Back to top

FORBEARANCE AGREEMENT

Forbearance Agreement

FORBEARANCE AGREEMENT You are currently viewing:
This Forbearance Agreement involves

MAIR HOLDINGS INC | UMB Bank, N.A.

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: FORBEARANCE AGREEMENT
Governing Law: Massachusetts     Date: 6/27/2006
Industry: AIRLIN     Law Firm: Mintz Levin    

Search Forbearance Agreement by:

Document Title:

Entire Document: (optional)

50 of the Top 250 law firms use our Products every day
Exhibit 10

Exhibit 10.17

 

Execution Version

 

AGREEMENT

 

THIS AGREEMENT (“Agreement”) dated as of April 18, 2006 between MAIR Holdings, Inc., a Minnesota corporation (“MAIR”), and UMB Bank, N.A. as trustee for the $14,000,000 Kenton County Airport Board Special Facilities Revenue Bonds,1999 Series A (Mesaba Aviation, Inc. Project) (the “Trustee”).

 

WITNESSETH:

 

WHEREAS, the Trustee is the successor trustee for those certain $14,000,000 Kenton County Airport Board Special Facilities Revenue Bonds,1999 Series A (Mesaba Aviation, Inc. Project) (the “Bonds”) and has claims on the Bonds that are evidenced by various documents (the “Bond Documents”) including, without limitation, (i) that certain Trust Indenture by and between the Kenton County Airport Board and Norwest Bank Minnesota, National Association, as trustee, dated as of July 1, 1999 (the “Indenture”); and (ii) that certain Lease Agreement by and Between Kenton County Airport Board and Mesaba Aviation, Inc. dated as of July 1, 1999 (the “Lease Agreement”); and

 

WHEREAS, MAIR guarantees obligations of its wholly-owned subsidiary, Mesaba Aviation, Inc. (“Mesaba”) with respect to the Bond Documents pursuant to that certain Guaranty Agreement dated as of July 1, 1999 (the “Guaranty”), including, without limitation the full and prompt payment of the principal, premium, if any, and interest, when and as the same shall become due and payable as provided in the Indenture and Mesaba’s full and prompt performance of all obligations under the Lease Agreement, all as more fully provided for in the Guaranty; and

 

WHEREAS, MAIR has been making certain payments to the Trustee since October 13, 2005, the date on which Mesaba filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code including: $91,927.61 on November 2, 2005, $91,927.55 on December 6, 2005, $91,927.61 on December 30, 2005, $91,927.61 on January 31, 2006, $91,927.61 on February 27, 2006 and $91,927.61 on March 1, 2006; and

 

WHEREAS, on February 15, 2006, the Trustee declared the liability of MAIR for all sums owed to the Trustee under the Bond Documents and Guaranty to be immediately due and payable, demanded the immediate payment in full in cash of all such sums, and demanded arrangements for the payment of any other charges due under the Bond Documents and Guaranty (including the Trustee’s costs of collection), all as more fully set forth in that certain demand letter dated February 15, 2006; and

 

WHEREAS, the Trustee has agreed to forbear the acceleration and payment of amounts due under the Bond Documents and Guaranty in exchange for MAIR delivering a letter of credit for the benefit of the Trustee and certain other agreements between the parties, and the parties have agreed to memorialize the terms and conditions of their agreement,

 

NOW, THEREFORE, in consideration of the premises and of the covenants herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.             Execution and Delivery of Letter of Credit. Contemporaneously with the execution of this Agreement, MAIR shall deliver to the Trustee a letter of credit (the “LOC”) from a bank acceptable to the Trustee (the “Issuing Bank”), effective as of the date of this Agreement, in form and substance acceptable to the Trustee, that names the Trustee as beneficiary, and in substantially the form attached hereto. The LOC shall be in the amount of $13,110,000 representing: (i) the $13,015,000 principal amount of the Bonds as of the date of this Agreement; (ii) the approximate amount of the payments for one month

 



 

described in Section 4.03(a)(y) and (a)(z) of the Lease Agreement; and (iii) an additional amount to cover the Trustee’s collection costs of the LOC.

 

2.             Obligation to Maintain Letter of Credit. From and after the date of this Agreement, MAIR shall ensure that until all obligations required by the Bond Documents and Guaranty are indefeasibly satisfied in full, in cash, MAIR shall maintain an LOC meeting the requirements described in this Agreement.

