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Title: |
Restructuring Agreement |
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Entities: |
Great Lakes Aviation, Ltd.; Bingham McCutchen; Briggs & Morgan |
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Date: |
2003 |
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Size: |
Preview shows 17KB of 102KB total |
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Price: |
$39 |
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ID: |
#523905 |
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RESTRUCTURING AGREEMENT
As of this 31st day of December, 2002, this Agreement ("Agreement") is
made by and between Great Lakes Aviation, Ltd., an Iowa corporation with its
principal place of business at 1022 Airport Parkway, Cheyenne, Wyoming 82001
("Great Lakes"), and Raytheon Aircraft Credit Corporation, a Kansas corporation
with its principal place of business at 10511 East Central Avenue, Wichita,
Kansas 67206 ("RACC").
RECITALS
A. Great Lakes currently owns or leases under finance leases thirty-seven
(37) Beech Model 1900D Airliners that have been financed or leased by
RACC and leases from RACC under operating leases two (2) Beech Model
1900C Airliners. These aircraft are identified and grouped as follows:
(1) the seven (7) 1900D Airliners having Manufacturer's Serial
Numbers UE-97, UE-101, UE-204, UE-226, UE-228, UE-249 and UE-260
(collectively and individually, the "Group A Aircraft");
(2) the thirty (30) 1900D Airliners having Manufacturer's Serial
Numbers UE-94, UE-96, UE-100, UE-118, UE-122, UE-150, UE-153,
UE-154, UE-169, UE-170, UE-179, UE-184, UE-192, UE-195, UE-201,
UE-202, UE-208, UE-210, UE-211, UE-219, UE-220, UE-240, UE-245,
UE-247, UE-251, UE-253, UE-254, UE-255, UE-257 and UE-261
(collectively and individually, the "Group B Aircraft"); and
(3) the two (2) 1900C Airliners having Manufacturer's Serial Numbers
UC-101 and UC-122 (collectively and individually, the "Group C
Aircraft," and, together with the Group A Aircraft and the Group
B Aircraft, the "Aircraft").
B. Subject to the terms and conditions contained herein, RACC has agreed to
(i) accept the return of the Group A Aircraft and extinguish the debt
and or lease obligations on each Group A Aircraft upon such return, (ii)
restructure its financing of the Group B Aircraft, and (iii) reduce the
lease payments on the Group C Aircraft and Great Lakes has agreed to
issue to RACC shares of Great Lakes' common stock, a deferral note, a
senior note, and a subordinated note.
C. This Agreement, taken together with the Transaction Documents (as
defined herein) to be executed in connection herewith, constitute the
entire
{PAGE}
-2-
agreement between RACC and Great Lakes concerning the subject matter
hereof and supercede and merge any prior written or oral agreements
between RACC and Great Lakes concerning the subject matter hereof.
D. The parties hereto have reached further agreement as to certain matters
relating to the Aircraft and certain related obligations between the
parties, and desire to set forth the terms of such agreement herein.
AGREEMENT
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Great Lakes and RACC agree as follows:
1. Recitals Incorporated. The parties hereto hereby incorporate the
Recitals as if fully set forth herein.
2. Group A Aircraft. The following applies to all Group A Aircraft.
(A) Return Conditions. The Group A Aircraft, including engines,
shall be returned by Great Lakes to RACC to destinations within
the United States selected by RACC in accordance with the
schedule attached hereto as Schedule 1. The Group A Aircraft are
to be returned in accordance with the following terms and
conditions (the "Return Conditions"): (i) all engines, engine
life cycle fatigue components, propellers, airframe and other
time/life components shall be at a minimum of half-life
remaining, as defined in accordance with the aircraft
manufacturer's maintenance manual or, in the case of engines, as
set forth in Pratt & Whitney's engine overhaul recommendations.
With regards to the half life requirement RACC may waive this
requirement on a case by case basis in economic consideration of
the component time remaining and for consideration that certain
components may be returned with better than half life remaining.
In all cases the decision of the RACC representative will be
final. (ii) all originally installed equipment shall be in
working order, (iii) such Group A Aircraft shall be airworthy,
and immediately prior to return have a complete 1-6 detail
inspection, and no structural inspections due within 5% of the
structural inspection schedule. Any structural inspection that
is due within 5% of the inspection schedule will be completed
prior to the return of the aircraft. This 5% requirement may be
waived on a case by case basis as agreed to by the GLA Director
of Maintenance and the RACC representative. All required
inspections shall be completed by an FAA Authorized Part 145
Certified Repair Station. (CRS) The aircraft shall be in
compliance with all Airworthiness Directives issued by the FAA
pertaining to such Group
{PAGE}
-3-
A Aircraft, and the manufacturers published maintenance
specifications and Mandatory Service Bulletins (iv) such Group A
Aircraft shall be delivered ready for Commuter use under part
121 and/or Part 91. RACC shall promptly perform an inspection of
each Group A Aircraft and attached engines, airframe and other
time/life components that is returned to it so as to determine
whether all of the Return Conditions have been satisfied. In the
event that RACC determines that any Group A Aircraft is not in
compliance with any of the Return Conditions, RACC shall
promptly notify Great Lakes in writing of such determination and
RACC shall have the option of either requesting that Great Lakes
(1) remedy such noncompliance in a manner reasonably
satisfactory to RACC within thirty (30) days or (2) return a
substitute Group B Aircraft designated by RACC in compliance
with the Return Conditions within thirty (30) days, in which
case such substitute Group B Aircraft shall be deemed to be a
Group A Aircraft for purposes of this Agreement and such
noncompliant Group A Aircraft shall be deemed to be a Group B
Aircraft for purposes of this Agreement. If RACC requests, Great
Lakes shall store and maintain any Group A Aircraft accepted by
RACC for a period not to exceed thirty (30) days.
