LOAN AGREEMENT
 
This Loan Agreement, made and entered into as of the ___ day of May, 2013,
between,
 
PNC BANK, NATIONAL ASSOCIATION, a national banking association with an office at
201 Penn Avenue, Scranton, Pennsylvania 18503 (herein called the “Bank”),
 
AND
 
Saker Aviation services, INC., a Nevada corporation with an office at 101 Hangar
Road, Avoca, Pennsylvania 18641 (herein called “Saker”),
 
AND
 
FBO AIR-WILKES-BARRE, INC., a Pennsylvania corporation with an office at 101
Hangar Road, Avoca, Pennsylvania 18641 (herein called “Wilkes-Barre”),
 
AND
 
FBO AIR-GARDEN CITY, INC., a Kansas corporation with an office at 101 Hangar
Road, Avoca, Pennsylvania 18641 (herein called “Garden City”),
 
AND
 
FIRSTFLIGHT HELIPORTS, LLC., a New York limited liability company with an office
at 101 Hangar Road, Avoca, Pennsylvania 18641 (herein called “FirstFlight” and,
collectively with Saker, Wilkes-Barre and Garden City, the “Borrowers”)
 
 

 
WITNESSETH:
 
At the request of the Borrowers, and in accordance with the terms and conditions
of this Loan Agreement, the Bank has agreed to provide the following financing
to the Borrowers to be utilized by the Borrowers in connection with the business
of providing fixed base operation services at various air transportation
facilities (collectively, the “Business”):
 
(a)        a revolving line of credit in the original principal amount of
$1,150,000.00 (the “Line of Credit”), the proceeds of which shall be utilized by
the Borrowers to payoff the Borrowers’ current line of credit with Bank of
America, N. A. (“Bank of America”) and to finance ongoing working capital needs;
 
(b)        a term loan in the original principal amount of $_____________ (the
“Term Loan”), the proceeds of which shall be utilized to refinance certain
existing indebtedness of the Borrowers with Bank of America; and
 
(c)        a non-revolving line of credit in the original principal amount of
$2,500,000.00 (the “Acquisition Line of Credit”, and, collectively with the Line
of Credit and the Term Loan, the “Loans”), the proceeds of which shall be
utilized to pay for a portion of the cost of strategic acquisitions in
accordance with the criteria set forth in this Loan Agreement.
 
This Loan Agreement, executed and delivered by the Bank and the Borrowers at the
closing held this date (the “Closing”), supersedes any and all commitments or
other understandings, whether oral or written, between the Bank and the
Borrowers with respect to the Loans, and all the continuing commitments of the
Bank and the obligations of the Borrowers with respect to the Loans are now set
forth in this Loan Agreement. The execution and delivery of this Loan Agreement
shall also evidence the satisfaction of all prior conditions and requirements of
the Bank with respect to the Loans and the delivery of all documents and
instruments set forth in the Closing Agenda for the Loans dated the date hereof
(the “Closing Agenda”), except such items (if any) that the Bank will permit the
Borrowers to produce subsequent to the Closing as indicated in Exhibit A to this
Loan Agreement, which items are to be provided within the time periods therein
specified.
 
 
2

 
The Loans and all other sums of every nature and kind at any time due and owing
by the Borrowers to the Bank in connection with the Loans, including all sums
that the Bank is permitted to advance, expend, charge to, or collect from the
Borrowers, including, without limitation, costs and reasonable attorney’s fees,
with interest thereon (collectively, the “Obligations”), are evidenced and
secured by the documents and instruments identified in this Loan Agreement or
otherwise identified in the Closing Agenda (the “Loan Documents”).
 
Wherefore, in reliance on the Borrowers’ representations and warranties
contained in this Loan Agreement, and subject to the continuing compliance by
the Borrowers with all covenants, terms, and conditions of this Loan Agreement
and the Loan Documents, and to confirm their respective understandings with
respect to the same, the parties hereby covenant, acknowledge, and agree as
follows:
 
1.     Incorporation of Recitals and Exhibits. The foregoing recitals, the
Closing Agenda, and all Exhibits to this Loan Agreement are hereby incorporated
by reference in and made a part of this Loan Agreement.
 
2.     The Line of Credit. The Line of Credit is evidenced by the Borrowers’
joint and several line of credit note dated the date hereof, and all
modifications and renewals thereof, amendments thereto, and substitutions
therefor (the “Line of Credit Note”). The terms and conditions of the Line of
Credit are as follows:
 
(a)     Advances and Repayments. During the period commencing on the date of
this Loan Agreement and ending on May __, 2014 (or such later date as may be
designated by the Bank by written notice from the Bank to the Borrowers) (the
“Line of Credit Maturity Date”), and so long as the Borrowers remain in
compliance with all covenants, terms and conditions of this Agreement, the Bank
will permit the Borrowers to borrow, repay and re-borrow under the Line of
Credit sums which shall not exceed $1,150,000.00 in the aggregate amount
outstanding at any one time (the “Maximum Amount”). All borrowings at any time
outstanding under the Line of Credit shall be evidenced by the Line of Credit
Note. The Borrowers shall pay interest to the Bank on the outstanding principal
balance of the Line of Credit at the rate determined in accordance with Section
2(c), below, and shall pay the entire principal amount outstanding under the
Line of Credit, with accrued and unpaid interest thereon, on the Line of Credit
Maturity Date.
 
 
3

 
(b)     Conditions for Advances. The Bank’s obligation to advance any funds to
the Borrower under the Line of Credit is subject to the conditions that (i) no
Event of Default, as hereinafter defined, or event which with the passage of
time, provision of notice or both would constitute an Event of Default, shall
have occurred and be continuing, (ii) each of the Borrowers shall be in
compliance with all covenants, terms and conditions of this Loan Agreement and
the Loan Documents, and (iii) all of the representations and warranties made by
each of the Borrowers in this Loan Agreement and the Loan Documents shall be
true and correct as of the date of such advance (except to the extent they
relate to a specified date).
 
Any request for an advance may be made by telephone, written request, e-mail, or
telecopy transmission by any of the individuals identified in Exhibit B to this
Loan Agreement, as such may be amended by the Borrower from time to time, and
shall be deemed to include the Borrowers’ certification that the foregoing
conditions have been satisfied. The Borrowers shall indemnify and hold the Bank
harmless from and against any and all damages, losses, liabilities, costs and
expenses (including reasonable attorney’s fees and expenses) which may arise or
be created by the acceptance of such requests or the making of such advances
under the Line of Credit. The Bank will enter on its books and records, which
entry when made will be presumed correct absent manifest error, the date and
amount of each advance, as well as the date and amount of each payment made by
the Borrowers.
 
(c)     Interest Rate.     Interest on the outstanding principal balance of the
Line of Credit shall accrue at a rate equal to the Daily Libor-Rate, as defined
in the Line of Credit Note, plus two hundred fifty (250) basis points (2.50%),
which rate shall fluctuate daily.
 
 
4

 
(d)     Letters of Credit. The Borrowers may request that the Bank issue Letters
of Credit for the account of one or more of them under the Line of Credit (each,
a “Letter of Credit”), provided that the aggregate outstanding principal amount
of all Letters of Credit does not exceed $250,000.00 at any one time. It is
hereby expressly understood and agreed that the Maximum Amount of the Line of
Credit, as set forth above, shall be reduced by an amount equal to the aggregate
amount of all outstanding Letters of Credit issued by the Bank from time to time
on behalf of the Borrowers, and that each payment by the Bank under a Letter of
Credit shall constitute an advance of proceeds under the Line of Credit and
shall be evidenced by, and repaid in accordance with, the Line of Credit Note.
The issuance of any such Letters of Credit shall be in accordance with the
Bank’s standard practices, procedures and documentation, including the execution
of the appropriate Letter of Credit Application (the “LC Application”) in form
and substance reasonably acceptable to the Bank. In addition, the Borrowers
shall pay the issuance and other fees and charges in connection with the
issuance of any such Letters of Credit as set forth in the schedule of fees
which accompanies the LC Application and shall pay to the Bank an annual fee
payable quarterly in arrears equal to two percent (2.00%) of the principal
amount of all Letters of Credit then issued and outstanding.
 
