UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 28, 2007
-----------------------------
Pre-Paid Legal Services, Inc.
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Oklahoma
--------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
001-9293 73-1016728
--------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
One Pre-Paid Way
Ada, OK 74820
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(580) 436-1234
--------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
--------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On September 28, 2007, Pre-Paid Legal Services, Inc. ("we" or "us") entered
into a Term Loan Agreement with Wells Fargo Equipment Finance, Inc. to refinance
its existing indebtedness of $9,555,518 relating to our Learjet Model 60
aircraft. The new loan has an interest rate of the 30 day LIBOR plus 0.89%
(compared to LIBOR plus 1.75% under the existing loan) and will be repaid over
10 years in monthly payments of principal of $79,629 (compared to $96,000 under
the existing loan) plus interest and is secured by the aircraft and engines.
Also, on September 25, 2007, Bank of Oklahoma, N.A. agreed to reduce the
interest rate on our real estate note from LIBOR plus 2.25% to LIBOR plus 1.5%,
effective as of September 1, 2007. As of September 1, 2007, this loan had a
balance of $11,428,580.
Item 9.01 Financial Statements and Exhibits.
See Exhibit Index attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Pre-Paid Legal Services, Inc.
By: /s/ Randy Harp
-------------------------------------------------
Randy Harp, Chief Operating Officer
Date: October 2, 2007
Exhibit Index
--------- ---------------------------------------------------------------------
|No. | Description |
| | |
--------- ---------------------------------------------------------------------
|10.1 | Term Loan Agreement dated September 28, 2007 between Pre-Paid |
| | Legal Services, Inc. and Wells Fargo Equipment Finance, LLC |
--------- ---------------------------------------------------------------------
|10.2 | Form of Aircraft Mortgage and Security Agreement |
| | |
--------- ---------------------------------------------------------------------
Exhibit 10.1
------------
TERM LOAN AGREEMENT
This Term Loan Agreement (this "Agreement") is made as of this 28th day of
September, 2007, between PRE-PAID LEGAL SERVICES, INC., a corporation formed
under the laws of the State of Oklahoma, having its headquarters at One Pre-Paid
Way, Ada, Oklahoma 74821-0145 ("Borrower"), and WELLS FARGO EQUIPMENT FINANCE,
INC., a corporation organized under the laws of Minnesota, having its
headquarters at 733 Marquette Avenue, Suite 700, MAC N9306-070, Minneapolis,
Minnesota 55402 ("Lender").
W I T N E S S E T H :
WHEREAS, Borrower has requested Lender to make a loan (the "Loan") to
Borrower in the principal amount of Nine Million Five Hundred Fifty-five
Thousand Five Hundred Seventeen and 95/100 United States Dollars (US
$9,555,517.95) for the purpose of financing a portion of the purchase price of
one Learjet Inc. Model 60 aircraft, serial number 293, and registration number
N772PP, together with two (2) Pratt & Whitney Canada model PW305A engines,
serial numbers CA0446 and CA0447 (the "Aircraft"); and
WHEREAS, Lender is willing to make such Loan, subject to the terms and
conditions of this Agreement.
NOW THEREFORE, in consideration of the covenants and promises herein
contained, the parties agree as follows:
ARTICLE I: AGREEMENT FOR THE LOAN
Section 1.01 Loan. Subject to the terms and conditions of this Agreement,
Lender agrees to make a Loan to Borrower in the aggregate principal amount of
Nine Million Five Hundred Fifty-five Thousand Five Hundred Seventeen and 95/100
United States Dollars (US $9,555,517.95) with respect to the Aircraft and
Borrower agrees to borrow the same from Lender.
ARTICLE II: FINANCING TERMS
Section 2.01 Term. The Loan under this Agreement shall be evidenced by a
Promissory Note in the form of Exhibit A hereto (the "Note") delivered by
Borrower to Lender. The term of the Loan shall be from the date of disbursement
by Lender of such Loan to September 28, 2017 (the "Maturity Date"), at which
time all outstanding amounts due shall be paid in full.
Section 2.02 Interest Rate. The principal balance of the Loan outstanding
at any time shall bear interest at a rate per annum as set forth in the Note
(the "Loan Rate").
Section 2.03 Principal and Interest Payments. Principal and interest on the
Loan shall be due and payable in United States Dollars under the terms and
conditions of the Note. The Loan may be prepaid in whole at any time after the
initial twenty-four (24) months and no prepayment penalty shall be due in
connection therewith; provided that each of the following conditions is
satisfied in connection with such prepayment: (a) the prepayment shall be made
on a payment date; (b) the Borrower shall have given Lender not less than ten
(10) days' written notice of the prepayment; (c) such prepayment, if in whole,
shall be accompanied by payment of all accrued but unpaid interest on the Loan
and any and all other amounts owing to Lender by Borrower; and (d) no Event of
Default shall have accrued and be continuing at the time of such prepayment.
Upon Lender's receipt of the written notice of prepayment required by this
Section, such prepayment shall be irrevocable. Any partial prepayments shall be
applied to the last maturing installment or installments.
Section 2.04 Interest Rate after Default. Notwithstanding any other
provision of this Agreement, from and after the date of any Event of Default (as
hereinafter defined), any amounts due and owing under this Agreement shall bear
interest at a rate equal to four percent (4.0%) per annum above the Loan Rate,
calculated on a daily basis.
Section 2.05 Net Payments. All payments of any kind due to Lender from
Borrower pursuant to this Agreement shall be made in the full face amount
thereof, without setoff, counterclaim, or other defense, but shall not be deemed
to be a waiver or release of any such counterclaim, off-set or other defense.
All such payments will be free and clear of, and without deduction or
withholding for, any present or future taxes.
Section 2.06 Evidence of Indebtedness. The Loan made by Lender and
Borrower's obligation to repay the Loan with interest in accordance with the
terms of this Agreement shall be evidenced by this Agreement, the records of
Lender and the Note. The records of Lender shall be prima facie evidence of the
Loan and accrued interest thereon and of all payments made in respect thereof.
Section 2.07 Financial Statements. Borrower shall furnish to Lender:
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of Borrower, the audited balance sheet of Borrower
as at the end of such fiscal year and the related statement of income of
Borrower for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year;
(b) the unaudited balance sheet of Borrower as at the end of each
fiscal quarter of Borrower and the related unaudited statement of income of
Borrower for such quarter for the portion of the fiscal year of Borrower
then ended, certified by the chief financial officer of Borrower;
(c) within thirty (30) days of filing, but in any event not later than
October 31st, a copy of Borrower's federal income tax return.
ARTICLE III: SECURITY FOR THE LOAN
Section 3.01 Note and Security Interest. At all times during the term
hereof and until all sums owing pursuant hereto are paid in full, the Loan shall
be secured by the Aircraft, the Note, and the Aircraft Mortgage and Security
Agreement in the form of Exhibit B hereto (the "Security Agreement") by and
between Borrower and Lender (collectively, the "Collateral"). This Agreement,
the Note, and the Security Agreement are collectively referred to herein as the
"Credit Documents."
ARTICLE IV: REPRESENTATIONS, WARRANTIES AND INDEMNIFICATIONS.
In order to induce Lender to enter into this Agreement and to make the
Loan, Borrower makes the representations, warranties, and indemnifications
hereinafter set forth in this Article IV.
Section 4.01 Indemnity. Borrower shall indemnify Lender and its affiliates,
and hold Lender and its affiliates harmless from any loss, cost or expense
whatsoever arising from the breach of any of Borrower's covenants or other
obligations set forth in this Agreement or any other Credit Document.
Section 4.02 Status and Authority. Borrower (a) is a corporation, duly
registered and validly existing under the laws of Oklahoma, (b) as of the date
of this Agreement, is situated in a Contracting State, as defined in the Cape
Town Convention (as defined below), (c) and has the power to execute, deliver
and carry out the terms and provisions of the Credit Documents to which it is a
party, and (d) has taken all necessary action to authorize the execution of the
Credit Documents to which it is a party and to consent to the registration of
the international interest arising under this Agreement with the International
Registry (as defined below). The Credit Documents to which it is a party have
been duly executed and delivered by Borrower and constitute the legal, valid,
and binding obligations of Borrower, enforceable in accordance with their
respective terms, except to the extent that enforcement may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and subject to the application or
limitation of equitable principles by a court of competent jurisdiction.
Section 4.03 Material Liabilities. There has been no material adverse
change in the operations, business, property, assets or condition (financial or
otherwise) of Borrower since the date of the financial statements heretofore
provided by Borrower to Lender.
Section 4.04 Use of Proceeds. Proceeds of the Loan shall be used
exclusively to refinance the purchase of the Aircraft. Borrower agrees that the
proceeds of the Loan, subject to the terms and conditions contained herein,
shall be paid by Lender pursuant to the written instructions of Borrower.
Section 4.05 USA Patriot Act. Borrower represents and warrants that it is
not a foreign shell bank, as defined in the USA Patriot Act, and is not being
used by a foreign bank to indirectly provide banking services to another foreign
bank that does not have a physical presence in any country. Borrower shall, with
reasonable promptness, provide to Lender all information and data with respect
to Borrower and/or any of its affiliates as from time-to-time may be required
for Lender to comply with the USA Patriot Act, with the understanding that
Lender may share information with the United States government for the purpose
of identifying or reporting suspected terrorism or money laundering. The USA
Patriot Act for purposes of this Section means The USA Patriot Act (P.L.
107-56), as amended or modified from time to time, and the regulations
promulgated thereunder.
ARTICLE V: CONDITIONS TO CLOSING.
In addition to the terms and conditions otherwise contained herein, the
making of the Loan is subject to the satisfaction of the conditions contained in
this Article V. The date on which the conditions are satisfied and the Loan is
made is hereinafter referred to as the "Closing Date."
Section 5.01 No Default. Borrower shall not be in default under any Credit
Documents.
Section 5.02 Representations and Warranties. The representations and
warranties contained in the Credit Documents shall be true and correct.
