
and PCE-115680; two Xxxxxxxx
Standard model 14RF-9 propellers
having serial numbers MFG-950302
and MFG-950402; any Replacement
Engine or Propeller
P304152 7-31-2001 Release of engine PCE-115679; add
engine PCE-115668 to collateral
----------------------------------------------------------------------------------------------------------------------------------
JURISDICTION SECURED PARTY FILE NUMBER DATE FILED COLLATERAL
----------------------------------------------------------------------------------------------------------------------------------
CIT P301265 7-13-2001 One Embraer model EMB-120RT
Brasilia aircraft (including
accessories and attachments)
bearing United States registration
number N452UE and manufacturer's
serial number 120.096; two Xxxxx
and Whitney model PW-118 engines
having serial numbers PCE-115620
and PCE-115440; two Xxxxxxxx
Standard model 14RF-9 propellers
having serial numbers MFG-567 and
MFG-1674; any Replacement Engine or
Propeller
----------------------------------------------------------------------------------------------------------------------------------
CIT P301266 7-13-2001 Embraer model EMB-120RT Brasilia
aircraft bearing United States
registration number N451UE and
manufacturer's serial number
120.108; two Xxxxx and Whitney
model PW-118 engines having serial
numbers PCE-115078 and PCE-115436;
two Xxxxxxxx Standard model 14RF-9
propellers having serial numbers
MFG-789 and MFG-1066; any
Replacement Engine or Propeller
----------------------------------------------------------------------------------------------------------------------------------
Davco Industries, LLC K974504 12-21-98 Davco 000-00-00 Ground Power Unit
(assignee: Soris, a division of
Case Credit Corporation)
----------------------------------------------------------------------------------------------------------------------------------
Steelcase Financial Services, P079704 2-4-2000 All furniture and equipment
Inc. leased or financed from Steelcase
Financial Services, Inc.
----------------------------------------------------------------------------------------------------------------------------------
JURISDICTION SECURED PARTY FILE NUMBER DATE FILED COLLATERAL
----------------------------------------------------------------------------------------------------------------------------------
Minnesota Secretary of CIT 1775173 7-12-95 One Embraer model EMB-120RT
State Brasilia aircraft (including
accessories and attachments)
bearing United States registration
number N299UX and manufacturer's
serial number 120.299; two Xxxxx
and Whitney model PW-118A engines
having serial numbers PCE-115679
and PCE-115680; two Xxxxxxxx
Standard model 14RF-9 propellers
having serial numbers MFG-950302
and MFG-950402; any Replacement
Engine or Propeller
2071826 9-29-98 Release of Engine PCE-115679
2071827 9-29-98 Amend Debtor's address and add an
engine to the collateral
2204973 2-25-2000 Continuation
----------------------------------------------------------------------------------------------------------------------------------
CIT 1797535 10-19-95 Embraer model EMB-120RT Brasilia
aircraft bearing United States
registration number N451UE and
manufacturer's serial number
120.108; two Xxxxx and Whitney
model PW-118 engines having
serial numbers PCE-115078 and
PCE-115436; two Xxxxxxxx Standard
model 14RF-9 propellers having
serial numbers MFG-789 and
MFG-1066; any Replacement Engine
or Propeller
21362401 6-2-99 Amendment of Debtor's address
2232182 5-30-2000 Continuation
----------------------------------------------------------------------------------------------------------------------------------
JURISDICTION SECURED PARTY FILE NUMBER DATE FILED COLLATERAL
----------------------------------------------------------------------------------------------------------------------------------
CIT 1803588 11-14-95 One Embraer model EMB-120RT Brasilia
aircraft (including accessories and
attachments) bearing United States
registration number N452UE and
manufacturer's serial number
120.096; two Xxxxx and Whitney
model PW-118 engines having serial
numbers PCE-115434 and PCE-115440;
two Xxxxxxxx Standard model 14RF-9
propellers having serial numbers
MFG-567 and MFG-1674; any
Replacement Engine or Propeller
2071828 9-29-98 Release of Engine PCE-115434
2071829 9-29-98 Amendment of Debtor's address and
add engine to collateral
description
2232181 5-30-2000 Continuation
----------------------------------------------------------------------------------------------------------------------------------
Finova Capital Corporation 1824525 2-12-96 One Airframe: Xxxxxxx Xxxxx
("Xxxxxx") XXX-000, FAA Registration Number
N279UE and Manufacturer's Serial
No. 120.085 Two Xxxxx & Whitney
model PW-118 engines with
Manufacturer's serial numbers
PCE-115497 and PCE-115330 Two
Xxxxxxxx Standard Model 14RF-9
propellers bearing serial numbers
866 and 1293
2261034 9-25-2000 Continuation
----------------------------------------------------------------------------------------------------------------------------------
Finova 1824526 2-12-96 One Airframe: Embraer Model
EMB-120, FAA Registration Number
N281UE and Manufacturer's Serial
No. 120.092 Two Xxxxx & Whitney model
PW-118 engines with Manufacturer's
serial numbers PCE-115347 and
PCE-115189; Two Xxxxxxxx Standard
Model 14RF-9 propellers bearing
serial numbers 1829 and 626
2261033 9-25-2000 Continuation
----------------------------------------------------------------------------------------------------------------------------------
JURISDICTION SECURED PARTY FILE NUMBER DATE FILED COLLATERAL
----------------------------------------------------------------------------------------------------------------------------------
WY, Laramie County Steelcase Financial Services, U-588931 2-18-2000 All furniture and equipment
Inc. 105707155 leased from Xxxxxxxxx.Xxxxx Xx.
00000.
----------------------------------------------------------------------------------------------------------------------------------