3.     The Term Loan. The Term Loan shall be in the original principal amount of
$______________, and is evidenced by the Borrowers’ joint and several term note
dated the date hereof, and all modifications and renewals thereof, amendments
thereto, and substitutions therefore (the “Term Note”). The terms and conditions
of the Term Loan are as follows:
 
(a)     Term. The Term Loan shall have a term of thirty-five (35) months (the
“Term”).
 
(b)     Interest Rate. Interest on the outstanding principal amount of the Term
Loan shall accrue at a rate equal to the one-month Libor-Rate, as defined in the
Term Note, plus two hundred seventy-five (275) basis points (2.75%), which rate
shall stay in effect for the applicable one-month period (a “Libor-Rate
Period”). At the end of the then current Libor-Rate Period, the Term Loan
interest rate shall automatically renew and shall continue to renew thereafter
for the same Libor-Rate Period at the then current Libor-Rate as of the
beginning of each succeeding Libor-Rate Period, plus two hundred seventy-five
(275) basis points.
 
 
5

 
(c)     Terms of Repayment. The outstanding principal balance of the Term Loan,
with interest thereon, shall be repaid as follows:
 
(i) Commencing on June __, 2013, and continuing on the same day of each month
thereafter until March __, 2016, the Borrowers shall make thirty-four (34)
consecutive monthly payments of principal to the Bank in the amount of
$__________ each, plus interest thereon at the rate provided in Section 3(b),
above; and
 
(ii) On April __, 2016, the Borrowers shall make a final payment to the Bank
equal to the then remaining unpaid principal balance of the Term Loan, plus
interest thereon at the rate provided in Section 3(b), above.
 
4.     The Acquisition Line of Credit. The Borrowers may obtain advances under
the Acquisition Line of Credit, on a non-revolving basis, to finance a portion
of the cost of the acquisition (each, a “Permitted Acquisition”) by one or more
of the Borrowers of one or more other entities (each, a “Target Company”) up to
the aggregate amount of $2,500,000.00, subject to the terms and conditions set
forth below. The Acquisition Line of Credit shall be evidenced by the Borrowers’
joint and several convertible line of credit note dated the date hereof and any
substitution or replacement therefor, renewal or modification thereof, or
amendment thereto (the “Convertible Line of Credit Note”, and, collectively with
the Line of Credit Note and the Term Note, the “Notes”). The terms and
conditions of the Acquisition Line of Credit are as follows:
 
(a)   Advance of Proceeds. During the period commencing on the date of this Loan
Agreement and continuing until the earlier of (i) May __, 2014, (ii) the date
that the entire principal amount of the Acquisition Line of Credit has been
advanced to the Borrowers, or (iii) the date the Bank receives written notice
from one of the individuals identified in Exhibit B that the Borrowers do not
intend to request any additional advances under the Acquisition Line of Credit
and desire that the outstanding principal balance of the Acquisition Line of
Credit begin amortizing (such earlier date being the “Conversion Date”), the
Borrowers may obtain advances under the Acquisition Line of Credit for Permitted
Acquisitions, provided that, in connection with such Permitted Acquisition and
at the time of each such advance:
 
 
6

 
(i) no Event of Default, as hereinafter defined, or event which with the passage
of time, provision of notice or both would constitute an Event of Default, shall
have occurred and be continuing;
 
(ii) the Borrowers shall be in compliance with all covenants, terms and
conditions of this Loan Agreement and the Loan Documents;
 
(iii) all of the representations and warranties made by the Borrowers in the
Loan Agreement and the Loan Documents shall be true and correct as of the date
of such advance (except to the extent they relate to a specific date);
 
(iv)     the Permitted Acquisition shall be non-hostile in nature;
 
(v) the Target Company shall have a positive historical “EBITDA”, as defined in
Section 12 of this Loan Agreement;
 
(vi) after giving effect to the Permitted Acquisition, the Borrowers shall, on a
pro-forma basis, remain in compliance with the Financial Covenants set forth in
Section 12 of this Loan Agreement;
 
(vii) the Bank shall have received and be satisfied, in its sole discretion,
with its review of (A) the purchase agreement for the Permitted Acquisition, (B)
the historical and current financial statements of the Target Company, and (C)
the “opening day” balance sheet and combined projected income statement for the
Borrowers and the Target Company;
 
(viii) the amount advanced by the Bank for any Permitted Acquisition shall not
exceed seventy percent (70%) of the cost of such Permitted Acquisition; and
 
(ix) the aggregate amount advanced by the Bank under this Section 4, shall not
exceed $2,500,000.00.
 
 
7

 
(b)     Interest Rate. Interest on the outstanding principal amount of the
Acquisition Line of Credit shall accrue at a rate equal to the one-month
Libor-Rate, as defined in the Convertible Line of Credit Note, plus two hundred
seventy-five (275) basis points (2.75%), which rate shall stay in effect for a
Libor-Rate Period of one-month. At the end of the then current Libor-Rate
Period, the Acquisition Line of Credit interest rate shall automatically renew
and shall continue to renew thereafter for the same Libor-Rate Period at the
then current Libor-Rate as of the beginning of each succeeding Libor-Rate
Period, plus two hundred seventy-five (275) basis points.
 
(c)     Terms of Repayment. The outstanding principal balance of the Acquisition
Line of Credit, with interest thereon, shall be repaid as follows:
 
(i)     Commencing on June __, 2013, and continuing on the 15th day of each
month thereafter until the Conversion Date, the Borrowers shall make monthly
payments of accrued and unpaid interest only as billed by the Bank on the
outstanding principal amount of the Acquisition Line of Credit at the rate of
interest set forth in Section 4(b), above;
 
(ii)   Commencing on the date which is thirty (30) days following the Conversion
Date, and continuing on the same day of each month thereafter, the Borrowers
shall make equal payments of principal in the amount which shall be determined
by dividing the outstanding principal amount of the Acquisition Line of Credit
as of the Conversion Date by the number of months selected by the Borrowers, not
to exceed sixty (60) months (the “Term Out Period”), plus accrued and unpaid
interest at the rate determined in accordance with Section 4(b), above; and
 
(iii)  On the same day of the last month of the Term Out Period, the Borrowers
shall make a final payment to the Bank equal to the then remaining unpaid
principal balance of the Acquisition Line of Credit, plus accrued and unpaid
interest at the rate determined in accordance with Section 4(b), above.
 
 
8

 
(d)     Unused Commitment Fee. In addition to all other payments due and owing
from the Borrowers to the Bank with respect to the Acquisition Line of Credit,
the Borrowers shall pay to the Bank a fee equal to one and one-half percent
(1.50%) of the amount by which $2,500,000.00 exceeds the average actual
outstanding principal amount of the Acquisition Line of Credit during the Fiscal
Quarter measured, which amount shall be paid by the Borrowers to the Bank within
thirty (30) days after notice from the Bank of the amount due, and which amount
shall be calculated on the basis of a year of three hundred sixty (360) days for
the actual number of days elapsed.
 
(e)     Mandatory Prepayments. In addition to all other payments due and owing
from the Borrowers to the Bank with respect to the Acquisition Line of Credit,
the Borrowers shall pay to the Bank, on an annual basis until all Obligations
with respect to the Acquisition Line of Credit are repaid in full, the amount
equal to fifty percent (50%) of the Borrowers’ “Excess Cash Flow” for the
previous Fiscal Year, which amount shall be due within thirty (30) days of
notice from the Bank to the Borrowers of the Bank’s determination of the amount
due from the Borrowers, following the Bank’s receipt of the Borrowers’ annual
financial statements for such Fiscal Year, as required under Section 10(h) of
this Loan Agreement. Such payments shall be applied to the outstanding principal
balance of the Acquisition Line of Credit in inverse order of maturities,
without premium or penalty, except for any “Break Funding Indemnification” as
may be due under Section 7 of the Convertible Line of Credit Note, in the event
such payment is made other than at the end of the then applicable Libor-Rate
Period. For purposes of this calculation, “Excess Cash Flow” means “EBITDA”, as
defined in Section 12 of this Loan Agreement, less the sum of interest paid,
current maturities, taxes paid, distribution and dividends made for the payment
of tax liabilities, unfunded capital expenditures and changes in “Working
Capital”, and, “Working Capital” means current assets, minus cash, minus current
liabilities. All other terms used in this Section 4(d) that are not specifically
defined herein or in Section 12 of this Loan Agreement shall have the meanings
commonly ascribed to them under Generally Accepted Accounting Principles
(“GAAP”).
 