 

3.             Payment of Amounts Under Bond Documents. From and after the date of this Agreement, MAIR shall pay the Trustee, in cash, all amounts required under the Bond Documents when and as the same would become due absent a default under any of the Bond Documents, including, without limitation, all amounts required under Section 4.03 of the Lease Agreement. MAIR shall also pay the Trustee, in cash, the Trustee’s costs, attorney’s fees, charges and expenses as required by the Bond Documents and Guaranty.

 

4.             Dollar Amount of Letter of Credit. So long as no Event of Default (as defined below) exists, each July 15 commencing July 15, 2006, MAIR may reduce the dollar amount of the LOC by the amount described in Schedule 4.0 (attached to this Agreement). MAIR shall ensure that notwithstanding any provision of this Agreement, the dollar amount of the LOC shall at all times meet or exceed the mandatory minimum remaining dollar amounts described in Schedule 4.0. In the event that any applicable LOC does not contain terms that automatically reduce the dollar amount of the LOC by the amount described in Schedule 4.0, then MAIR shall give the Trustee notice (in the manner described below) not less than fifteen days before any change in the dollar amount of the LOC becomes effective. For the avoidance of doubt, the terms of the LOC shall not otherwise be changed without the Trustee’s express written consent.

 

5.             Forbearance of Acceleration. In consideration for MAIR delivering the LOC and complying with the other requirements of this Agreement, for so long as no Event of Default (as defined below) exists, the Trustee shall not demand acceleration and payment of the amounts due from MAIR to the Trustee under the Bond Documents and/or Guaranty.

 

6.             Events of Default. The occurrence of any of the following events shall constitute an “Event of Default”:

 

(a)           MAIR fails to make any payment when due to the Trustee under the Bond Documents or the Guaranty;

 

(b)           MAIR fails to provide the Trustee satisfactory evidence that the LOC has been renewed within forty-five (45) days prior to any expiration of the LOC then in effect;

 

(c)           The LOC is not renewed within forty-five (45) days prior to any expiration of the LOC then in effect;

 

(d)           The Issuing Bank for the LOC notifies the Trustee (in the manner required by the LOC) of the Issuing Bank’s intent not to renew the LOC;

 

(e)           All Bonds then outstanding become subject to mandatory redemption under the Indenture;

 

(f)            MAIR fails to comply with any other term of this Agreement; and/or

 

(g)           MAIR commits any “Event of Default” as that term is used in the Guaranty.

 

2



 

7.             Remedies on Default. Upon the occurrence of an Event of Default, the Trustee, may, in its sole discretion, without any further action required under this Agreement or otherwise, and without notice to MAIR or any opportunity to cure:

 

(a)                                  make an immediate draw on the LOC;

 

(b)                                 without terminating this Agreement, treat the Trustee’s obligations to MAIR under this Agreement as terminated (while retaining all rights against MAIR);

 

(c)                                  pursue any other remedy provided by the Bond Documents and/or the Guaranty; and/or

 

(d)                                 pursue any remedy provided by applicable law.

 

8.             Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received if so given) by hand delivery, facsimile (with receipt confirmed by telephone), or by any courier service, such as Federal Express, providing proof of delivery. All communications hereunder shall be delivered to the respective parties at the following addresses:

 

If to Trustee:

 

UMB Bank, N.A., as Trustee

 

 

Corporate Trust Division

 

 

2401 Grand Blvd., Suite 200

 

 

Kansas City, MO 64108

 

 

Facsimile: (816) 860-3029

 

 

Attention: Anthony Hawkins

 

 

 

With copies to:

 

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

 

 

One Financial Center

 

 

Boston, MA 02111

 

 

Facsimile: (617) 542-2241

 

 

Attention: Kevin J. Walsh

 

 

 

 

 

And

 

 

 

 

 

Oppenheimer Funds, Inc.

 

 

350 Linden Oaks

 

 

Rochester, NY 14625

 

 

Attention: Angela Uttaro

 

 

 

 

 

And

 

3



 

 

 

Merrill Lynch Investment Managers

 

 

800 Scudders Mill Road

 

 

Section 1B

 

 

Plainsboro, NJ 08536

 

 

Attention: Christopher Fornal

 

 

 

If to MAIR:

 

MAIR Holdings, Inc.

 

 

150 South 5th Street

 

search for free browse for free learn more