Section 5.03 Delivery of Documents. Borrower shall have delivered to Lender
the following documents:
(a) a duly executed original of each of the Credit Documents;
(b) a certificate of good standing of Borrower issued by the State of
Oklahoma;
(c) a copy of the Articles of Incorporation of Borrower;
(d) a copy of the Bylaws of Borrower;
(e) a certified copy of the resolutions of the Board of Directors of
Borrower authorizing the transaction contemplated herein;
(f) evidence that Borrower has become a transacting user entity with
the International Registry and appointed an administrator and a
professional user entity to act on Borrower's behalf;
(g) evidence that good title to the Aircraft is in the name of
Borrower;
(h) evidence that Borrower has obtained the insurance required by
Section 3.4 of the Security Agreement;
(i) copies of the FAA Entry Point Filing Form-International Registry
(AC From 8050-135), and FAA Standard Airworthiness Certificate
(AC Form 8100-2) for the Aircraft;
(j) an Irrevocable De-Registration and Export Request Authorization
substantially in favor of Lender (the "IDERA");
(k) receipt of the nonrefundable Documentation Fee (as defined in
Section 7.08);
(l) an opinion of counsel to Borrower in form of Exhibit C attached
hereto; and
(m) such additional documentation which may be reasonably requested
by Lender, in form and substance acceptable to Lender in its sole
discretion.
ARTICLE VI: EVENTS OF DEFAULT; REMEDIES
Section 6.01 Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement:
(a) the occurrence of an "Event of Default" under the Security
Agreement or the Note;
(b) default by Borrower in the payment of any other amounts payable
under this Agreement or default of any other terms or provisions
of this Agreement, any other Credit Document and such default
shall continue for a period of thirty (30) days after Borrower
has been notified in writing of such default;
(c) the Security Agreement granted to Lender shall cease to be in
full force and effect or shall cease to give to Lender the rights
and interests purported to be created thereunder;
(d) the Collateral or any portion thereof shall be seized or
confiscated by any governmental authority for any reason
whatsoever;
(e) the failure by Borrower to maintain the insurance coverage on the
Aircraft in accordance with the requirements set forth in the
Security Agreement;
(f) Borrower fails or becomes unable generally to pay its debts as
they come due, makes an assignment for the benefit of creditors,
has a compulsory winding up order made against it or resolves to
be wound up voluntarily, files a petition in bankruptcy or for
relief under any bankruptcy or insolvency law, is adjudicated
insolvent or bankrupt, petitions or applies to any tribunal for
any receiver of or any trustee for such company or any
substantial part of its property, commences any proceeding
relating to such company under any reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction whether now or hereafter in effect, or if
there is commenced against Borrower any such proceeding which
remains undismissed for a period of sixty (60) days or Borrower,
by any act, indicates its consent to, approval of, or
acquiescence in any such proceeding or the appointment of any
receiver of or any trustee for Borrower or any substantial part
of its property, or suffers any such receivership or trusteeship
to continue undischarged for a period of sixty (60) days;
(g) any representation, warranty or statement made by Borrower in
this Agreement, or any other Credit Document or any notice or
other document, certificate or statement delivered by Borrower
pursuant hereto or in connection herewith is or proves to have
been incorrect or misleading when made;
(h) Borrower suspends or ceases or threatens to suspend or cease to
carry on a material part of its business;
(i) the occurrence of an event of default of Borrower under any other
agreement between Borrower and Lender or any of Lender's
affiliates or subsidiaries;
(j) default shall be made in the due observance or performance of any
term, covenant or agreement contained in any other agreement
between Borrower and Lender or any of Lender's affiliates and
subsidiaries;
(k) there shall occur in the reasonable opinion of Lender any
material adverse change in the financial condition of Borrower
which, in the reasonable opinion of Lender, will materially
impair the ability of Borrower to perform its obligations under
the Credit Documents; or
(l) any other event which substantially deprives Lender of what it is
entitled to expect under the Credit Documents.
then upon the happening of any of the foregoing Events of Default, the Note and
all amounts under this Agreement shall become and be immediately due and payable
upon Lender having given Borrower notice of such acceleration, and Lender shall
be entitled to all other remedies available at law; provided, however, that upon
the occurrence of an Event of Default specified in (f) above, the Note and all
amounts under this Agreement shall automatically become due and payable without
notice or demand of any kind. Except as set forth in the immediately preceding
sentence and this paragraph, Borrower expressly waives any presentment, demand,
protest or other notice of any kind.
ARTICLE VII: MISCELLANEOUS PROVISIONS
Section 7.01 Governing Law. This Agreement and the rights and obligations
of the parties hereunder shall be governed by and construed in accordance with
the laws of the State of Minnesota.
Section 7.02 Jurisdiction; Service of Process; Waiver of Immunity. Any
legal action or proceeding against Borrower with respect to the Credit Documents
to which it is a party may be brought in such of the courts of competent
jurisdiction of the State of Minnesota or in the United States District Court
located in the State of Minnesota as Lender or its respective successors and
permitted assigns, as the case may be, may elect, and by execution and delivery
of the Credit Documents to which it is a party, Borrower irrevocably submits to
the non-exclusive jurisdiction of such courts, and to appellate courts
therefrom, for purposes of legal actions and proceedings under each Credit
Document and, in the case of any such legal action or proceeding brought in the
above-named Minnesota courts, hereby irrevocably consents, during such time, to
the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered mail,
postage prepaid, to Borrower at its address set forth above, or by any other
means permitted by applicable law. Borrower hereby irrevocably designates,
appoints and empowers CT Corporation System as its authorized agent for service
of process in the State of Minnesota in any suit or proceeding with respect to
the Credit Documents to which it is a party. A copy of any such process served
on such agent shall be promptly forwarded by airmail by the person commencing
such proceeding to Borrower at its address set forth above, but the failure of
Borrower to receive such copies shall not affect in any way the service of such
process as aforesaid. Provided, further, in the event that service of process is
made upon CT Corporation System as set forth herein, Lender shall provide a copy
of such service of process to Borrower. Borrower further irrevocably consents to
the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
airmail, postage prepaid, to Borrower at its address set forth above. The
foregoing, however, shall not limit the rights of Lender to serve process in any
other manner permitted by law or to bring any legal action or proceeding or to
obtain execution of judgment in any jurisdiction. Borrower further agrees that
final judgment against Borrower in any action or proceeding in connection with
the Credit Documents to which it is a party shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States of
America by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of the fact and the amount of Borrower's indebtedness. TO
THE EXTENT THAT BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY OF THE ABOVE-NAMED COURTS OR FROM ANY LEGAL PROCESS THEREIN,
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY, AND BORROWER HEREBY
IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE
ABOVE-NAMED COURTS (I) ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF THE ABOVE-NAMED COURTS, (II) THAT IT OR ANY OF ITS PROPERTY IS
IMMUNE FROM THE ABOVE DESCRIBED LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, OR
OTHERWISE), (III) THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THE CREDIT
DOCUMENTS TO WHICH IT IS A PARTY MAY NOT BE ENFORCED IN OR BY SUCH COURTS, OR
(IV) ANY DEFENSE THAT WOULD HINDER OR DELAY THE LEVY, EXECUTION OR COLLECTION OF
ANY AMOUNT TO WHICH EITHER PARTY HERETO IS ENTITLED PURSUANT TO A FINAL JUDGMENT
OF ANY COURT HAVING JURISDICTION. NOTHING IN THIS SECTION 7.02 SHALL LIMIT ANY
RIGHT OF LENDER TO BRING ACTIONS, SUITS OR PROCEEDINGS IN THE COURTS OF ANY
OTHER JURISDICTION. BORROWER EXPRESSLY ACKNOWLEDGES THAT THE FOREGOING WAIVER IS
INTENDED TO BE IRREVOCABLE AND HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO
REQUEST A TRIAL BY JURY IN ANY ACTION RELATING TO THE CREDIT DOCUMENTS.
Section 7.03 Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under any applicable law of any jurisdiction,
such provision shall, as to such jurisdiction, be inapplicable and deemed
omitted to the extent so contrary, prohibited, or invalid, without invalidating
the remainder hereof or affecting the validity or enforceability of such
provision in any other jurisdiction. In the event of any conflict between any
Cape Town Convention provisions in this Agreement and any provisions in this
Agreement not related to the Cape Town Convention, the provisions relating to
the Cape Town Convention shall prevail.
Section 7.04 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument, and all signatures need
not appear on any one counterpart.
Section 7.05 Notice. Any notice or other communication required or
permitted under this Agreement or necessary or convenient in connection with
this Agreement shall be sent by facsimile to the respective facsimile numbers
noted below, and shall be deemed duly given the next business day following the
date upon which such notice is sent. If not conveniently transmitted by
facsimile, notice shall be sent by registered or certified mail, return receipt
requested, or by international courier delivery service, and shall be deemed
duly given upon actual receipt and shall be addressed as follows:
If to Lender: Wells Fargo Equipment Finance, Inc.
733 Marquette Avenue, Suite 700
MAC N9306-070
Minneapolis, Minnesota 55402
Attention: Account Services
Facsimile: 866-687-5578
If to Borrower: Pre-Paid Legal Services, Inc.
One Pre-Paid Way
Ada, Oklahoma 74821-0145
Attention: Steve Williamson, CFO
Facsimile: 580-310-6966
or to such address or addressee as either party from time to time shall
designate by written notice to the other.
Section 7.06 Benefit of Agreement. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the parties and their
respective successors in interest and permitted assigns; provided however, that
Borrower shall not assign or transfer any interest or delegate any duty
hereunder without the prior written consent of Lender. Lender shall have the
absolute right to assign or transfer any interest herein or in the other Credit
Documents, including, without limitation, the right to sell participation
interests in the Loan.
Section 7.07 Further Documentation. The parties hereto agree that from time
to time after the Closing Date, Borrower shall execute and deliver to Lender
such further document or documents as Lender may reasonably request and which is
or are necessary or desirable in order to confirm, further evidence the
respective obligations of Borrower and/or the rights and privileges of Lender
under this Agreement or the other Credit Documents, or carry out the intent of
the parties under this Agreement or the other Credit Documents. Without limiting
the generality of the foregoing, the parties hereto undertake to enter into,
execute and deliver such documents as may be necessary or desirable to
constitute an international interest under the Cape Town Convention.
Particularly in the case of any amendment, waiver or consent pursuant to Section
7.09 hereof, the parties undertake to enter into, execute and deliver such
documents as may be necessary or desirable to enhance the enforceability of the
commercial agreements of the parties under the Cape Town Convention to the
greatest extent permitted under the Cape Town Convention, such that Lender's
priority position should not be prejudiced thereby.