(f)     Interest Rate Protection. The Borrowers shall enter into and maintain an
interest rate protection agreement (the “Hedge Agreement”) for at least fifty
percent (50.00%) of the outstanding principal balance of the Acquisition Line of
Credit as of the Conversion Date, which conforms to ISDA standards and has terms
and is with a counterparty satisfactory to the Bank, enabling the Borrowers to
protect themselves against fluctuations in interest rates. If the Bank is the
counterparty to the Hedge Agreement, all obligations of the Borrowers to the
Bank arising pursuant thereto shall be secured by the Collateral described in
Section 6 of this Loan Agreement. If the Bank is not the counterparty, such
Hedge Agreement shall be unsecured.
 
 
9

 
5.     Origination Fee.     In consideration of the Bank’s agreement to extend
the Loans to the Borrowers, the Borrowers shall pay to the Bank an Origination
Fee in the amount of $19,750.00, $5,000.00 of which was paid to the Bank on
March 26, 2013, and $14,750.00 of which shall be paid to the Bank at Closing. No
portion of the Origination Fee shall be refundable.
 
6.     Collateral Security.
 
(a)     The obligation of the Borrowers to repay the Obligations is secured,
except as provided in Section 6(b), below, by a perfected first lien upon and
security interest in all of the assets of each of the Borrowers, including the
following, all whether now owned or hereafter acquired or arising and wherever
located: (i) accounts (including credit card receivables); (ii) deposit
accounts; (iii) instruments (including promissory notes); (iv) documents
(including warehouse receipts); (v) chattel paper (including electronic chattel
paper and tangible chattel paper); (vi)inventory and goods of every nature,
including stock-in-trade and goods on consignment; (vii) equipment, vehicles,
machinery and furniture; (viii) fixtures; (ix) letter of credit rights; (x)
general intangibles, of every kind and description, including payment
intangibles, software, computer information, choses in action, claims (including
claims for indemnification or breach of warranty), books, records, patents and
patent applications, copyrights, trademarks, tradenames, tradestyles, trademark
applications, goodwill, contracts, licenses, license agreements, tax and any
other types of refunds, returned and unearned insurance premiums, rights and
claims under insurance policies; (xi) all supporting obligations of all of the
foregoing property; (xii) all property of any Borrower now or hereafter in the
Bank’s possession or in transit to or from, or under the custody or control of,
the Bank or any affiliate thereof; (xiii) all cash and cash equivalents thereof;
and (xiv) all cash and noncash proceeds (including insurance proceeds) of all of
the foregoing property, all products thereof and all additions and accessions
thereto, substitutions therefor and replacements thereof (collectively, the
“Collateral”).
 
 
10

 
(b)     Notwithstanding the foregoing, the Bank and the Borrowers acknowledge
and agree that the Bank’s lien upon and security interest in portions of the
Collateral provided by Garden City shall be subordinate to the prior security
interest therein granted by Garden City to AVFUEL Corporation, as evidenced by
Financing Statement No. 6662779 filed with the Kansas Department of State on
January 14, 2010 (the “Permitted Encumbrance”).
 
(c)     The above-described security interests shall be granted by the
appropriate Security Agreement executed and delivered by the Borrowers to the
Bank contemporaneously herewith setting forth the Bank’s rights and remedies
with respect thereto, and shall be duly perfected, to the extent necessary, by
filing under the provisions of the Uniform Commercial Code (the “Code”) in
effect in the state of each Borrower’s respective jurisdiction, and by such
other action as is required under the Code and other applicable laws.
 
7.     Payments, Prepayments and Late Charges.
 
(a)     All payments on the Loans shall be made in immediately available funds
at the office of the Bank specified in the introduction portion of this Loan
Agreement or at any other place that the Bank may from time to time designate by
written notice to the Borrowers.
 
(b)  The Bank shall be entitled to impose a service charge on any installment of
interest or principal and interest not paid within fifteen (15) days after the
same becomes due and payable equal to the lesser of five percent (5%) of the
amount of such installment, or $100.00.
 
(c)   The Borrowers shall have the right to prepay the entire amount of any Loan
at any time, and may make partial prepayments on account of principal from time
to time on any Loan, provided that (i) partial prepayments shall be applied in
inverse order of maturities; (ii) such payment shall not be deemed to postpone
the due date of any installment of interest or principal and interest on such
Loan, or extend the term or maturity date of such Loan; (iii) all accrued but
unpaid interest and other charges due with respect to such Loan are paid in full
as of the date of such prepayment; and (iv) at the time of any partial or full
prepayment of the Term Loan or the Acquisition Line of Credit, the Borrowers, as
a portion of the bargained for consideration for the Bank providing such Loan,
shall pay to the Bank, such amounts, including any “Break Funding
Indemnification” payments as may be due under Section 7 of the Convertible Line
of Credit Note or section 6 of the Term Note.
 
 
 
11

 
8.     Representations and Warranties. To induce the Bank to provide the
financing described in this Loan Agreement, the Borrowers each hereby represents
and warrants to the Bank, and covenant and agree with the Bank, that:
 
(a)     Saker is a corporation duly organized, in good standing and validly
existing under the laws of the State of Nevada; Wilkes-Barre is a corporation
duly organized, in good standing and validly existing under the laws of the
Commonwealth of Pennsylvania; Garden City is a corporation duly organized, in
good standing and validly existing under the laws of the State of Kansas; and
FirstFlight is a limited liability company duly organized, in good standing and
validly existing under the laws of the State of New York;
 
(b)     each Borrower maintains its principal office at 101 Hangar Road, Avoca,
Pennsylvania 18641, and all of its books and records of each Borrower are kept
at such office;
 
(c)     the respective registered offices or offices for service of process of
the Borrowers are as follows:
 
(i) Saker’s registered office is located c/o Sierra Corporate Services – Reno,
100 West Liberty Street, 10th Floor, Reno, Nevada 89501;
 
(ii) Wilkes-Barre’s registered office is c/o Corporation Service Company, 2595
Interstate Dr., #103, Harrisburg, Pennsylvania 17110;
 
(iii) Garden City’s registered office is c/o Search Network, Ltd., 700 SW
Jackson, Suite 100, Topeka, Kansas 66603; and
  
 
12

 
(iv) the address to which the New York Secretary of State shall forward copies
of process accepted on behalf of FirstFlight is 101 Hangar Road, Avoca,
Pennsylvania 18641;
 
(d)     each Borrower is duly registered or otherwise qualified in all
jurisdictions where failure to so register or qualify would have a material
adverse effect on (i) the financial condition of such Borrower or its ability to
repay the Obligations, (ii) the operation of the Business or (iii) the
Collateral or the Bank’s security interest in the Collateral;
 
(e)   each Borrower has the power and authority to own their respective portions
of the Collateral and their other assets and to operate the Business as now
being conducted;
 
(f)     each Borrower holds all franchises, licenses, permits, and other
authorizations of every nature and kind required for the ownership of their
respective portions of the Collateral, their other assets and the operation of
the Business, all of which are now in full force and effect;
 
(g)     Saker is a publically-held corporation;
 
(h)     Saker holds one hundred percent (100%) of the issued and outstanding
common stock of Wilkes-Barre and Garden City, respectively, and one hundred
percent (100%) of the issued and outstanding membership units in FirstFlight;
 
(i)     the execution and delivery of this Loan Agreement and the other Loan
Documents executed by Saker and Saker’s compliance with the respective
covenants, terms, and conditions thereof, will not violate any of the provisions
of its Articles of Incorporation or Bylaws or any statute or regulation, or any
order, decree, or decision of any court or governmental agency binding upon
Saker, or conflict with or result in a breach of any of the covenants, terms,
and conditions of any agreement or instrument to which Saker is a party or by
which it is bound or to which it is subject, or constitute a default thereunder,
or result in the creation of a lien, charge, or encumbrance of any nature or
kind upon any of its assets pursuant to the terms of any such agreement or
instrument;
 