(B) Delivery of Aircraft Records, Etc. Great Lakes shall deliver to
RACC, as an additional Return Condition, all of the following
items related to each of the Group A Aircraft:
(1) All records of maintenance, preventative maintenance,
alterations and repairs relating to such Group A
Aircraft. All major repairs and alteration documentation
shall be in the form of either FAA Form 337 or FR-CO
(FAA Approved Field Repairs).
(2) All airframe, engine and propeller logbooks endorsed for
current total time and cycles for the airframe, total
time and cycles for each engine and engine life cycle
fatigue components and an entry for total time and
cycles since overhaul and hot section inspection for
each engine, and total time since new and time since
overhaul for each propeller. The airframe logbook must
include all appropriate endorsements (i.e., maintenance
releases) verifying that the avionics have been
periodically tested and inspected in accordance with 14
CFR Section 91.411 and Section 91.413 and Chapters 4 and
5 of the Beechcraft Maintenance Manual.
{PAGE}
-4-
(3) A current written summary certified by Great Lakes'
inspection authority listing the status of all
applicable airworthiness directives and service
bulletins for the airframe, engines, propellers and
appliances.
(4) A written summary certified by Great Lakes' authorized
inspection authority of the current status of life
limited and/or overhauled components for the airframe,
engines (in accordance with the Manufacturer's
recommended intervals), engine accessories and
appliances as defined in the most current revision(s) of
all Beechcraft maintenance publications applicable to
such Group A Aircraft. The aforesaid summary shall be
organized in the chapter order specified by the Air
Transport Association.
(5) Great Lakes must provide the following documentation and
data for each component having an overhaul or inspection
requirement or life limit, which components are
identified in Chapter 4 and/or Chapter 5 of Beechcraft
Maintenance Manual applicable to such Group A Aircraft,
as follows: (i) an airworthiness release certificate or
maintenance release tag, (ii) the vendor work order or
copy thereof verifying the details of each component's
overhauls, and (iii) an appropriate record certifying
the date and expended time status of the components when
installed (i.e., copy of log or inspection squawk card).
The three (3) items identified in the preceding sentence
must be properly organized and provided on-board such
Group A Aircraft.
(6) Great Lakes must provide written verification that Pratt
& Whitney has approved all of the Group A Aircraft
engines as being eligible for enrollment in a Pratt &
Whitney engine fleet maintenance program.
(7) For each Group A Aircraft that is not leased from RACC
and for each engine that is not leased but is on a Group
A Aircraft that is leased, Great Lakes shall deliver to
RACC an executed FAA Bill of Sale for such Group A
Aircraft or, in the case of an engine, an appropriate
document of conveyance.
Great Lakes acknowledges that each of the items
described above in subsections (1) through (6) must be
provided to RACC upon return of each Group A Aircraft
regardless of whether Great Lakes has conducted its
periodic inspections of such
{PAGE}
-5-
Group A Aircraft pursuant to Chapter 5 of the Beechcraft
Maintenance Manual or in accordance with an inspection
program approved by the FAA pursuant to 14 CFR Section
91.4099(f).
(C) Suspension of Payments; Extinguishment of Debt. Payments due
from Great Lakes to RACC under the existing aircraft lease or
secured promissory note, as applicable (each a "Existing Finance
Agreement" and collectively, the "Existing Finance Agreements")
for each of the Group A Aircraft shall be suspended for the
period commencing on the Effective Date through the applicable
deadline for the return of such Aircraft set forth on Schedule 1
hereto (the "Group A Cut-Off Date"). If any Group A Aircraft has
not been returned by Great Lakes to RACC in accordance with the
terms of this Agreement on or before the applicable Group A
Cut-Off Date, debt and/or lease payments due on such Group A
Aircraft will resume for the period from such Group A Cut-Off
Date until such time as such Aircraft is so returned, with such
payments to be made in accordance with the terms of the related
Existing Finance Agreement without modification by this
Agreement. Upon the return of any Group A Aircraft in accordance
with the terms of this Agreement, all payments and other amounts
owed at such time of return under the related Existing Finance
Agreement shall be cancelled and extinguished, except for any
payments that become due after the applicable Group A Cut-Off
Date.
(D) Financing of Costs of Return Conditions. RACC agrees to provide
financing to Great Lakes with respect to each Group A Aircraft
in the form of advances (the "Advances") in an amount not to
exceed seventy-five percent (75%) of the reasonable
out-of-pocket costs incurred by Great Lakes (exclusive of any
costs associated with the labor of any Great Lakes' employees)
in refurbishing and repairing such Group A Aircraft so as to
meet the Return Conditions for which (1) the nature of the work
to be done, estimated cost and identity of the service provider
have been pre-approved by RACC in writing and (2) copies of the
related purchase orders and invoices have been provided to RACC,
provided that the aggregate amount of the Advances to be
provided with respect to all of the Group A Aircraft shall not
exceed $3,000,000. The Advances shall be evidenced by a
promissory note executed by Great Lakes payable to RACC (the
"Group A Return Conditions Note," the form of which is attached
hereto as Exhibit A), which shall have a bullet maturity on the
fourth anniversary of issue (December 31, 2006) and bear
interest at the rate of LIBOR plus 500 basis points. "LIBOR"
shall mean the rate of interest determined by RACC at which
Dollar deposits for ninety (90) days are offered based on
information provided
{PAGE}
-6-
in The Wall Street Journal on the second business day prior to
the date of the issuance of the Group A Return Conditions Note
or the first day of January, April, July and October, as
applicable, provided, however, that if the rate described above
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