Section 7.08 Expenses/Documentation Fee. Borrower shall, on demand, pay or
reimburse Lender for Lender's reasonable costs and expenses (including
reasonable fees and disbursements of legal counsel) incurred, and all payments
made, and indemnify and hold Lender harmless from and against all losses
suffered by Lender in connection with, arising out of, or in any way related to
(i) the negotiation, preparation, execution and delivery of this Agreement and
the other Credit Documents; (ii) protecting, preserving, exercising or enforcing
any of the rights of Lender under this Agreement or the other Credit Documents,
including, without limitation, the registration of an international interest
with the International Registry and Borrower's registration as a transacting
user entity with the International Registry and/or Borrower's appointment of an
administrator or a professional user entity to facilitate filings with the
International Registry; and (iii) any claim (whether asserted by Lender or
Borrower or any other person) and the prosecution or defense thereof, in any way
arising under, related to, or connected with, this Agreement or the other Credit
Documents or the relationship established hereunder; provided, however, such
indemnification obligations shall not apply to any act or omission involving a
breach of this Agreement by Lender and shall not apply to any act or omission
involving gross negligence or willful misconduct by Lender or its
representatives. On or before the Closing, Borrower shall have remitted to
Lender a documentation fee in the amount of Three Thousand Five Hundred Dollars
($3,500.00) (the "Documentation Fee"), which amount will be used in part for
reimbursement of Lender's costs incurred in the negotiation, preparation,
execution and delivery of this Agreement and the other Credit Documents;
provided, however, in no event shall Borrower be responsible for any
reimbursement of such costs in excess of Five Thousand Dollars ($5,000.00).
Borrower's obligation under this Section 7.08 shall survive the repayment of the
Loan and the Note.
Section 7.09 Waivers; Amendments. Any term, covenant, agreement or
condition of this Agreement or the other Credit Documents may be amended or
waived, and any departure therefrom may be consented to, if, but only if, such
amendment, waiver or consent is in writing and is signed by Lender and, in the
case of an amendment, by Borrower. Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.
Section 7.10 Set-Off. Upon and after the occurrence of any Event of
Default, Lender and each of its affiliates is hereby authorized by Borrower, at
any time and from time to time, without notice, (a) to set off against, and to
appropriate and apply to the payment of, the obligations and liabilities of
Borrower under this Agreement and the other Credit Documents (whether matured or
unmatured, fixed or contingent or liquidated or unliquidated) any and all
amounts owing by Lender or any such affiliate to Borrower (whether payable in
United States Dollars or any other currency, whether matured or unmatured, and,
in the case of deposits, whether general or special, time or demand and however
evidenced) and (b) pending any such action, to the extent necessary, to hold
such amounts as collateral to secure such obligations and liabilities.
Section 7.11 Limitation of Liability. No claim may be made by Borrower
against Lender or its affiliates, directors, officers, employees, attorneys or
agents for any special, indirect, consequential or punitive damages in respect
of any breach or wrongful conduct (whether the claim therefor is based on
contract, tort or duty imposed by law) in connection with, arising out of or in
any way related to the transactions contemplated and relationships established
by this Agreement or the other Credit Documents, or any act, omission or event
occurring in connection therewith (unless such claims result from the negligence
or willful misconduct of Lender or its affiliates, directors, officers,
employees, attorneys or agents); and Borrower hereby waives, releases and agrees
not to sue upon any such claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
Section 7.12 Entire Agreement. This Agreement and the other Credit
Documents embody the entire agreement between Borrower and Lender and supersede
all prior agreements, representations and understandings, if any, relating to
the subject matter hereof.
Section 7.13 Currency. The payment obligations of Borrower under this
Agreement and the other Credit Documents shall not be discharged by an amount
paid in currency other than United States Dollars, whether pursuant to a
judgment or otherwise. To the extent that the amount so paid on prompt
conversion to United States Dollars and transfer to the specified place of
payment under normal banking procedures does not yield the amount of United
States Dollars in such place due under this Agreement and the other Credit
Documents, Borrower shall indemnify Lender and any obligee against any such
shortfall. In the event that any payment, whether pursuant to a judgment or
otherwise, upon conversion and transfer does not result in the payment of such
amount of United States Dollars in the specified place of payment, the obligee
of such payment shall have a claim against Borrower for the additional amount
necessary to yield the amount due and owing under this Agreement and the other
Credit Documents and is a separate cause of action.
Section 7.14 Cape Town Definitions. For purposes of this Agreement, "Cape
Town Convention" shall mean, collectively, the official English language text of
the convention on International Interests in Mobile Equipment and the Protocol
to the Convention on International Interests in Mobile Equipment on Matters
Specific to Aircraft Equipment, adopted on November 16, 2001, at a diplomatic
conference in Cape Town, South Africa. Any reference in this Agreement to a
provision, section or article of the Cape Town Convention shall be a reference
to the Consolidated Text of the Cape Town Convention and to the corresponding
provision, section or article of the documents described in the immediately
preceding sentence from which the Consolidated Text of the Cape Town Convention
is derived. "International Registry" shall mean the international registry
located in Dublin, Ireland, established pursuant to the Cape Town Convention.
IN WITNESS WHEREOF, the authorized representatives of the parties have
executed this Term Loan Agreement as of the date first written above.
WELLS FARGO EQUIPMENT FINANCE, INC.
By: /s/ Julie Milbrath
---------------------------------------------------
Name: Julie Milbrath
-------------------------------------------------
Title: Assistant Vice President
------------------------------------------------
PRE-PAID LEGAL SERVICES, INC.
By: /s/ Steve Williamson
--------------------------------------------------
Steve Williamson, CFO
Exhibit 10.2
------------
FORM OF AIRCRAFT MORTGAGE
AND SECURITY AGREEMENT
AIRCRAFT MORTGAGE
AND SECURITY AGREEMENT
between
PRE-PAID LEGAL SERVICES, INC.
and
WELLS FARGO EQUIPMENT FINANCE, INC.
dated as of September 28, 2007
Aircraft:
Learjet Inc. Model 60
(described on the International Registry drop down menu
as LEARJET model LEARJET 60)
Serial Number 293, Registration Number: N772PP
Engines: Pratt & Whitney Canada Model PW305A
(described on the International Registry drop down menu
as PRATT & WHITNEY CANADA, Model PW300 SERIES)
Serial Numbers: CA0446 and CA0447
each of which exceeds the equivalent of 550 rated takeoff horsepower
or is capable of generating 1,750 or more pounds of thrust
TABLE OF CONTENTS
PARTIES
RECITALS
GRANTING CLAUSES
ARTICLE 1 - DEFINITIONS
1.1 Defined Terms
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 Ownership; Priority Lien; No Violation
2.2 Insurer's Certificate
ARTICLE III - COVENANTS OF MORTGAGOR
3.1 Registration, Maintenance and Operation of Aircraft and
Engines.
3.2 Alterations, Modifications and Addition
3.3 Event of Loss
3.4 Insurance
3.5 Location of Aircraft
3.6 Application of Insurance Proceeds
3.7 Liens on Mortgaged Property; Taxes
3.8 Further Assurances
3.9 Recording and Filing
3.10 Suits to Protect the Mortgaged Property
ARTICLE IV - DEFAULT AND REMEDIES
4.1 Events of Default
4.2 Relief Pending Final Determination
4.3 Relief Pending Final Determination
4.4 Provisions Regarding Sale
4.5 Application of Monies Received by Lender
4.6 Waiver of Defaults
ARTICLE V - SATISFACTION AND DISCHARGE
5.1 Discharge
ARTICLE VI - MISCELLANEOUS
6.1 Severability
6.2 Counterparts
6.3 Amendments
6.4 Indemnification by Mortgagor; Expenses
6.5 Acknowledgement of Receipt of Copy of Mortgage
6.6 Assignment
6.7 Notice
6.8 Agreement
6.9 Applicable Law
AIRCRAFT MORTGAGE AND SECURITY AGREEMENT
THIS AIRCRAFT MORTGAGE AND SECURITY AGREEMENT ("Mortgage") dated as of the
28th day of September, 2007, between PRE-PAID LEGAL SERVICES, INC., a
corporation formed under the laws of the State of Oklahoma having its
headquarters at One Pre-Paid Way, Ada, Oklahoma 74821-0145 ("Mortgagor"), and
WELLS FARGO EQUIPMENT FINANCE, INC., a corporation organized under the laws of
the State of Minnesota, having its headquarters at 733 Marquette Avenue, Suite
700, MAC N9306-070, Minneapolis, Minnesota 55402 ("Lender").
W I T N E S S E T H :
WHEREAS, Mortgagor has entered into a Term Loan Agreement with Lender dated
as of September 28, 2007 (the "Agreement"); and
WHEREAS, Lender and Mortgagor wish that the payment of all amounts due
under said Agreement and the Note (as defined below) be secured by a security
interest and an international interest as herein provided;
NOW, THEREFORE, the parties hereto agree and declare as follows:
For and in consideration of the premises hereof and to secure (i) the
performance of all Secured Obligations (as defined below), and (ii) payment of
all amounts due under the Agreement, including the Note taken in conjunction
therewith, Mortgagor does hereby consent to the creation of an international
interest under the Cape Town Convention (as defined below) and does hereby
mortgage, hypothecate, pledge, confirm and grant a security interest in, lien
upon and right of set-off against, the property described in Granting Clauses I
through IV, inclusive, whether now owned or hereafter acquired (which property,
including all property hereafter specifically subjected to this Mortgage and any
other agreement supplemental hereto, is referred to herein as the "Mortgaged
Property"), forever with the power granted, to Lender, its successors and
assigns to dispose of the Mortgaged Property:
GRANTING CLAUSE I
All right, title and interest of Mortgagor in and to the Aircraft, the
Parts, the Engines (all as defined below) and their components and
attachments, and all manuals and log books and other documentation relating
thereto, it being the intent that separate rights shall attach to the
Airframe separate and apart from the Engines for purposes of the Cape Town
Convention.
GRANTING CLAUSE II
All proceeds of insurance from any loss of, or damage to, any
properties mentioned or referred to in Granting Clause I and any other
proceeds of any kind resulting from any Event of Loss (as defined below)
with respect thereto.
GRANTING CLAUSE III
All estate, right, title, interest and claims whatsoever, at law, as
well as in equity, which Mortgagor has or possesses on the date of this
Mortgage or to which Mortgagor may hereafter become legally or equitably
entitled, from, in or to the properties described in Granting Clauses I and
II, inclusive, including, without limitation, the Associated Rights (as
defined below), the right to receive any rent from the lease of the
Aircraft or any charter or management fees derived from the use of the
Aircraft, together with all accounts receivable, general intangibles and
chattel paper evidencing any of the foregoing.
GRANTING CLAUSE IV
All right, title and interest of Mortgagor in any engine Maintenance
Service Plan (MSP), including any engine reserve account, and any
management agreement involving the Aircraft.