(j)     the execution and delivery of this Loan Agreement and the other Loan
Documents executed by Saker and Saker’s compliance with all the covenants, terms
and conditions thereof, has been duly authorized by proper action of Saker, in
conformity with its Articles of Incorporation and Bylaws; this Loan Agreement
and the Loan Documents have been duly executed and delivered by its duly
authorized officers, and constitute legal, valid and binding obligations of
Saker, enforceable in accordance with their respective terms;
 
 
13

 
(k)     the execution and delivery of this Loan Agreement and the other Loan
Documents executed by Wilkes-Barre and Wilkes-Barre’s compliance with the
respective covenants, terms, and conditions thereof, will not violate any of the
provisions of its Articles of Incorporation or Bylaws or any statute or
regulation, or any order, decree, or decision of any court or governmental
agency binding upon Wilkes-Barre, or conflict with or result in a breach of any
of the covenants, terms, and conditions of any agreement or instrument to which
Wilkes-Barre is a party or by which it is bound or to which it is subject, or
constitute a default thereunder, or result in the creation of a lien, charge, or
encumbrance of any nature or kind upon any of its assets pursuant to the terms
of any such agreement or instrument;
 
(l)     the execution and delivery of this Loan Agreement and the other Loan
Documents executed by Wilkes-Barre and Wilkes-Barre’s compliance with all the
covenants, terms and conditions thereof, has been duly authorized by proper
action of Wilkes-Barre, in conformity with its Articles of Incorporation and
Bylaws; this Loan Agreement and the Loan Documents have been duly executed and
delivered by its duly authorized officers, and constitute legal, valid and
binding obligations of Wilkes-Barre, enforceable in accordance with their
respective terms;
 
(m)     the execution and delivery of this Loan Agreement and the other Loan
Documents executed by Garden City and Garden City’s compliance with the
respective covenants, terms, and conditions thereof, will not violate any of the
provisions of its Articles of Incorporation or Bylaws or any statute or
regulation, or any order, decree, or decision of any court or governmental
agency binding upon Saker, or conflict with or result in a breach of any of the
covenants, terms, and conditions of any agreement or instrument to which Garden
City is a party or by which it is bound or to which it is subject, or constitute
a default thereunder, or result in the creation of a lien, charge, or
encumbrance of any nature or kind upon any of its assets pursuant to the terms
of any such agreement or instrument;
 
 
 
14

 
(n)     the execution and delivery of this Loan Agreement and the other Loan
Documents executed by Garden City and Garden City’s compliance with all the
covenants, terms and conditions thereof, has been duly authorized by proper
action of Garden City, in conformity with its Articles of Incorporation and
Bylaws; this Loan Agreement and the Loan Documents have been duly executed and
delivered by its duly authorized officers, and constitute legal, valid and
binding obligations of Garden City, enforceable in accordance with their
respective terms;
 
(o)     the execution and delivery of this Loan Agreement and the other Loan
Documents executed by FirstFlight and FirstFlight’s compliance with the
respective covenants, terms, and conditions thereof, will not violate any of the
provisions of its Operating Agreement or any statute or regulation, or any
order, decree, or decision of any court or governmental agency binding upon
FirstFlight, or conflict with or result in a breach of any of the covenants,
terms, and conditions of any agreement or instrument to which FirstFlight is a
party or by which it is bound or to which it is subject, or constitute a default
thereunder, or result in the creation of a lien, charge, or encumbrance of any
nature or kind upon any of its assets pursuant to the terms of any such
agreement or instrument;
 
(p)     the execution and delivery of this Loan Agreement and the other Loan
Documents executed by FirstFlight and its compliance with all the covenants,
terms and conditions thereof, has been duly authorized by proper action of
FirstFlight, in conformity with its Operating Agreement; this Loan Agreement and
the Loan Documents have been duly executed and delivered by its duly authorized
Members, and constitute legal, valid and binding obligations of FirstFlight,
enforceable in accordance with their respective terms;
 
(q)     the Borrowers have each, as required, filed in a timely manner all
federal, state, and local tax returns, and have paid all taxes shown to be due
thereon unless the validity thereof is being contested in good faith by
appropriate proceedings diligently conducted and such liability is covered by
adequate reserves in accordance with GAAP;
 
(r)     the financial statements for the Fiscal Year ended December 31, 2012,
set forth on Saker’s Annual Report on Form 10-K filed with the United States
Securities and Exchange Commission (“SEC”) for such Fiscal Year were prepared in
accordance with GAAP consistently applied, and fairly and accurately reflect the
financial condition of the Borrowers (as a consolidated group) as of the date
thereof. No liability, whether direct, contingent or otherwise is omitted from
such financial statements, and there has been no material adverse change in the
financial condition of any Borrower since such date;
 
 
 
15

 
(s)     each Borrower holds good title to its respective portions of the
Collateral, free and clear of all liens and encumbrances, except in favor of the
Bank as provided in this Loan Agreement or with respect to the Permitted
Encumbrance;
 
(t)    each lease or other similar agreement to which any Borrower is a party as
tenant or operator thereunder, as identified on Exhibit C to this Loan Agreement
(collectively, the “Leases”), is in full force and effect, constitutes legal and
binding obligations of such Borrower, and, to the best of such Borrower’s
knowledge, constitutes legal and binding obligations of each landlord or lessor
thereunder;
 
(u)    each Lease is valid and enforceable in accordance with its respective
terms and no event of default, or any event which with the passage of time or
the giving of notice, or both, would become an event of default, has occurred
and is continuing under any Lease;
 
(v)     that certain “Membership Unit Redemption Agreement” dated as of August
29, 2011 (the “Redemption Agreement”), between FirstFlight and Empire Aviation,
LLC (“Empire”) constitutes a legal and binding obligation of FirstFlight, and,
to the best of FirstFlight’s knowledge, constitutes a legal and binding
obligation of Empire, is valid and enforceable in accordance with its respective
terms, and, no event of default, or any event which with the passage of time or
the giving of notice, or both, would become an event of default, has occurred
and is continuing thereunder;
 
(w)    to the best of the Borrowers’ knowledge, the development, use and
occupancy of each property leased by a Borrower conform in all material respects
with all applicable subdivision, zoning and related state and local laws,
regulations and ordinances with respect thereto, including, without limitation,
all material provisions of the Americans with Disabilities Act, 42 U.S.C. §§
12101 et seq., as amended from time to time, and all required permits and
approvals concerning the development, use and occupancy of each property leased
by a Borrower have been obtained and are valid and in full force and effect;
 
 
 
16

 
(x)   each document or instrument executed and delivered by a Borrower in
connection with the Permitted Encumbrance is in full force and effect,
constitutes a legal and binding obligation of such Borrower, is valid and
enforceable in accordance with its terms, and, no event of default, or any event
which with the passage of time or the giving of notice, or both, would become an
event of default, has occurred and is continuing under any such document or
instrument or otherwise with respect to the Permitted Encumbrance;
 
(y)     each Borrower is in material compliance with all of its respective
covenants, obligations, and agreements under each document or instrument
relating to any material asset owned by it, and, no event of default, or any
event which with the passage of time or the giving of notice, or both, would
become an event of default, has occurred and is continuing under any such
document or instrument;
 
(z)    there is no litigation or governmental proceeding pending or (to the
knowledge of any Borrower) threatened against or affecting any Borrower, their
respective assets, the Collateral or the operation of the Business which, if
adversely determined, would have a material adverse effect on the financial
condition of such Borrower, the operation of the Business, or any Collateral, or
materially affect the ability of any Borrower to perform their obligations under
this Loan Agreement, or the other Loan Documents;
 
(aa)     no authorization, approval, or other action by, and no notice to or
filing with, any governmental authority, regulatory body or other entity is
required as a condition precedent to the execution and delivery by any Borrower
of this Loan Agreement, or any of the other Loan Documents, and the performance
by any Borrower of all of their obligations under the same;
 
