Exhibit 10.3

 

TERM NOTE

 

U.S. $3,400,000.00 Dated as of May __, 2018

 

 

FOR VALUE RECEIVED, the undersigned, Worthington Acquisition, LLC (, a North
Carolina limited liability company (together with its successors and assigns,
“Acquisition”), Worthington Aviation, LLC, a North Carolina limited liability
company (together with its successors and assigns, “Aviation”), Worthington MRO,
LLC, a North Carolina limited liability company (together with its successors
and assigns, “MRO”; and together with Acquisition and Aviation being sometimes
collectively referred to herein as, the “Borrowers” and individually as, a
“Borrower”), jointly and severally promise to pay to the order of MINNESOTA BANK
& TRUST, a national banking association (the “Lender”), the principal sum of
THREE MILLION FOUR HUNDRED THOUSAND AND No/100ths DOLLARS (U.S. $3,400,000.00)
on or before November 30, 2019, or such earlier date as this promissory note
(this “Note”) may be declared due and payable by Lender pursuant to the terms
hereof and the terms of the Loan Agreement (the “Maturity Date”), together with
interest on the principal amount thereof outstanding from time to time at the
rate or rates described below, and any and all other amounts which may be due
and payable hereunder or under any of the Loan Documents (as hereinafter
defined) from time to time. This Note is made pursuant to the terms and
conditions set forth in that certain Loan Agreement dated of even date herewith
by and among Borrowers and Lender (as amended, modified, supplemented or
restated from time to time being the “Loan Agreement”). The amount disbursed by
the Lender to Borrowers, repayment of which is evidenced by this Note, is
referred to as the “Loan”. All capitalized terms used and not expressly defined
herein shall have the meanings given to such terms in the Loan Agreement.

 

Interest Prior to Default.

 

(a)           Interest Rate.

 

(i)     The Borrowers jointly and severally promises to pay interest on the
unpaid principal amount hereof from the date hereof until such principal amount
is paid in full at a fluctuating per annum rate of interest (the “Interest
Rate”) that equals the sum of (a) the Index (as hereinafter defined), plus (b)
2.50% (the “Margin”).

 

(ii)     The interest rate on this Note is subject to change from time to time
based on changes in an independent index which is LIBOR (as hereafter defined)
adjusted and determined, without notice to Borrowers, as of the date of this
Note and on the first day of each calendar month hereafter (the “Interest Rate
Change Date”). “LIBOR” shall mean the London Interbank Offered Rate of interest
for an interest period of 1 month which appears on Bloomberg, rounded to the
nearest 1/10,000th of 1%, on the day that is two London Business Days preceding
each Interest Rate Change Date (the “Reset Date”). If LIBOR as defined above is
not available or is not published for any Reset Date, then Lender shall, at its
sole discretion, choose a substitute source for LIBOR, which LIBOR plus the
Margin, shall become effective on the next Interest Rate Change Date. “London
Business Day” shall mean any day on which commercial banks in London, England
are open for general business (collectively, the “Index”). The Index is not
necessarily the lowest rate charged by Lender on its loans. If the Index becomes
unavailable during the term of the Loan, Lender may designate a substitute Index
after notice to Borrowers. Lender will tell Borrowers the current Index rate
upon Borrowers’ request. The interest rate change will not occur more often than
each month. Borrowers understand that Lender may make loans based on other rates
as well. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.

 

 

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TERM NOTE

Page 2

 

U.S. $3,400,000.00

Dated as of May __, 2018

 

 

(b)     Change in Capital Adequacy Requirements. If Lender shall determine that
the adoption after the date hereof (for purposes of this Agreement, the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all guidelines and
regulations adopted in connection therewith are deemed to have been adopted
after the date hereof) of any applicable law, rule or regulation regarding
capital adequacy, or any change in any existing law, rule or regulation
regarding capital adequacy, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration of any such law, rule
or regulation regarding capital adequacy, or compliance by Lender (or any of its
branches) with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on Lender’s
capital as a consequence of its obligations hereunder or for the credit which is
the subject matter hereof to a level below that which Lender could have achieved
but for such adoption, change or compliance (taking into consideration Lender’s
policies with respect to liquidity and capital adequacy) by an amount deemed by
Lender to be material, then from time to time, within fifteen (15) days after
demand by Lender, Borrowers shall jointly and severally pay to Lender such
additional amount or amounts reasonably determined by Lender as will compensate
Lender for such reduction.