TO HAVE AND TO HOLD, the Mortgaged Property under and subject to the terms
and conditions set forth herein, for the benefit and security of all Secured
Obligations and of all and singular the present and future holders thereof and
to secure the payment and performance of the Secured Obligations, ratably and
without any preference, distinction or priority as to lien or otherwise of any
such Secured Obligations over any other Secured Obligation by reason of the
difference in time of the actual making, issue, delivery, incurrence or sale of
the respective Secured Obligations or for any other reason whatsoever, except as
herein otherwise expressly provided or referred to, and so that each and every
Secured Obligation, whether outstanding on the date of this Mortgage or
hereafter issued and delivered or incurred shall have the same lien and
security, and so that each and every such Secured Obligation shall be equally
and proportionately secured hereby as if it had been made, issued, delivered and
incurred simultaneously with the execution and delivery of this Mortgage.
PROVIDED, HOWEVER, and these presents are upon the condition that, unless
and until an Event of Default has occurred and is continuing, neither Lender nor
its successors or assigns shall disturb Mortgagor's possession and use of the
Aircraft, Engines, Parts or other property constituting all or part of the
Mortgaged Property, subject to the further covenants, conditions, uses and
trusts, and except as specifically set forth herein; and
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto that
the Mortgaged Property is to be held and applied on the further covenants,
conditions, uses and trusts set forth herein:
ARTICLE I - DEFINITIONS
1.1 Defined Terms. As used in this Mortgage, except as otherwise indicated
herein, the following terms shall have the meanings set forth below or in the
location indicated:
(a) "Agreement" shall mean the Term Loan Agreement dated as of
September 28, 2007, between Mortgagor and Lender.
(b) "Aircraft" shall mean the Learjet Inc. Model 60 aircraft
(described on the International Registry drop down menu as LEARJET model
LEARJET 60), bearing Serial No. 293, and FAA Registration No. N772PP,
together with all Engines and all Parts.
(c)"Airframe" shall mean (i) the Aircraft, not including the Engines
or any APU, it being the intent that separate rights shall attach to the
Airframe separate and apart from the Engines for purposes of the Cape Town
Convention, and (ii) any and all Parts from time to time incorporated in,
installed on or attached to the Aircraft and any and all Parts removed
therefrom so long as Lender shall retain an interest therein in accordance
with the applicable terms of this Agreement after removal from the
Aircraft.
(d)"Associated Rights" means all rights to payment or other
performance by Mortgagor under an agreement which is secured by or
associated with the Aircraft.
(e) "Cape Town Convention" shall mean, collectively, the official
English language text of the convention on International Interests in
Mobile Equipment and the Protocol to the Convention on International
Interests in Mobile Equipment on Matters Specific to Aircraft Equipment,
adopted on November 16, 2001, at a diplomatic conference in Cape Town,
South Africa. Any reference in this Agreement to a provision, section or
article of the Cape Town Convention shall be a reference to the
Consolidated Text of the Cape Town Convention and to the corresponding
provision, section or article of the documents described in the immediately
preceding sentence from which the Consolidated Text of the Cape Town
Convention is derived.
(f) "Engine(s)" shall mean those certain Pratt & Whitney Canada model
PW305A engines (described on the International Registry drop down menu as
PRATT & WHITNEY CANADA, Model PW300 SERIES), bearing Manufacturer's Serial
Nos. CA0446 and CA0447 on the International Registry drop down menu), which
engines have 550 or more rated takeoff horsepower or are capable of
generating 1,750 or more pounds of thrust or the equivalent thereof, and
any replacement Engine purchased in accordance with Paragraph 3.3(b) of
this Mortgage.
(g) "Event of Default" shall have the meaning given to it pursuant to
Paragraph 4.1 of this Mortgage.
(h) "Event of Loss" with respect to the Aircraft or any Engine shall
mean any of the following events:
(i) loss of the Aircraft or any Engine or the use thereof due to
destruction, damage beyond repair or rendition of such Aircraft or
Engine permanently unfit for normal use from any reason whatsoever;
(ii) any damage to the Aircraft or Engine (including those
requiring the completion of an FAA Form 337, "Major Repair And
Alteration Statement") which results in an insurance settlement with
respect to such Aircraft or Engine on the basis of total loss;
(iii) the theft, disappearance, condemnation, confiscation,
attachment, sequestration, distraint or seizure of, or requisition of
title to or use or possession of, such Aircraft or Engine for a period
of ninety (90) consecutive days; or
(iv) the operation or location of the Aircraft, while under
condemnation, confiscation, seizure, requisition or otherwise in any
area excluded from coverage by any insurance policy in effect with
respect to the Aircraft required by the provisions of this Mortgage or
of the Agreement.
(i) "FAA" shall mean the United States Federal Aviation
Administration, or the agency or official of the United States of America
at the time administering the functions of the Federal Aviation
Administration with respect to the regulation of aircraft.
(j) "Federal Aviation Act" shall mean Subtitle VII of Title 49 of the
United States Code, as amended from time to time, or any similar
legislation of the United States enacted to supersede, amend or supplement
such Act.
(k) "IDERA" shall mean an Irrevocable De-Registration and Export
Request Authorization substantially in the form of Annex I hereto.
(l) "Insurance Certificate" shall mean a certificate of a Qualified
Insurance Broker.
(m) "International Registry" shall mean the international registry
located in Dublin, Ireland, established pursuant to the Cape Town
Convention.
(n) "International Registry Procedures" shall mean the official
English language text of the Procedures for the International Registry
issued by the supervisory authority thereof pursuant to the Cape Town
Convention.
(o) "International Registry Regulations" shall mean the official
English language text of the Regulations of the International Registry
issued by the supervisory authority thereof pursuant to the Cape Town
Convention.
(p) "Liens" shall mean all liens, charges, security interests,
national interests, prospective international interests, international
interests, leaseholds and encumbrances of every nature and description
whatever, whether consensual or nonconsensual, including, without
limitation, any rights of third parties under third party agreements and
irrevocable de-registration and export request authorizations.
(q) "Mortgage" shall mean this Aircraft Mortgage and Security
Agreement, as it from time to time may be supplemented or amended by any
other supplements or amendments executed by and between Mortgagor and
Lender.
(r) "Mortgaged Property" shall have the meaning specified in the
paragraph of introduction immediately preceding the Granting Clauses of
this Mortgage.
(s) "Note" shall mean the "Note" as defined in the Agreement.
(t) "Parts" shall mean all appliances, parts, instruments,
appurtenances, accessories, furnishings, auxiliary power units, if any, and
other equipment of whatever nature (but excluding complete Engine), so long
as the same shall be (i) incorporated or installed in or attached to the
Aircraft or any Engine, at any time, or (ii) otherwise subject to this
Mortgage.
(u) "Person" shall mean an individual, a corporation, a limited
liability company, a partnership, an unincorporated organization, an
association, a joint-stock company, a joint venture, a trust, an estate or
a government or any agency or political subdivision thereof.
(v) "Qualified Insurance Broker" shall mean an aircraft insurance
broker, designated by Mortgagor and satisfactory to Lender.
(w) "Secured Obligations" shall mean all obligations of Mortgagor
under the Agreement and the Note, and all obligations of Mortgagor under
this Mortgage and all future obligations under any loan agreements,
promissory notes and other obligations of Mortgagor to Lender arising from
the Agreement.
Capitalized terms not otherwise defined in this Mortgage shall have the
meanings set forth in the Agreement.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 Ownership; Priority Lien; No Violation. Mortgagor represents and
warrants that on the date of execution of the Note and this Mortgage and for as
long as the Note and this Mortgage shall remain in full force and effect:
(a) The Aircraft and Engines then being subjected to this Mortgage are
free and clear of all Liens, except the lien of this Mortgage and the
IDERA, and for the purposes of this Mortgage, Mortgagor shall be deemed to
be the legal title holder of the Aircraft and Engines;
(b) This Mortgage has been duly executed and delivered by Mortgagor.
This Mortgage is enforceable in accordance with its terms against Mortgagor
and third parties subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally and to
general equity principles; and
(c) Neither the execution and delivery by Mortgagor of this Mortgage
nor compliance by Mortgagor with any of the terms and provisions of this
Mortgage will, in any way, conflict with, result in any breach of, or
constitute a default under, or result in the creation of any lien (other
than the lien permitted under this Mortgage) upon any property of Mortgagor
under:
(i) any statute, rule or regulation of the United States of
America;
(ii) any treaties, conventions or international regulations,
including, without limitation, the Cape Town Convention, the
International Registry Regulations and the International Registry
Procedures;
(iii) any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan, credit agreement or other
agreement or instrument to which Mortgagor is a party or by which it
or any of its properties may be bound or affected; or
(iv) any order, writ, injunction, decree, judgment, award,
determination, direction or demand of any federal, state, municipal or
other governmental department, court, commission, board, bureau,
agency or instrumentality, domestic or foreign, which is binding on
Mortgagor.
2.2 Insurer's Certificate. Mortgagor shall deliver to Lender an Insurer's
Certificate as to the due compliance with the insurance provisions of Paragraph
3.4 hereof.
ARTICLE III - COVENANTS OF MORTGAGOR
3.1 Registration, Maintenance and Operation of Aircraft and Engines.
(a) Registration and IDERA.
(i) At or prior to the Closing Date (as defined in the
Agreement), at its own cost and expense, and at all times during the
term of this Mortgage, Mortgagor shall (A) cause the Aircraft to be
duly registered in the name of Mortgagor in accordance with the
Federal Aviation Act, and the Aircraft shall not be registered under
the laws of any other country without the prior written consent of
Lender, and (B) cause this Mortgage to be registered as an
international interest on the International Registry. In furtherance
thereof, Mortgagor shall consent, through its professional user
entity, to international registration upon issuance of the request for
consent by the International Registry.
(ii) Mortgagor shall not allow the name of any Person other than
Lender to be placed on the Aircraft and Engines as a designation that
might be interpreted as a lien thereon, provided, that Mortgagor may
cause the Aircraft to be lettered and otherwise marked in an
appropriate manner for convenience of identification of the interest
therein of Mortgagor.
(iii) Mortgagor shall not (A) consent to any Person other than
Lender making any registrations in the International Registry in
relation to the Airframe and Engines, or (B) execute and deliver any
irrevocable de-registration and export request authorization to any
Person other than the IDERA in favor of Lender.
(iv) Mortgagor shall execute and deliver the IDERA, and cause the
same to be filed in accordance with the Federal Aviation Act.