(bb)     no Borrower sponsors or contributes to any “employee benefit pension
plan” within the meaning of Section 303(2) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”) which is subject to Title IV of EROSA
or Section 412 of the Internal Revenue Code of 1986, as amended (the “IRS
Code”); and the execution and delivery of this Loan Agreement, or the other Loan
Documents, will not involve any non-exempt “prohibited transaction” within the
meaning of ERISA or Section 4975 of the IRS Code;
 
 
 
17

 
(cc)     no material “prohibited transaction” (as described in Section 406 of
ERISA and not otherwise exempt) or “reportable event” (as described in Section
4043 of ERISA and the regulations thereunder) has occurred with respect to any
“employee benefit plan” established or maintained by any Borrower;
 
(dd)     no Borrower is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any Loan will be used, directly or indirectly, to purchase or carry
any margin stock or to extend credit to others for the purpose of purchasing or
carrying margin stock;
 
(ee)     there is no material fact that any Borrower has not disclosed to the
Bank which could have a material adverse effect on any Collateral, the Business,
or the financial condition of any Borrower. Neither the financial statements
referenced in Section 8(r) hereof, nor any certificate or statement delivered
herewith or heretofore by any Borrower in connection with the negotiations of
this Loan Agreement, contains any untrue statement of a material fact or omits
to state any material fact necessary to keep the statements contained herein or
therein from being misleading;
 
(ff)     each Borrower has adopted for all purposes a Fiscal Year ending on
December 31; and
 
(gg)     each Borrower is, and after consummation of the transactions evidenced
by this Loan Agreement and after giving effect to all Obligations incurred, and
the liens created in connection herewith, will be, solvent.
 
 
 
18

 
9.     Conditions Precedent. The obligation of the Bank to extend the Loans to
the Borrowers and to complete Closing is expressly conditioned upon the Bank
being provided with the following documents in form and substance acceptable to
the Bank on or before Closing, or within the time specified in Exhibit A to this
Loan Agreement:
 
(a)     Loan Documents. This Loan Agreement, the Notes and all other Loan
Documents identified in this Loan Agreement or in the Closing Agenda;
 
(b)     General Insurance. Policies of Fire, Casualty, and Liability Insurance,
Flood Insurance and Business Interruption Insurance, as required by the Bank,
with regard to the Collateral and the Business, with such coverages as are
usually maintained by similar businesses, in such amounts and issued by such
insurance carriers as may be acceptable to the Bank, wherein the interests of
the Bank and the Borrowers are insured, as their respective interests may
appear, and the said policies to name the Bank as lender loss payee and
additional insured under the equivalent of a Pennsylvania standard clause. All
policies shall provide that no cancellation or termination shall be effective
without at least thirty (30) days prior written notice to the Bank;
 
(c)     Legal Opinion. An opinion of counsel for the Borrowers from counsel and
in scope and form acceptable to the Bank;
 
(d)     Organization Documents of Saker. Delivery of an Officer’s Certificate on
behalf of Saker with attached thereto (i) a copy of Saker’s Articles of
Incorporation filed with the State of Nevada, and all amendments thereto (ii) a
copy of Saker’s By-laws; (iii) a Good Standing Certificate for Saker issued by
the State of Nevada and dated within thirty (30) days of Closing, (iv) an
original Corporate Resolution authorizing the actions contemplated by this Loan
Agreement, and (v) an Incumbency Certificate;
 
(e)     Organization Documents of Wilkes-Barre. Delivery of an Officer’s
Certificate on behalf of Wilkes-Barre with attached thereto (i) a copy of
Wilkes-Barre’s Articles of Incorporation filed with the Commonwealth of
Pennsylvania, and all amendments thereto (ii) a copy of Wilkes-Barre’s By-laws;
(iii) a Good Standing Certificate for Wilkes-Barre issued by the Commonwealth of
Pennsylvania and dated within thirty (30) days of Closing, (v) a copy of the
Wilkes-Barre’s Application filed with the Commonwealth of Pennsylvania for
registration of the Fictitious Name “Saker Aviation Services”, (v) the Written
Consent of the sole Director of Wilkes-Barre authorizing the actions
contemplated by this Loan Agreement, and (vi) an Incumbency Certificate;
 
 
 
19

 
(f)     Organization Documents of Garden City. Delivery of an Officer’s
Certificate on behalf of Garden City with attached thereto (i) a copy of Garden
City’s Articles of Incorporation filed with the State of Kansas, and all
amendments thereto (ii) a copy of Garden City’s By-laws; (iii) a Good Standing
Certificate for Garden City issued by the State of Kansas and dated within
thirty (30) days of Closing, (iv) the Written Consent of the sole Director of
Garden City authorizing the actions contemplated by this Loan Agreement, and (v)
an Incumbency Certificate;
 
(g)     Organizational Documents of FirstFlight. Delivery of a Member’s
Certificate on behalf of FirstFlight with attached thereto (i) a copy of
FirstFlight’s Articles of Organization filed with the State of New York, and all
amendments thereto (ii) a copy of FirstFlight’s Operating Agreement; (iii) a
Good Standing Certificate for FirstFlight issued by the State of New York and
dated within thirty (30) days of Closing, (iv) the Written Consent of the Sole
Member of FirstFlight authorizing the actions contemplated by this Loan
Agreement, and (v) an Incumbency Certificate;
 
(h)     Leases. A copy of each Lease with all amendments thereto and/or
assignments thereof;
 
(i)     Redemption Agreement. An executed copy of the Redemption Agreement;
 
(j)   Payoff Letter and Authorization. A payoff letter from Bank of America with
respect to each loan at Bank of America being paid-off with the proceeds of the
Loans, and the written authorization from Bank of America to terminate all UCC
Financing Statements in its favor with respect to the Collateral;
 
(k)  UCC Financing Statement Amendments. Evidence of delivery for filing of UCC
Amendments (Terminations) of all UCC Financing Statements in favor of Bank of
America or Birch Hill Capital LLC terminating their respective liens upon
portions of the Collateral;
 
 
20

 
(l) Closing Certificate. A Certificate executed and delivered by Saker
certifying as to the accuracy of the Borrowers’ representations and warranties
set forth in this Loan Agreement, the compliance with all affirmative, negative
and financial covenants set forth in this Loan Agreement and the absence of any
Event of Default, as defined in this Loan Agreement, or any event which with the
giving of notice or the passage of time, or both, would become an Event of
Default;
 
(m) Disbursement Authorization. An Authorization from the Borrowers as to the
disbursement at Closing of the proceeds of the Term Loan and proceeds, if any,
of the Line of Credit; and
 
(n) Fees and Expenses. Payment by the Borrowers of all fees required under this
Loan Agreement, including, without limitation, all fees costs required to be
paid in connection with the items to be furnished by the Borrowers under this
Section 9 and all reasonable fees and expenses of the Bank’s counsel, as
provided in Section 17 of this Loan Agreement.
 
10.     Affirmative Covenants. The Borrowers each covenant and agree with the
Bank that so long as any portion of the Obligations remains outstanding and
unpaid:
 
(a)     the Borrowers will pay promptly when due all interest and all
installments of principal and interest at the times and in the manner specified
in the Notes;
 
(b)     the Borrowers will pay promptly when due all other sums of every nature
and kind comprising part of the Obligations in the manner and at the times
required by this Loan Agreement and the Loan Documents;
 
(c)     the Borrowers will each keep, perform, and comply with all other
covenants, terms, and conditions of this Loan Agreement and the Loan Documents;
 
(d)     each Borrower will maintain its corporate or limited liability company
status and all franchises, licenses, permits, registrations and other
authorizations required for the ownership of their respective portions of the
Collateral and their other assets and the operation of the Business in full
force and effect, and continuously operate the Business in material compliance
with the same and in material compliance with all statutes, ordinances and
regulations applicable to such operations, including, without limitation, those
of the SEC, the Federal Aviation Administration and the Transportation Safety
Administration;
 
 
 
21

 
(e)     the Borrowers will each act prudently and in accordance with customary
industry standards in managing or operating their respective portions of the
Collateral and their other assets and the Business, keep in good working order
and condition, ordinary wear and tear excepted, the Collateral and all of their
respective assets and properties which are necessary to the operation of the
Business, make all repairs, replacements, and renewals necessary for the proper
maintenance and operation of the same, and permit authorized representatives of
the Bank to inspect the same at reasonable times;
 
