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FORBEARANCE AGREEMENT

Forbearance Agreement

FORBEARANCE AGREEMENT | Document Parties: MAIR HOLDINGS INC | UMB Bank, N.A. You are currently viewing:
This Forbearance Agreement involves

MAIR HOLDINGS INC | UMB Bank, N.A.

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Title: FORBEARANCE AGREEMENT
Governing Law: Massachusetts     Date: 6/27/2006
Industry: Airline     Law Firm: Mintz Levin    

FORBEARANCE AGREEMENT, Parties: mair holdings inc , umb bank  n.a.
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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


 
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