(b) Maintenance. After the Closing Date, and except as may otherwise
be agreed in writing by Mortgagor and Lender, Mortgagor, at its own cost
and expense during the term of the Agreement and until full and complete
payment of the Note and of all amounts due or to become due under the
Agreement, shall:
(i) make all necessary payments in order to maintain current
enrollment of the Engines under any maintenance service plan
established by the manufacturer;
(ii) maintain, service, repair, overhaul and test, or cause the
same to be done to, the Aircraft and each Engine so as to keep them in
as good operating condition as when subjected to the lien hereof and
the international interest in favor of Lender, ordinary wear and tear
excepted, fully operational, duly certified and in airworthy condition
and in at least such condition as may be necessary to:
(A) enable the airworthiness certification of the Aircraft
and the Engines by the FAA to be maintained in good standing at
all times under the Federal Aviation Act and other applicable
laws of the United States of America;
(B) comply with the airframe and engine recommended
inspection and service programs of the manufacturer of the
Aircraft and the manufacturer of the Engines, including, without
limitation, all applicable airworthiness directives and service
bulletins; and
(C) comply with all regulations of the FAA and any other
governmental agency having jurisdiction;
(iii) maintain all records, logs and other materials in English
required by the FAA to be maintained in respect of the Aircraft and
the Engines (and in the event the Aircraft and any Engine is
repossessed pursuant to Article IV hereof, deliver all such materials
pertaining thereto to Lender); and
(iv) upon Lender's written request, promptly furnish to Lender
such information as may be required to enable Lender to file any
reports required to be filed by Lender with any governmental authority
because of its interest in the Mortgaged Property and promptly consent
to any filings with the International Registry as Lender may determine
are necessary or appropriate.
(c) Operations. Mortgagor shall not permit the Aircraft and any Engine
to be maintained, serviced, repaired, overhauled, tested, used or operated
in violation of any law or any rule, regulation or order of any
governmental authority having jurisdiction thereover, or in violation of
any airworthiness certificate, license or registration relating to the
Aircraft or any Engine issued by any such authority, or in violation or
breach of any representation or warranty made with respect to obtaining
insurance on the Aircraft or any term or condition of such insurance
policy. Mortgagor shall not lease the Mortgaged Property to any other
Party, without Lender's prior written consent. If required by applicable
law, Mortgagor shall operate the Aircraft (or cause the Aircraft to be
operated) under a Part 135 Certificate.
3.2 Alterations, Modifications and Additions.
(a) Alterations, Modifications and Additions. Mortgagor, at its own
cost and expense, shall make such alterations and modifications in and
additions to the Aircraft and Engines as may be required from time to time
to meet all applicable standards of the Federal Aviation Administration or
other governmental authority having jurisdiction over the Aircraft and
Engines.
So long as no Event of Default shall have occurred and be continuing,
Mortgagor, at its own cost and expense, and from time to time, may make such
alterations and modifications in, and additions to, the Aircraft and any Engine
as Mortgagor may deem desirable in the proper conduct of its business; provided,
that no such alteration, modification or addition shall diminish the value or
utility of the Aircraft or such Engine, or impair the condition or airworthiness
thereof, below the value, utility, condition or airworthiness thereof
immediately prior to such alteration, modification or addition assuming the
Aircraft or such Engine were measured by the value, utility and airworthiness,
and in the condition and state of repair required to be maintained by the terms
hereof. All Parts incorporated or installed in or attached to or added to the
mortgaged Aircraft or any mortgaged Engine as the result of any alteration,
modification or addition shall conform to the requirements of Paragraph 3.2(a)
hereof and, without further act or deed, shall become subject to the lien of
this Mortgage and the international interest in favor of Lender.
So long as no Event of Default shall have occurred and be continuing,
Mortgagor, at any time, may remove any Part from the Aircraft or Engines if:
(i) such Part is in addition to, and not in replacement of, or
substitution for, any Part incorporated or installed in or attached to
the Aircraft or any Engine;
(ii) such Part is not required to be incorporated or installed
in, or attached or added to, the Aircraft or such Engine pursuant to
the terms of Paragraphs 3.1(b), 3.1(c) or Paragraph 3.2 hereof; and
(iii) such Part can be readily removed from the Aircraft or any
Engine without diminishing or impairing the value, utility, condition
and airworthiness of the Aircraft or such Engine.
Upon any such removal, such Part shall cease to be a "Part" within the meaning
hereof.
(b) Liability of Lender. Lender shall not bear any liability or cost
for any alteration, modification or addition, or for any grounding or
suspension of certification of the Aircraft or any Engine, or for loss to
Mortgagor of any revenue in respect of the Aircraft or any Engine, however
arising.
3.3 Event of Loss.
(a) Event of Loss with Respect to the Aircraft. Upon the occurrence of
an Event of Loss with respect to the Aircraft, Mortgagor shall give Lender
prompt written notice thereof, stating the circumstances of such Event of
Loss. No later than thirty (30) days after the date of such Event of Loss,
Mortgagor shall, at Lender's sole option:
(i) repay the outstanding principal balance under the Agreement
and the Note and all other Secured Obligations in full, or
(ii) enter into, at the expense of Mortgagor, an agreement in all
respects satisfactory to Lender for repair of the Aircraft sufficient
to return the Aircraft to the same or better condition as the Aircraft
was in prior to the Event of Loss.
(b) Event of Loss with Respect to a Mortgaged Engine. Upon the
occurrence of an Event of Loss with respect to any Engine, which Event of
Loss does not constitute an Event of Loss with respect to the Aircraft,
Mortgagor shall give Lender prompt written notice thereof, stating the
circumstances of such Event of Loss. As soon as possible, but no later than
thirty (30) days after the date of such Event of Loss, Mortgagor shall:
(i) repay the outstanding principal balance under the Note and
all other Secured Obligations in full, or
(ii) enter into, at the expense of Mortgagor, an agreement in all
respects satisfactory to Lender for the purchase of a new Engine
compatible with the Aircraft to replace the Engine which is the
subject of such Event of Loss.
Upon delivery of such new Engine pursuant to such agreement, Mortgagor
shall cause such new Engine to be installed on the Aircraft and specifically
subject such new Engine to the lien hereof and the international interest in
favor of Lender, delivering to Lender all documents required or useful in
connection therewith and consenting to the registration of an international
interest with the International Registry with respect to such new Engine. Lender
shall execute and deliver all documents required or useful in connection with
releasing the replaced Engine from the lien of this Mortgage and shall discharge
all registrations with the International Registry with respect to the replaced
Engine.
3.4 Insurance. At or prior to the Closing Date, and without limiting the
requirements of Section 5.03 of the Agreement, Mortgagor will carry, at the cost
and expense of Mortgagor:
(a) public liability insurance (including, without limitation,
passenger legal liability);
(b) property damage insurance (including, without limitation, airport
property damage liability and contractual liability); and
(c) all-risk ground and flight aircraft hull insurance (including,
without limitation, war risk, hijacking and similar perils insurance).
The amount of such all-risk ground and flight aircraft hull insurance at no time
and in no event shall be less than Ten Million United States Dollars
(US$10,000,000.00). In the case of public liability, the amount thereof
maintained shall in no event be less than Ten Million United States Dollars
(US$10,000,000.00). All insurance required to be maintained by this Paragraph
3.4 shall be maintained in effect with financially sound and reputable insurers
satisfactory to Lender and shall be evidenced by one (1) or more policies, each
of which shall provide:
(i) in the case of all-risk ground and flight aircraft hull
insurance that Lender is designated as a loss payee (but without
imposing upon Lender any obligation imposed upon the insured,
including, without limitation, the liability to pay the premiums of
such policies), and that, in the event of any damage or loss to the
Aircraft or any Engine, all payments shall be made to Lender at its
address:
WELLS FARGO EQUIPMENT FINANCE, INC.
733 Marquette Avenue, Suite 700
MAC N9306-070
Minneapolis, Minnesota 55402
(ii) in the case of public liability and property damage
insurance, that Lender is an additional named insured (but without
imposing upon Lender any obligation, including, without limitation,
the liability to pay the premiums for such policies), and that all of
the provisions thereof shall operate in the same manner as if there
were a separate policy covering each insured (provided that such
policies shall operate in the same manner as if there were a separate
policy covering each insured);
(iii) that, as against Lender, the insurer waives any rights of
subrogation, set-off, counterclaim or any other deduction, whether by
attachment or otherwise;
(iv) that, in respect of the interest of Lender in such policy or
policies, the insurance shall not be invalidated by any action or
inaction of Mortgagor or of any other Person (other than Lender) and
shall insure Lender regardless of any breach or violation by Mortgagor
or any other Person (other than Lender ) of any warranties,
declarations or conditions contained in such policies; and
(v) that, if such insurance is canceled for any reason whatsoever
or changes in any material respect in relation to the interest of
Lender or is allowed to lapse for nonpayment of premium, such
cancellation, change or lapse shall not be effective as to Lender for
thirty (30) days after receipt by Lender of written notice by the
insurer of such cancellation, change or lapse. All proceeds of
insurance policies required to be in effect hereof, if for any reason
not paid directly to Lender and if not then required to be paid over
by Lender to Mortgagor pursuant to Paragraph 3.6 hereof, shall be
deposited by Mortgagor with Lender.
3.5 Location of Aircraft. Mortgagor shall at all times keep the Aircraft
registered under the laws of the United States of America. Mortgagor shall not
base the Aircraft in a location outside of the United States of America, and
Mortgagor shall not operate or locate the Aircraft or any Engine or permit the
Aircraft or any Engine to be operated or located in:
(a) any area or on any route excluded from coverage under the
provisions of any insurance policy required by the terms of Paragraph 3.4
above; or
(b) any recognized, or, in Lender's reasonable judgment, threatened
area of hostilities unless fully covered to Lender's satisfaction by war
risk insurance.
3.6 Application of Insurance Proceeds.
(a) Proceeds of insurance received as a result of an Event of Loss
with respect to the Aircraft shall be applied by Lender to payment of the
Secured Obligations in the manner provided in Paragraph 4.5 hereof.