(f)     the Borrowers will maintain the insurance required under Section 9(b) of
this Loan Agreement;
 
(g)     the Borrowers will pay promptly when due all real estate taxes, sewer
rentals, and other municipal assessments, rentals, and charges of every nature
and kind at any time, if any, that they are obligated to pay under the Leases,
or which are otherwise imposed upon their respective portions of the Collateral
and their other assets, and all taxes levied and imposed on the operation of the
Business, as well as all debts, obligations and claims of every nature and kind
which, if unpaid, might or could become a lien or charge upon the Collateral or
their other assets, unless the validity thereof is being contested in good faith
by appropriate proceedings diligently conducted to the satisfaction of the Bank
and such liability is covered by reserves in accordance with GAAP;
 
(h)   the Borrowers shall furnish the Bank within one hundred twenty (120) days
after the end of each Fiscal Year with either (i) a copy of Saker’s Annual
Report on Form 10-K filed with the SEC for such Fiscal Year, or (ii) their
annual consolidated financial statements for such Fiscal Year. Such financial
statements shall be audited by Certified Public Accountants acceptable to the
Bank in accordance with GAAP applied on a consistent basis, and shall contain,
at a minimum, a balance sheet, an income statement, and a statement of cash
flows;
 
(i)     the Borrowers shall furnish the Bank within forty-five (45) days after
the end of the first three (3) Fiscal Quarters of each Fiscal Year with either
(i) a copy of Saker’s Quarterly Report on Form 10-Q filed with the SEC for such
Fiscal Quarter, or (ii) their management prepared quarterly consolidated
financial statements, which financial statements shall contain, at a minimum, a
balance sheet, an income statement, and a statement of cash flows;
 
 
 
22

 
(j)     the Borrowers shall deliver to the Bank, with the annual financial
statements referenced in subsection (h), above, and with each of the quarterly
financial statements referenced in subsection (i), above, a certificate (the
“Compliance Certificate”) as to compliance with the financial covenants set
forth in Section 12 of this Loan Agreement and as to the absence of any Event of
Default under this Loan Agreement and the other Loan Documents (or, if such
non-compliance or Event of Default exists, the precise nature thereof and the
corrective measures to be taken to cure such non-compliance or Default, it being
understood and agreed that the delivery of the Compliance Certificate shall not
limit, delay or otherwise affect the Bank’s rights and remedies under this Loan
Agreement and the other Loan Documents as the result of such non-compliance or
Default);
 
(k)     the Borrowers shall each furnish all additional information with respect
to their respective financial conditions, the Business, and portions of the
Collateral, that the Bank may from time to time reasonably request, and, in the
event such information is not provided to the Bank, or if an Event of Default,
as hereinafter defined, has occurred and is continuing, each Borrower hereby
authorizes the Bank and any of its agents, to call at their place of business at
intervals to be determined by the Bank during regular business hours and after
reasonable notice, and without hindrance or delay, to allow the Bank to inspect,
audit, check and make extracts and copies from any books, records, journals,
orders, receipts, computer tapes, computer disks, computer printouts, and
correspondence which relate to the Collateral, the Business, and the general
financial condition of each Borrower. Such actions by the Bank shall occur at
such times and be conducted in such manner as to not cause any undue burden to
the Borrowers, or any undue disruption of the Business. In addition, in the
event such information is not provided or if an Event of Default, as hereinafter
defined, has occurred and is continuing, each Borrower hereby authorizes all
duly constituted federal, state and municipal authorities to furnish to the Bank
copies of audit reports of the Borrowers made by any of them, and authorizes any
banking institution, account debtor or any third party with whom any Borrower
has a contractual relationship pertaining to their financial condition, the
Collateral, the Business, or the Loan Documents, to furnish the Bank copies of
such contract and any related writings, provided, however, that the Bank agrees
to keep such information confidential and to use the same only for the purpose
of monitoring compliance with the provisions of this Loan Agreement or enforcing
the Bank’s rights hereunder;
 
 
 
23

 
(l)      each Borrower shall pay promptly when due all principal and interest
and all other sums of every nature and kind with respect to any and all loans or
lines of credit extended to it by the Bank subsequent to the date of this Loan
Agreement (collectively, the “Subsequent Indebtedness”);
 
(m)     the Borrowers shall promptly give written notice to the Bank of any
damage to any Collateral in excess of $100,000.00, as well as written notice of
the revocation or termination of any of the franchises, licenses, permits or
other authorizations required for the ownership or operation of the Business, or
any other event, including litigation or other proceedings commenced or
threatened, which might or could have a material adverse effect on the financial
condition of any Borrower or on the operation of the Business, including any
event which, after the passage of time or the giving of notice or both, would
constitute an Event of Default under this Loan Agreement, or the other Loan
Documents;
 
(n)     Garden City shall perform in a timely manner all of its covenants,
obligations, and agreements with respect to the Permitted Encumbrance;
 
(o)     each Borrower shall perform in a timely manner all of its covenants,
obligations, and agreements and under each mortgage, deed of trust, or other
encumbrance or agreement relating to any asset owned by it when non-compliance
would have a material adverse effect upon the Business, its financial condition,
or its ability to repay the Obligations;
 
(p)     each Borrower shall perform in a timely manner all of its covenants,
agreements and obligations with respect to each Lease to which it is a party,
shall provide the Bank with a copy of any notice of default sent or received
under any Lease upon receipt thereof by it, and shall provide the Bank with
notice of the termination of any Lease;
 
(q)     within twenty-one (21) days following the date of this Loan Agreement,
the Borrowers shall maintain all of their primary deposit accounts with respect
to the Business with the Bank;
 
 
 
24

 
(r)     within sixty (60) days following the date of this Loan Agreement, the
Borrowers shall deliver to the Bank, substantially in the form of the applicable
Exhibit  D-1, D-2 or D-3 attached hereto, a Landlord’s Waiver from the
respective landlord or lessor under each Lease;
 
(s)     within sixty (60) days following the date of this Loan Agreement, the
Borrowers shall deliver to the Bank, substantially in the form of the applicable
Exhibit  E-1, E-2 or E-3 attached hereto, an Estoppel Certificate from the
respective landlord or lessor under each Lease;
 
(t)    Wilkes-Barre shall exercise, on a timely basis, its option to extend the
term of the Lease to which it is a party for a period of five (5) years,
commencing as of September 1, 2013, in accordance with the terms thereof;
 
(u)     within sixty (60) days following the date of this Loan Agreement, Saker
shall exercise its option to extend for a period of two years the employment
agreement with Ronald J. Ricciardi (“Ricciardi”) to serve as its President or
Chief Executive Officer;
 
(v)     the Borrowers shall make prompt payment of all contributions required
under any employee benefit plan to meet the minimum funding requirements of
ERISA, furnish the Bank, upon request, with a copy of the most recently filed
annual report filed by any Borrower under ERISA for any plan required to file
such a report, and furnish to the Bank, within ten (10) days after receipt, or
ten (10) days prior to filing, as the case may be, any notice with respect to a
“reportable event”, or a “prohibited transaction” as defined in ERISA which
could result in a materially adverse effect, a notice of intent to terminate any
employee benefit plan, or the imposition (or threatened imposition) of
withdrawal liability under Section 4201 of ERISA.
 