(b) Proceeds of property damage insurance payable as a result of an
Event of Loss shall be held by Lender until Mortgagor shall have entered
into the agreement for repair of the Aircraft as required by Paragraph
3.3(a) or purchase of a new engine as required by Paragraph 3.3(b) or the
time provided in Paragraph 3.3(a) or Paragraph 3.3(b) therefor shall have
expired. Upon placing such an order, such proceeds, upon the request of
Mortgagor, shall be applied directly to payment (including any progress
payment) for such repair or replacement Engine, provided, that all rights
of Mortgagor in, to and under such contract for such repair or the purchase
of a replacement Engine shall first have been assigned to Lender in a
manner reasonably satisfactory in form and substance to Lender. Unless a
Default or Event of Default shall have occurred and be continuing, such
proceeds (or balance thereof remaining after payment in full for such
repair or such replacement Engine) shall be paid to Mortgagor upon
completion of such repair or installation of the replacement Engine on the
Aircraft and its subjection to the lien hereof and international interest
in favor of Lender as required by Paragraph 3.3(b) above, and Lender shall
immediately apply any proceeds of insurance remaining after completion of
and payment for such repair or replacement, then held or thereafter
received by Lender, to the payment or prepayment of the Secured
Obligations.
(c) Unless a Default or Event of Default shall have occurred and be
continuing and except as provided in Paragraph 3.6(d), any proceeds of
insurance received as a result of any damage or loss not constituting an
Event of Loss shall be held by Lender, or upon the request of Mortgagor,
applied by Lender directly to payment (including any progress payment) for
any repair or replacement required by the terms hereof. Unless a Default or
Event of Default shall have occurred and be continuing, after completion
of, and payment for, such repair or replacement, such proceeds, or any
excess over the cost of such repair or replacement if such proceeds shall
have been applied by Lender to payment for such repair or replacement,
shall be forthwith paid over to Mortgagor by Lender.
(d) Unless a Default or Event of Default shall have occurred and be
continuing, any proceeds of insurance received as a result of any damage or
loss to Parts which Mortgagor is entitled to remove pursuant to Paragraph
3.2(a) above without replacement shall be forthwith paid over to Mortgagor
by Lender.
(e) Proceeds of insurance received by Lender on account of damage or
loss to any Mortgaged Property and not applied to payment of the Secured
Obligations, shall be forthwith paid over by Lender to Mortgagor upon
payment in full of the Secured Obligations, shall be forthwith paid over by
Lender to the holders of subsequently ranking interests which have been
registered with the International Registry or of which Lender has been
given notice, with any remaining balance being paid by Lender to Mortgagor.
3.7 Liens on Mortgaged Property; Taxes.
(a) Mortgagor shall always maintain this Mortgage as a first priority
security interest, international interest, and lien upon the Mortgaged
Property and Mortgagor shall cause the international interest in favor of
Lender to always remain the only registered international interest with
respect to the Airframe and Engines. Mortgagor shall not directly or
indirectly create, assume or permit, or suffer to be created and to exist,
any Lien on or with respect to any Mortgaged Property, title thereto or any
interest therein. Mortgagor shall promptly, at its own cost and expense,
take such action as may be necessary to duly discharge any Lien on or with
respect to any Mortgaged Property, title thereto or any interest therein.
(b) Mortgagor shall pay and indemnify Lender for, and hold Lender
harmless from and against, all income (other than Lender's income),
franchise, gross receipts, rental, sales, use, excise, personal property,
ad valorem, value added, leasing, leasing use, stamp, landing, airport use
or other taxes, levies, imposts, duties, charges, fees or withholdings of
any nature, together with any penalties, fines or interest thereon (the
"Tax(es)") arising out of transactions contemplated by this Mortgage and
imposed against Lender, Mortgagor or the Aircraft, or any part thereof, by
the United States of America, any foreign government, any state, municipal
or local subdivision, any agency or instrumentality thereof or any taxing
authority upon or with respect to the Aircraft, or any part thereof, or
upon the ownership, delivery, leasing, possession, use, operation, return,
transfer or release thereof, or upon the rentals, receipts or earnings
arising therefrom, or upon or with respect to this Mortgage. If a claim is
made against Lender for any Tax that is subject to indemnification
hereunder, Lender shall notify Mortgagor promptly within thirty (30) days
after Lender's receipt of such written notice, and Mortgagor will pay such
Tax promptly and in no event later than thirty (30) days after such notice;
provided, however, that if Mortgagor elects to contest or assume the
defense as therein described and provided that Mortgagor can testify such
Tax would not subject the Aircraft to risk of seizure, and Mortgagor so
contests or defends in a timely manner and within the legal delays allowed
to do so, Mortgagor's obligation to pay or reimburse shall, if applicable
laws allow, be postponed until a settlement of the matter or a decision is
rendered on the defense or contestation. Mortgagor's contestation or
defense shall be at Mortgagor's sole cost and expense. If the governmental
authority or agency seeking to collect requires any payment to be made or
any security assurance or guarantee to be furnished as a condition of
contestation or defense, Mortgagor shall pay or furnish same or cause the
payment or furnishing thereof. In case any report or return is required to
be made with respect to any Taxes, Mortgagor will either (after notice to
Lender) make such report or return in such manner as will show the
ownership of the Aircraft in Mortgagor and send a copy of such report or
return to Lender or will notify Lender of such requirement and make such
report or return in such manner as shall be satisfactory to Lender. Lender
agrees to cooperate fully with Mortgagor in the preparation of any such
report or return.
3.8 Further Assurances. Mortgagor, from time to time, shall perform or
execute and deliver, or cause to be performed or executed and delivered, all
such further and other acts, conveyances, transfers, instruments and assurances
as may be reasonably appropriate, or as may be requested by Lender, for the
better mortgaging, hypothecating, confirming, pledging, granting and perfecting
of a lien and security interest unto Lender or a registered international
interest in favor of Lender, in all or in part, of the Mortgaged Property or for
facilitating the execution of the lien or international interest created by this
Mortgage or for securing to Lender the benefit hereof and of the rights and
remedies created hereby. Mortgagor, at all times, shall defend and protect the
lien of this Mortgage on the Mortgaged Property against the enforcement of all
Liens, claims, penalties and rights asserted by any and all Persons whatsoever.
3.9 Recording and Filing. Without limiting Paragraph 3.8 above, Lender, at
the cost and expense of Mortgagor, shall cause this Mortgage and any and all
additional instruments which shall be executed pursuant to the terms hereof, of
the Note or of the Agreement, so far as permitted by applicable laws and
regulations, on and at all times after the date of execution to be kept, and
this Mortgage filed and recorded in such places as may be required under
applicable law, or as Lender, in its discretion, may reasonably request to
perfect and preserve the lien of this Mortgage on all of the Mortgaged Property
and to protect the security and the rights and remedies of Lender hereunder.
Without limiting the foregoing, Mortgagor shall do, or cause to be done, any and
all acts and things as may be reasonably requested by Lender to (i) perfect the
lien of this Mortgage pursuant to the Uniform Commercial Code as in effect in
any jurisdiction with respect to any portion of the Mortgaged Property subject
to the provisions of such Code and (ii) consent to and maintain the registered
international interest in favor of Lender under the Cape Town Convention.
Mortgagor shall bear the entire cost and expense of all actions required to be
taken pursuant to Paragraph 3.8 and 3.9 hereof.
3.10 Suits to Protect the Mortgaged Property. Lender shall have power to
institute and to maintain, at Mortgagor's cost and expense, such suits and
proceedings as Lender may deem expedient to prevent any impairment of the
Mortgaged Property by any acts which may be unlawful or in violation of this
Mortgage or to preserve or protect the interests of Lender in the Mortgaged
Property, including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid, if the enforcement of, or compliance with, such enactment, rule or
order would impair the security hereunder or be prejudicial to the interests of
Lender.
ARTICLE IV - DEFAULT AND REMEDIES
4.1 Events of Default. If one (1) or more of the following events (each an
"Event of Default") shall occur:
(a) Default shall be made in the payment of any installment of
principal, interest or fee due under the Agreement or the Note, when due
and payable, or within any grace period applicable thereto, whether at
maturity, by notice of intention to repay or otherwise, or in the payment
of any other amount payable hereunder or thereunder when due and payable;
(b) Default shall be made in the due observance or performance of any
other term, covenant or agreement contained in this Mortgage or in the
Agreement, and such Default shall not have been cured within a period of
thirty (30) days following written notice from Lender to cure such Default;
(c) Any representation or warranty made by Mortgagor herein or in the
Agreement or any statement or representation made in any certificate,
report or opinion delivered in connection herewith shall prove to have been
misleading in any material respect when made;
(d) Mortgagor fails or becomes unable generally to pay its debts as
they come due, makes an assignment for the benefit of creditors, files a
petition in bankruptcy or for relief under any bankruptcy or insolvency
law, is adjudicated insolvent or bankrupt, petitions or applies to any
tribunal for any receiver of or any trustee for Mortgagor or any
substantial part of its property, commences any proceeding relating to
Mortgagor under any reorganization, arrangement, or readjustment of debt
law or statute of any jurisdiction whether now or hereafter in effect, or
if there is commenced against Mortgagor any such proceeding which remains
undismissed for a period of sixty (60) days or Mortgagor, by any act,
indicates its consent to, approval of, or acquiescence in any such
proceeding or the appointment of any receiver of or any trustee for
Mortgagor or any substantial part of its property, or suffers any such
receivership or trusteeship to continue undischarged for a period of sixty
(60) days;
(e) This Mortgage shall cease to be in full force and effect or shall
cease to give Lender the rights and interests purported to be created
hereunder, including, without limitation, the failure of the interests
granted hereunder to constitute a registered international interest in the
Collateral subject to the Cape Town Convention; or
(f) Default shall be made in the due observance or performance of any
other term, covenant or agreement contained in any other agreement or
mortgage between Mortgagor or Lender; or
(g) Any other event occurs which substantially deprives Lender of what
it is entitled to expect under the Credit Documents;
then, upon the happening of any of the foregoing Events of Default, the Note and
all amounts under the Agreement shall become and be immediately due and payable,
with Mortgagor hereby expressly waiving any presentment, demand, protest or
other notice of any kind;