11.     Negative Covenants. The Borrowers each covenant and agree with the Bank
that so long as any portion of the Obligations remains outstanding and unpaid:
 
 
 
25

 
(a)     the Borrowers shall not sell, lease, or otherwise transfer or dispose of
any of the Collateral and shall not mortgage, pledge or otherwise encumber any
Collateral, or allow any lien, security interest, mortgage, pledge or other form
of encumbrance to attach to the same, except (i) in the ordinary course of
business, or (ii) with respect to the Permitted Encumbrance;
 
(b)     the Borrowers shall not borrow additional money from any other source
except the Bank or incur any additional indebtedness, except (i) trade debt
incurred in the ordinary course of business, and (ii) capital lease obligations
mot to exceed $100,000.00 in the aggregate in any Fiscal Year;
 
(c)     the Borrowers shall not guarantee or assume, either directly or
indirectly, any additional indebtedness or liability of others, except trade
debt incurred in the ordinary course of business;
 
(d)    the Borrowers shall not extend any loan or other credit to any other
person or entity, except in the ordinary course of business;
 
(e)   the Borrowers shall not merge or consolidate with any other entity, or
create any form of subsidiary, or acquire any other entity, except in connection
with any Permitted Acquisition;
 
(f)     Saker shall not change its corporate status, shall not change the
current corporate or limited liability company status of Wilkes-Barre, Garden
City or FirstFlight, and shall not issue any additional capital stock or
membership interests in, or transfer any capital stock or membership interests
of, Wilkes-Barre, Garden City or FirstFlight;
 
(g)     the Borrowers shall not change their principal office, their Fiscal
Year, or their method of accounting, except as may be required under GAAP;
 
(h)     the Borrowers shall not make any material change in the nature of the
Business or engage in any other business activities which are not reasonably
related to the Business; and
 
(i)     the Borrowers shall not allow any “employee benefit plan” they created
or are maintaining to fail to be in substantial compliance with ERISA or the IRS
Code, and in the event the Borrowers ever maintain an “employee pension benefit
plan” that is subject to Title IV of ERISA or Section 412 of the IRS Code, shall
not fail to make any required contribution to such plan.
 
 
26

 
All requests for the Bank’s prior consent to modifications or waivers of the
foregoing covenants shall be submitted to the Bank in writing, unless that
requirement is waived by the Bank. The Bank agrees that a consent to any
modification or waiver so requested will not arbitrarily or unreasonably be
withheld, but the Bank shall nevertheless be entitled to withhold consent in any
instance when the Bank is satisfied, or reasonably believes, that the
modification or change so requested, if consent were granted, would have a
material adverse effect on the ability of the Borrowers to repay the
Obligations, or its ability to perform their obligations under this Loan
Agreement, or adversely affect the Bank’s security for the Obligations, and in
no event shall the Bank become liable to the Borrowers for any direct or
consequential damages claimed by reason of the Bank’s withholding of consent.
 
12.     Financial Covenants. The Borrowers hereby acknowledge that the Bank has
agreed to provide financing under this Loan Agreement on the express
understanding that the Business will continue to be operated in compliance with
the financial standards set forth in this Section 12 and the Borrowers
accordingly covenants and agrees with the Bank that during each Fiscal Year that
the Obligations remain outstanding and unpaid, the Borrowers, shall in
accordance with the Bank's calculations, comply with the following:
 
(a)     The Borrowers will maintain, on a combined basis, a “Leverage Ratio”,
determined by dividing Funded Debt by EBITDA, of no greater than 2.25 to 1.00
for the Fiscal Quarter ending June 30, 2013, and for each Fiscal Quarter
thereafter, which Ratio shall be measured on a rolling four quarter basis; and
 
(b)     The Borrowers will maintain, on a combined basis, a “Fixed Charge
Coverage Ratio” of no less than 1.10 to 1.00, beginning with the Fiscal Quarter
ending June 30, 2013, and for each Fiscal Quarter thereafter, which Ratio shall
be measured on a rolling four quarter basis.
 
 
27

 
For purposes of this Section 12, the following terms shall have the following
meanings:
 
“Current Maturities” means the scheduled payments of principal on all
indebtedness for borrowed money having an original term of more than one (1)
year, as shown on the Borrowers’ financial statements as of one (1) year prior
to the date of determination (including, but not limited to, (i) amortization of
capitalized lease obligations, and (ii) payments due under the Redemption
Agreement).
 
“EBITDA” means net income plus interest expense plus income tax expense plus
depreciation plus amortization plus non-cash expenses.
 
“Fixed Charge Coverage Ratio” means (i) EBITDA divided by (ii) the sum of
Current Maturities plus interest expense plus cash taxes paid, plus dividends
and distributions plus Unfunded Capital Expenditures, measured on a rolling four
(4) quarter basis.
 
“Funded Debt” means all indebtedness for borrowed money, including but not
limited to capitalized lease obligations, reimbursement obligations in respect
of letters of credit, and guarantees of any such indebtedness.
 
“Unfunded Capital Expenditures” means capital expenditures made from the
Borrowers’ funds other than funds borrowed as term debt to finance such capital
expenditures.
 
All other terms used in this Section 12 that are not specifically defined herein
shall have the meanings commonly ascribed to them under GAAP, and all financial
computations required under this Section 12 shall be made in conformity with
GAAP, consistently applied, as calculated by the Bank.
 
13.     Events of Default. An Event of Default under this Loan Agreement shall
be deemed to have occurred if an event of default has occurred under any other
Loan Document or if any of the following events occur:
 
(a)     the Borrowers fail to pay any interest or any installment principal and
interest on any Loan when due;
 
(b)   the Borrowers fail to pay any other sum required to be paid under any
Note, the other Loan Documents, or this Loan Agreement when due;
 
 
 
28

 
(c)     any Borrower fails to keep, perform, and comply with any other
covenants, terms, and conditions of this Loan Agreement or the Loan Documents,
and such failure is not remedied within thirty (30) days after the date of
written notice from the Bank, specifying the nature of the failure or
non-compliance;
 
(d)     any Borrower suffers a material adverse change in its financial
condition to the extent that, in the reasonable business judgment of the Bank,
the Bank’s risk with respect to collection of the Obligations is materially
increased;
 
(e)     any Borrower becomes insolvent, or files any petition for relief under
the Bankruptcy Code, or is named in any involuntary petition seeking such
relief, and the same is not discharged or terminated within sixty (60) days of
such involuntary filing, or makes any assignment for the benefit of creditors or
to an agent authorized to liquidate any substantial amount of its or their
properties and assets, or applies for or consents to or suffers the appointment
of a receiver or Trustee;
 
(f)     any Borrower makes any representation or warranty, or furnishes or
causes to be furnished any certificate, financial statement, or opinion required
by the provisions of this Loan Agreement that is false or misleading in any
material respect as of the time made or furnished;
 
(g)     any Borrower allows any final judgment or order which is unappealed for
the payment of money in excess of $100,000.00 which is not covered by the
appropriate insurance without a reservation of rights, to be entered against it,
and either (i) enforcement proceedings are commenced by any creditor under any
said judgment or order, or (ii) said judgment remains unstayed for a period of
forty-five (45) days;
 
(h)     an event of default occurs, after the expiration of any applicable
notice and cure period, with respect to any obligation in excess of $100,000.00,
whether for borrowed money, or otherwise, of any Borrower to the Bank or to any
other creditor, and the Bank or such creditor initiates execution proceedings
with respect to such judgment, or otherwise takes any action to attach, seize or
otherwise levy upon any assets of such Borrower, and such action is not
terminated or resolved to the satisfaction of the Bank within twenty (20) days;
 
 
29

 
(i)     an event of default occurs, after the expiration of any applicable
notice and cure period, with respect to any Subsequent Indebtedness incurred by
any Borrower;
 
(j)     an event of default occurs, after the expiration of any applicable
notice and cure period, with respect to the Permitted Encumbrance;
 
(k)     an event of default occurs, after the expiration of any applicable
notice and cure period, under any Lease as a result of the action or inaction of
any Borrower;
 
(l)     Ricciardi dies, or Saker fails to extend his employment agreement in
accordance with Section 10(u) of this Loan Agreement, or, following such
extension, Ricciardi thereafter, for any reason, no longer serves as the
President or Chief Executive Officer of Saker, and is not replaced with an
individual reasonably acceptable to the Bank within ten (10) days of such event;
or
 
(m)     the Borrowers fail to provide the documentation, or otherwise fails to
comply with the requirements, set forth in Exhibit A.
 