4.2 Rights Against Mortgaged Property.
(a) If an Event of Default shall have occurred and be continuing, then
and in every such case, Lender, in addition to all other rights and
remedies available hereunder, shall have, at law or in equity or by
statute, each of the following rights and remedies, none of which is
intended to be exclusive of any other right or remedy, and each of which
may be exercised either singly or, to the extent permitted by applicable
law, concurrently with any one or more of the other rights or remedies:
(i) To the extent applicable, Lender shall have the rights and
remedies of a secured party under the Cape Town Convention and/or the
Uniform Commercial Code as enacted in any jurisdiction in which any of
the Mortgaged Property may be located, including, without limitation,
all of the rights and remedies set forth in Articles 12, 13, 15 and 20
of the Cape Town Convention, and Mortgagor hereby consents to the
same. In any case, Lender may immediately, directly or by such agent
as it may appoint, without demand of performance and (to the extent
permitted by applicable law) without notice of its intention to sell
or of time or place of sale or of redemption or other notice or demand
whatsoever to Mortgagor, all of which are hereby expressly waived, and
without advertisement, sell at public or private sale or otherwise
realize upon, the whole or, from time to time, any part of the
Mortgaged Property. If notice of any sale or other disposition is
required by law to be given, Mortgagor hereby agrees that a notice
sent at least ten (10) days before the time of any intended
de-registration and export of the Mortgaged Property or intended
public sale or after which any private sale or other disposition of
the Mortgaged Property is to be made shall be reasonable notice of
such sale or other disposition. Whenever Lender shall demand
possession of any of the Mortgaged Property pursuant to this Article
IV, Mortgagor, at its own cost and expense, shall deliver, or cause to
be delivered, such Mortgaged Property without risk or expense to
Lender, to such airport or airports in the United States of America,
as shall be designated by Lender or such other place as may be
mutually agreed upon by Mortgagor and Lender. In addition, Mortgagor
shall provide, without expense to Lender, storage facilities for such
Mortgaged Property. At the request of Lender, Mortgagor shall promptly
execute and deliver to Lender such instruments or other documents as
Lender may deem necessary or advisable to enable Lender or an agent or
representative designated by Lender, at such time or times and place
or places as Lender may specify, to obtain possession of all or any
part of the Mortgaged Property;
(ii) Lender, either after entry or without entry, may proceed by
suit or suits, at law or in equity, to foreclose this Mortgage and to
sell all or, from time to time, any part of the Mortgaged Property
under the judgment or decree of a court of competent jurisdiction;
(iii) Lender may procure the de-registration of the Mortgaged
Property whether by utilizing the IDERA or otherwise;
(iv) Lender may procure the export and shipment transfer of the
Mortgaged Property from the territory in which it is situated;
(v) Lender may take legal proceedings for the appointment of a
receiver or receivers (to which Lender shall be entitled as a matter
of right) to take possession of the Mortgaged Property pending the
sale thereof pursuant either to the power of sale given in this
Paragraph 4.2 or to a judgment, order or decree made in any judicial
proceeding or the foreclosure or involving the enforcement of this
Mortgage;
(vi) Lender, either directly or by such agent as it may appoint
or by means of a receiver appointed by a court therefor, may enter
upon the premises of Mortgagor and any other premises where any of the
Mortgaged Property may be located, take immediate possession of the
Mortgaged Property and exclude Mortgagor and all other Persons
therefrom, using all necessary force so to do;
(vii) Lender may appoint a trustee to take title to all or part
of the Mortgaged Property on behalf of Lender and to exercise on
behalf of Lender any or all of its remedies hereunder, and Mortgagor
shall execute and deliver all such instruments and documents as Lender
may reasonably request in connection therewith; and
(viii) Upon every taking of possession pursuant to this Paragraph
4.2, Lender from time to time may make all such expenditures for
maintenance, insurance, repairs, replacements, alterations, additions
and improvements to and of the Mortgaged Property as Lender may deem
proper. In each such case, Lender shall have the right to hold, use
operate, store, lease, control or manage the Mortgaged Property, and
to exercise all rights and powers of Mortgagor relating to the
Mortgaged Property, as Lender shall deem appropriate, including the
right to enter into any and all such agreements with respect to the
use, operation, storage, leasing, control or management of any of the
Mortgaged Property as Lender may determine.
(b) No delay or omission of Lender in the exercise of any right,
power, remedy or privilege conferred hereunder shall impair any such right,
power, remedy or privilege or be construed to be a waiver of any Default or
Event of Default or acquiescence therein; and every right, power and
privilege given by this Mortgage to Lender may be exercised from time to
time and as often as may be deemed expedient by Lender. No remedy for the
enforcement of the rights of Lender shall be exclusive of or dependent on
any other such remedy, but any one or more of such remedies from time to
time may be exercised independently or in combination.
4.3 Relief Pending Final Determination. Without limiting the generality of
Lender's other remedies set forth in this Section 4, in the event Lender adduces
evidence of an Event of Default by Mortgagor, Lender may, pending final
determination of its claim, obtain from a court speedy (as defined in Article 20
of the Cape Town Convention) relief in the form of such one or more of the
following orders as Lender requests:
(a) preservation of the Mortgaged Property and its value;
(b) possession, control or custody of the Mortgaged Property;
(c) immobilization of the Mortgaged Property;
(d) lease or, except where covered by sub-paragraphs (a) to (c),
management of the Mortgaged Property and the income therefrom; and
(e) if at any time Mortgagor and Lender specifically agree, sale and
application of proceeds therefrom.
In furtherance thereof, Lender and Mortgagor hereby agree to exclude the
application of paragraph 4 of Article 20 of the Cape Town Convention. Nothing in
this Section 4.3 shall limit the availability to Lender of other forms of
interim relief.
4.4 Provisions Regarding Sale. Upon any sale of any of the Mortgaged
Property, whether made under the power of sale hereby given or under judgment,
order or decree in any judicial proceedings, for the foreclosure or involving
the enforcement of this Mortgage, to the extent permitted by applicable law:
(i) Lender or its representative may bid for and purchase the
property being sold and, upon compliance with the terms of sale, may
hold, retain and possess and dispose of such property in its absolute
right without further accountability, and, in paying the purchase
money therefor, may assign to Mortgagor in lieu of cash all or any
part of the Note or other Secured Obligations then outstanding or
claims for interest thereon, at par, and the Note, in case the portion
thereof as assigned shall be less than the amount due thereon, shall
be returned to Lender after being appropriately stamped to show
partial payment;
(ii) Lender or its representative may make and deliver to the
purchaser or purchasers a good and sufficient deed, bill of sale and
instrument of assignment and transfer of the property sold;
(iii) Lender or its representative is hereby irrevocably
appointed the true and lawful attorney of Mortgagor, in its name and
stead, to make all necessary deeds, bills of sale and instruments of
assignment and transfer of the property thus sold and to deregister
and export the property, and for that purpose it may execute and
deliver all necessary deeds, bills of sale and instruments of
assignment and transfer, and may substitute one (1) or more Person
with like power, Mortgagor hereby ratifying and confirming all that
its said attorney, or such substitute or substitutes, shall lawfully
do by virtue hereof; but if so requested by Lender or by any
purchaser, Mortgagor shall ratify and confirm any such sale or
transfer, deregistration or export, by execution and delivering to
Lender or to such purchaser all property deeds, bills of sale,
instruments of assignment and transfer and releases as may be
designated in any such request;
(iv) All right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of Mortgagor of, in and to
the property so sold shall be divested. Such sale shall be a perpetual
bar both at law and in equity against Mortgagor, its successors and
assigns, and against any and all Persons claiming or who may claim the
property sold or any part thereof from, through or under Mortgagor,
its successor or assigns;
(v) The receipt of Lender shall be a sufficient discharge to the
purchaser or purchasers at such sale for its or their purchase money,
and such purchaser or purchasers and its or their assigns or personal
representatives after paying such purchase money and receiving such
receipt of Lender shall not be obligated to see to the application of
such purchase money or be in anyway answerable for any loss,
misapplication or non-application thereof; and
(vi) To the extent it may lawfully do so, Mortgagor agrees that
it will not, at any time, insist upon or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any
appraisement, valuation, stay, extension or redemption laws, or any
law permitting it to direct the order in which the Mortgaged Property
or any part thereof shall be sold, now or at any time hereafter in
force, which may delay, prevent or otherwise affect the performance or
enforcement of this Mortgage or the Secured Obligations, and Mortgagor
hereby expressly waives all benefit or advantage of any such laws and
covenants, and agrees that it will not hinder, delay or impede the
execution of any power granted and delegated to Lender in this
Mortgage, but will suffer and permit the execution of every such power
as though no such laws were in force, except that Mortgagor, in any
event, shall have the right, prior to the disposition of any Mortgaged
Property or the entering into of a binding commitment therefor, to
obtain the release of such Mortgaged Property from the lien hereof and
the return to Mortgagor thereof upon payment of the Secured
Obligations in full.
4.5 Application of Monies Received by Lender. If an Event of Default shall
have occurred and be continuing, any monies collected pursuant to Article IV or
otherwise constituting a part of the Mortgaged Property may be held by Lender as
Mortgaged Property or, in the discretion of Lender, applied to the payment of
the Secured Obligations. When so applied, such monies shall be applied as
follows:
FIRST, to the payment of all costs and expenses incurred in connection
with the enforcement and collection of this Mortgage, the Agreement or
the Note;
SECOND, to the payment of all Secured Obligations other than principal
of the Note;
THIRD, to the payment of all the principal of the Note then due and
payable;
FOURTH, the balance to be held as additional collateral security for
all Secured Obligations not then due and payable; and
FIFTH, after all Secured Obligations shall have been paid in full, the
balance shall be paid to the holders of subsequently ranking interests
which have been registered with the International Registry or of which
Lender has been given notice; and
SIXTH, the balance (if any) to be paid over to Mortgagor.
If, after application of all proceeds of the Mortgaged Property, any Secured
Obligation shall remain unpaid, Mortgagor shall remain liable thereon for the
deficiency, and Lender shall preserve its right to assert claims for the
deficiency against Mortgagor under the Agreement and the Note.
4.6 Waiver of Defaults. By written notice to Mortgagor, Lender may waive
any default hereunder and its consequences. Upon any such waiver, such default
shall cease to exist, and any Default or Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Mortgage; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
ARTICLE V - SATISFACTION AND DISCHARGE
5.1 Discharge. When the principal amount of the Note, together with
interest thereon and all Secured Obligations shall have been finally and fully
paid, then this Mortgage shall terminate and cease to exist. Thereupon Lender
shall discharge this Mortgage, release its lien on the Mortgaged Property and
discharge its registered international interest from the International Registry
and Lender shall execute and deliver to Mortgagor, at Mortgagor's cost and
expense, such instruments in writing as may be requested by Mortgagor to
evidence such cancellation, discharge and release.
ARTICLE VI - MISCELLANEOUS
6.1 Severability. If any provision of this Mortgage shall be invalid,
inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions or in all jurisdictions, or in all cases because
it conflicts with any other provision or provisions hereof or any constitution
or statute or rule of public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions hereunder contained invalid, inoperative or
unenforceable to any extent whatsoever. The invalidity of any one (1) or more
phrases, sentences, clauses, Sections or Articles in this Mortgage shall not
affect the remaining portions of this Mortgage or any part hereof. In the event
of any conflict between any Cape Town Convention provision in this Mortgage and
any provision in this Mortgage not related to the Cape Town Convention, the
provisions relating to the Cape Town Convention shall prevail.