14.     Remedies; Cross-Default Provision; Default Rate. If an Event of Default
as defined in Section 13 of this Loan Agreement shall occur, the Bank shall be
entitled, without further notice to the Borrowers, to declare the Obligations
immediately due and payable, and to demand payment of the Notes, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived, and shall thereupon terminate the right of the Borrowers’ to
obtain any further advances under the Line of Credit of the Acquisition Line of
Credit. The Bank shall thereupon be entitled to exercise, separately or
concurrently, all rights and remedies under the Notes, and the other Loan
Documents, or otherwise available to the Bank at law or in Equity, to enforce
collection of the obligations, including, without limitation, the Bank’s right
of setoff against any and all funds of the Borrower on deposit with the Bank.
The foregoing rights and remedies of the Bank are cumulative and not exclusive
of any rights and remedies which the Bank might otherwise have at law or in
Equity or by virtue of any statute or rule of procedure.
 
 
30

In addition to the other Events of Default set forth in Section 13 of this Loan
Agreement, it is expressly agreed and understood that the occurrence of an Event
of Default with respect to any Loan, any Subsequent Indebtedness or any other
obligation of any Borrower to the Bank whether as borrower or guarantor
(collectively, the “Additional Obligations”), will constitute an Event of
Default with respect to each Loan, all Subsequent Indebtedness and all such
Additional Obligations.
 
In addition, it is hereby expressly agreed and understood that upon the
occurrence of an Event of Default, as provided in this Section 14 and in Section
13, above, interest on the outstanding principal amount of each Loan shall
accrue, without further notice from the Bank at the rate equal to three percent
(3.00%) above the interest rate then in effect under this Loan Agreement and the
Note evidencing such Loan.
 
15.     Cross-Collateral Provision. It is hereby expressly agreed and understood
that the Collateral identified in this Loan Agreement, or in any Loan Document
previously or hereinafter delivered to the Bank in connection with any Loan,
secures such Loan and all other letters of credit, loans, advances, debts,
liabilities, obligations, covenants and duties owing by any Borrower to the Bank
or to any other direct or indirect subsidiary of The PNC Financial Services
Group, Inc. of any kind or nature, present or future (including, without
limitation, any interest accruing thereon after maturity, or after the filing or
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to any Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether or not evidenced by any note, guaranty or other instrument, whether
arising under any agreement, instrument or document, whether or not for the
payment of money, whether arising by reason of an extension of credit, opening
of a letter of credit, loan, equipment lease or guarantee, under any interest or
currency swap, future, option or other similar agreement, or in any other
manner, whether arising out of overdrafts on deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of the Bank’s non-receipt of or inability to collect funds or
otherwise not being made whole in connection with depository transfer check or
other similar arrangements, whether direct or indirect (including those acquired
by assignment or participation), absolute or contingent, joint or several, due
or to become due, now existing or hereafter arising, and any amendments,
extensions, renewals or increases and all costs and expenses of the Bank
incurred in the documentation, negotiation, modification, enforcement,
collection or otherwise in connection with any of the foregoing, including but
not limited to reasonable attorneys’ fees and expenses.
 
 
31

 
16.     Exercise of Rights. No delay or failure of the Bank in exercising any
right or remedy under this Loan Agreement shall be deemed a waiver of such right
or remedy, or affect or impair the future exercise of such right or remedy, and
no modification or waiver by the Bank of any covenant or condition of this Loan
Agreement, or waiver of the Bank of any default hereunder, shall be effective
for any purpose unless contained in a writing signed by the Bank and then only
to the extent specifically set forth in such writing.
 
17.     Payment of Expenses. The Borrowers jointly and severally agree to pay
all reasonable fees and expenses of the Bank’s counsel, and all other expenses
incurred by the Bank in connection with any future modification or amendment to
this Loan Agreement or the Loan Documents, or any future enforcement of the
rights and remedies of the Bank under this Loan Agreement and the Loan
Documents, including, without limitation, all such costs and expenses incurred
in connection in any Bankruptcy proceeding initiate by or against any Borrower.
 
18.     Notice and Demands. All notices, demands, requests, consents, approvals
and other communications required or permitted hereunder (“Notices”) must be in
writing and will be effective upon receipt. Notices may be given in any manner
to which the Bank and the Borrowers may separately agree, including electronic
mail. Without limiting the foregoing, first-class mail, facsimile transmission
and commercial courier service are hereby agreed to as acceptable methods for
giving Notices. Regardless of the manner in which provided, Notices may be sent
to addresses for the Bank and the Borrowers as set forth above or to such other
address as either may give to the other for such purpose in accordance with this
Section 18.
 
 
 
32

 
19.     Consent to Jurisdiction. Each Borrower hereby irrevocably consents to
the jurisdiction of the Court of Common Pleas of Lackawanna County, Pennsylvania
or the United States District Court for the Middle District of Pennsylvania in
any and all actions and proceedings whether arising hereunder or under any other
agreement or undertaking, and irrevocably agrees to service of process by
Certified Mail, Return Receipt Requested to the address of such Borrower, set
forth herein. Each Borrower hereby waives and shall not interpose any objections
of forum non conveniens, or to venue and waives any right to remove any
proceeding commenced in a state court to a federal court, and consent to any and
all relief ordered by such court.
 
20.     Indemnification. Each Borrower hereby agrees to jointly and severally
indemnify the Bank (and its directors, officers, employees, attorneys, agents
and controlling persons) against any and all claims, losses, damages,
liabilities, costs and expenses (or actions in respect thereof) (including,
without limitation fees and expenses of counsel and expert witnesses) which may
be incurred by any of them in connection with any investigation, litigation or
other proceeding arising in connection with the Loan Agreement, the use or the
proposed use of proceeds of the Loans, other than for their own gross negligence
or willful misconduct. The Borrowers’ obligations hereunder shall be in addition
to any other liability it may otherwise have and shall survive the repayment of
the Obligations.
 
21.     Severability. The invalidity of any one or more Sections of this Loan
Agreement, or any portion thereof, shall not be deemed to affect or impair the
validity and enforceability of the remainder.
 
22.     Assignments; Binding Effect. All covenants, terms and provisions of this
Loan Agreement shall extend to and bind the respective successors and assigns of
the Borrowers and shall inure to the benefit of the successors and assigns of
the Bank, provided that no Borrower shall have the right to assign this Loan
Agreement or any rights hereunder to any other person or entity. Except to the
extent otherwise required by the context of this Loan Agreement, the word “Bank”
where used in this Loan Agreement means and includes any holder of any Note
originally issued to the Bank, and the holder of any Note shall be bound by and
have the benefits of this Loan Agreement in the same manner as if such holder
had been a signatory hereto.
 
 
33

 

23.     Interpretation. This Loan Agreement shall constitute a contract under
the laws of the Commonwealth of Pennsylvania and shall for all purposes be
construed in accordance with such laws. The headings of Sections in this Loan
Agreement are for convenience of reference only, and shall not enlarge or
restrict the rights of the parties hereto.
 
24.     No Consequential Damages, Etc. The Bank will not be responsible for any
damages, consequential, incidental, special, punitive or otherwise, that may be
incurred or alleged by any Borrower or any other person or entity as a result of
this Agreement, the other Loan Documents, the transactions contemplated hereby
or thereby, or the use of the proceeds of the Loans.
 
25.     WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND THE BANK IRREVOCABLY
WAIVES ANY AND ALL RIGHT HE OR IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS
EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN
ANY OF SUCH DOCUMENTS. THE BORROWERS AND THE BANK ACKNOWLEDGE THAT THE FOREGOING
WAIVER IS KNOWING AND VOLUNTARY.
 
Each Borrower acknowledges that it has read and understood all the provisions of
this Agreement, including the waiver of jury trial, and has been advised by
counsel as necessary or appropriate.
In Witness Whereof, the undersigned have executed this Loan Agreement as of the
day and year first above written, intending to be legally bound.
 
 
34

WITNESS:   PNC BANK, NATIONAL ASSOCIATION             By                 Title:
Vice President         WITNESS:   SAKER AVIATION SERVICES             By        
        Title: President and Chief                 Executive Officer        
WITNESS:   FBO AIR-WILKES-BARRE, INC.             By                  Title:
President         WITNESS:   FBO AIR-GARDEN CITY, INC.             By          
      Title: President

 
[Signatures Continued on Next Page]
 
 
35

 
[Signatures Continued] 
 
WITNESS:
 
    FIRSTFLIGHT HELIPORTS, LLC, by its sole Member, SAKER AVIATION SERVICES,
INC.     By                  Title: Managing Member

 
36