6.2 Counterparts. This Mortgage may be executed in several counterparts and
by the parties hereto on separate counterparts, each of which shall be an
original and all of which together shall constitute but one and the same
instrument.
6.3 Amendments. Any amendment hereto shall be in writing and shall be
signed by Mortgagor and Lender.
6.4 Indemnification by Mortgagor; Expenses.
(a) Mortgagor shall indemnify, reimburse and hold Lender and its
officers, directors, employees and agents harmless from and against any and
all claims, demands, causes of action, suits or judgments and any and all
costs and expenses of any nature (including, without limitation, reasonable
fees and expenses of legal counsel), for or on account of injury to or
death of persons (including employees and agents of Mortgagor or Lender),
property damage and any other liability which may result from or arise in
any manner out of:
(i) the ownership, possession, control, management, maintenance,
condition, storage, use or operation of all or part of the Mortgaged
Property by Mortgagor or any bailee, transferee or lessee of
Mortgagor, or
(ii) any failure on the part of Mortgagor to perform or comply
with any of the terms hereof (including, without limitation, any
failure by Mortgagor to effect or maintain any insurance required to
be effected or maintained pursuant to the provisions of Paragraph 3.4
hereof).
If Lender shall receive knowledge of any claim or liability hereby indemnified
against, Lender shall give prompt notice thereof to Mortgagor; provided,
however, Lender's failure to promptly provide any such notice shall not act as a
waiver of any of Lender's rights hereunder. The obligation contained in this
Paragraph 6.4 shall continue in full force and effect notwithstanding the full
payment of the Note and all amounts due under the Agreement or hereunder and
notwithstanding the discharge hereof pursuant to Paragraph 5.1 hereof or
otherwise.
(b) Mortgagor shall be responsible for, and shall pay, all fees and
expenses incurred by Lender (including the reasonable fees and expenses of
its legal counsel) in connection with the enforcement of, or the exercise
of any right or remedy of Lender under, this Mortgage or any amendment or
supplement hereto.
6.5 Acknowledgment of Receipt of Copy of Mortgage. Mortgagor hereby
acknowledges and certifies that a full, complete, correct and exact copy of this
Mortgage has been delivered to and received by Mortgagor on the date of its
execution.
6.6 Assignment. This Mortgage may be freely assigned by Lender without the
consent of Mortgagor. This Mortgage shall inure to the benefit of Lender, its
successors in interest and assigns. This Mortgage may not be assigned by
Mortgagor without the written consent of Lender.
6.7 Notice. Any notice or other communication required or permitted under
this Mortgage or necessary or convenient in connection with this Mortgage shall
be sent by facsimile to the respective facsimile numbers noted below, and shall
be deemed duly given the next business day following the date upon which such
notice is sent. If not conveniently transmitted by facsimile, notice shall be
sent by registered or certified mail, return receipt requested, or by
international courier delivery service, and shall be deemed duly given upon
actual receipt and shall be addressed as follows:
If to Lender: Wells Fargo Equipment Finance, Inc.
733 Marquette Avenue, Suite 700
MAC N9306-070
Minneapolis, Minnesota 55402
Attention: Account Services
Facsimile: 866-687-5578
If to Mortgagor: Pre-Paid Legal Services, Inc.
One Pre-Paid Way
Ada, Oklahoma 74821-0145
Attention: Steve Williamson, CFO
Facsimile: 580-436-7410
or to such address or addressee as either party from time to time shall
designate by written notice to the other.
6.8 Applicable Law. This Mortgage and the Note shall be governed by, and
construed in accordance with, the laws of the State of Minnesota; provided, that
the parties hereto shall be entitled to all rights conferred by the Federal
Aviation Act. Any legal action or proceeding against Mortgagor with respect to
this Mortgage to which it is a party may be brought in such of the courts of
competent jurisdiction of the State of Minnesota or in the United States
District Court located in Minnesota as Lender or its respective successors and
permitted assigns, as the case may be, may elect, and by execution and delivery
of this Mortgage to which it is a party, Mortgagor irrevocably submits to the
non-exclusive jurisdiction of such courts, and to appellate courts therefrom,
for purposes of legal actions and proceedings under this Mortgage and, in the
case of any such legal action or proceeding brought in the above-named Minnesota
courts, hereby irrevocably consents, during such time, to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered mail, postage prepaid, to Mortgagor at
its address set forth above, or by any other means permitted by applicable law.
Mortgagor further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified airmail, postage prepaid, to Mortgagor
at its address set forth above. The foregoing, however, shall not limit the
rights of Lender to serve process in any other manner permitted by law or to
bring any legal action or proceeding or to obtain execution of judgment in any
jurisdiction. Mortgagor further agrees that final judgment against Mortgagor in
any action or proceeding in connection with this Mortgage to which it is a party
shall be conclusive and may be enforced in any other jurisdiction within or
outside the United States of America by suit on the judgment, a certified or
exemplified copy of which shall be conclusive evidence of the fact and the
amount of Mortgagor's indebtedness. TO THE EXTENT THAT MORTGAGOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY OF THE ABOVE-NAMED
COURTS OR FROM ANY LEGAL PROCESS THEREIN, MORTGAGOR HEREBY IRREVOCABLY WAIVES
SUCH IMMUNITY, AND MORTGAGOR HEREBY IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT,
BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING
BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED COURTS (I) ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, (II) THAT IT
OR ANY OF ITS PROPERTY IS IMMUNE FROM THE ABOVE DESCRIBED LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION, OR OTHERWISE), (III) THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS MORTGAGE TO WHICH IT IS A PARTY MAY NOT BE ENFORCED IN OR BY SUCH COURTS,
OR (IV) ANY DEFENSE THAT WOULD HINDER OR DELAY THE LEVY, EXECUTION OR COLLECTION
OF ANY AMOUNT TO WHICH EITHER PARTY HERETO IS ENTITLED PURSUANT TO A FINAL
JUDGMENT OF ANY COURT HAVING JURISDICTION. NOTHING IN THIS SHALL LIMIT ANY RIGHT
OF LENDER TO BRING ACTIONS, SUITS OR PROCEEDINGS IN THE COURTS OF ANY OTHER
JURISDICTION. MORTGAGOR EXPRESSLY ACKNOWLEDGES THAT THE FOREGOING WAIVER IS
INTENDED TO BE IRREVOCABLE AND HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO
REQUEST A TRIAL BY JURY IN ANY ACTION RELATING TO THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Aircraft Mortgage
and Security Agreement to be duly executed and delivered in Minneapolis,
Minnesota, as of the date and year first above written.
PRE-PAID LEGAL SERVICES, INC.
By: /s/ Steve Williamson
-------------------------------------------------
Steve Williamson, CFO
STATE OF OK )
----------
) SS:
COUNTY OF Pontotoc )
---------
In said State and County this __ day of September, 2007, personally
appeared Steve Williamson, and acknowledged the foregoing document, by him
subscribed, to be his free act and deed and the free act and deed of Pre-Paid
Legal Services, Inc..
Before me,
/s/ Lolita J. Frederick
-----------------------------------
Notary Public
My Commission expires:
5/29/2008
-----------------------
IN WITNESS WHEREOF, the parties hereto have caused this Aircraft Mortgage
and Security Agreement to be duly executed and delivered in Minneapolis,
Minnesota, as of the date and year first above written.
WELLS FARGO EQUIPMENT FINANCE, INC.
By: /s/ Julie Milbrath
-------------------------------------------------
Name: Julie Milbrath
-------------------------------------------------
Title: Assistant Vice President
------------------------------------------------
STATE OF MN )
-----------
) SS:
COUNTY OF Wright )
---------
In said State and County this 26 day of September, 2007, personally
appeared Julie Milbrath and acknowledged the foregoing document, by him/her
subscribed, to be his/her free act and deed and the free act and deed of Wells
Fargo Equipment Finance, Inc.
Before me, Renee K. Simenson
/s/Renee K. Simenson
-----------------------------------
Notary Public
My Commission expires:
1/31/2010
-----------------------
ANNEX I
IRREVOCABLE DE-REGISTRATION
AND EXPORT REQUEST AUTHORIZATION
September 28, 2007
To: United States Federal Aviation Administration
Re: Irrevocable De-Registration and Export Request Authorization
The undersigned is the registered owner of one (1) Learjet Inc. Model 60
aircraft (described on the International Registry drop down menu as LEARJET
model LEARJET 60), bearing Manufacturer's Serial No. 293, and United States
Registration No. N772PP, together with two (2) Pratt & Whitney Canada model
PW305A engines (described on the International Registry drop down menu as PRATT
& WHITNEY CANADA, Model PW300 SERIES, bearing Manufacturer's Serial Nos. CA0446
and CA0447 on the International Registry drop down menu) (together with all
installed, incorporated or attached accessories, parts and equipment, the
"aircraft").
This instrument is an irrevocable de-registration and export request
authorization issued by the undersigned in favor of Wells Fargo Equipment
Finance, Inc. (the "authorized party") under the authority of Article XIII of
the Protocol to the Convention on International Interests in Mobile Equipment on
Matters specific to Aircraft Equipment. In accordance with that Article, the
undersigned hereby requests:
(i) recognition that the authorized party or the person it
certifies as its designee is the sole person entitled to:
(a) procure the de-registration of the aircraft from the United States
Aircraft Registry maintained by the United States Federal Aviation
Administration for the purposes of Chapter III of the Convention on
International Civil Aviation, signed at Chicago, on 7 December 1944; and
(b) procure the export and physical transfer of the aircraft from the
United States of America; and
(ii) confirmation that the authorized party or the person it
certifies as its designee may take the action specified in clause (i)
above on written demand without the consent of the undersigned and
that, upon such demand, the authorities in the United States of
America shall cooperate with the authorized party with a view to the
speedy completion of such action.
The rights in favor of the authorized party established by this instrument
may not be revoked by the undersigned without the written consent of the
authorized party.
Please acknowledge your agreement to this request and its terms by
appropriate notation in the space provided below and lodging this instrument in
the United States Aircraft Registry.
PRE-PAID LEGAL SERVICES, INC.
By: /s/ Steve Williamson
-------------------------------------------------
Steve Williamson, CFO