 

Interest After Default. Upon the occurrence of an Event of Default, including
failure to pay upon final maturity, the interest rate on this Note shall be
increased by adding an additional 3.000 percentage point margin (“Default Rate
Margin”). The Default Rate Margin shall also apply to each succeeding interest
rate change that would have applied had there been no default. However, in no
event will the interest rate exceed the maximum interest rate limitations under
applicable law.

 

 

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TERM NOTE

Page 3

 

U.S. $3,400,000.00

Dated as of May __, 2018

 

 

Payment Terms.

 

(a)     Principal and Interest. Payments of principal and interest due under
this Note, if not sooner declared to be due in accordance with the provisions
hereof, shall be made as follows (each such date when a payment is due and
payable, a “Payment Date”):

 

(i)     On the first day of each month, commencing on June 1, 2018, through and
including November 1, 2018, the Borrowers shall jointly and severally make a
payment of accrued interest;

 

(ii)     On the first day of each subsequent month and continuing until the
Maturity Date, the Borrowers shall jointly and severally shall make payments of
principal in the amount of $147,536.70 plus accrued interest; and

 

(iii)     The Loan shall be due and payable, and Borrowers jointly and severally
promise to pay the outstanding principal amount of the Loan to Lender, together
with all accrued interest thereon then remaining unpaid and all other unpaid
amounts, charges, fees and expenses outstanding under this Note or under any of
the other Loan Documents, on the Maturity Date.

 

(b)     Method of Payments. Both principal and interest are payable in lawful
money of the United States of America to the Lender at 7701 France Avenue South,
Edina, MN 55435 (or other location specified by the Lender) in immediately
available funds. By its execution of this Note, each Borrower authorizes the
Lender to charge from time to time against any of such Borrower’s depository
accounts maintained with the Lender any such payments when due and the Lender
will use its reasonable efforts to notify such Borrower of such charges.

 

Interest Calculation Method. Interest on this Note shall be calculated on the
basis of a 360-day year and the actual number of days elapsed in any portion of
a month in which interest is due. If any payment to be made by the Borrowers
hereunder shall become due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.

 

Prepayment; Minimum Interest Charge. This Note may be prepaid in whole or in
part at any time, so long as such prepayment is accompanied by a simultaneous
payment of any applicable termination fees payable under any Hedge Agreement,
plus accrued interest on the amount being prepaid through the date of
prepayment. In any event, even upon full prepayment of this Note, Borrowers
understand that Lender is entitled to a minimum interest charge of $10.00. Early
payments will not, unless agreed to by Lender in writing, relieve Borrowers of
Borrowers’ joint and several obligation to continue to make payments of accrued
unpaid interest. Rather, early payment will reduce the principal balance due.
Borrowers jointly and severally agree not to send Lender payments marked “paid
in full”, “without recourse”, or similar language. If Borrowers sends such a
payment, Lender may accept it without losing any of Lender’s rights under this
Note, and Borrowers will remain jointly and severally obligated to pay any
further amount owed to Lender. All written communications concerning disputed
amounts, including any check or other payment instrument that indicates that the
payment constitutes “payment in full” of the amount owed or that is tendered
with other conditions or limitations or as full satisfaction of a disputed
amount must be mailed or delivered to: Minnesota Bank & Trust, 7701 France
Avenue South, Edina, MN 55435.

 

 

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TERM NOTE

Page 4

 

U.S. $3,400,000.00

Dated as of May __, 2018

 

 

Late Charge. If a payment due hereunder is not made within seven days after the
date when due, Borrowers shall jointly and severally pay to Lender a late
payment charge of 5% of the amount of the overdue payment to compensate Lender
for a portion of the cost related to handling the overdue payment.

 

Interest After Default. Upon the occurrence of an Event of Default, including
failure to pay upon final maturity, the interest rate on this Note shall be
increased by adding an additional 3.000 percentage point margin (“Default Rate
Margin”). The Default Rate Margin shall also apply to each succeeding interest
rate change that would have applied had there been no default. However, in no
event will the interest rate exceed the maximum interest rate limitations under
applicable law.

 

Loan Agreement. This Note is the Term Note referred to in, and is entitled to
the benefits of, the Loan Agreement. The Loan Agreement, among other things, (i)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events prior to the maturity hereof upon the terms and
conditions therein specified; (ii) contains provisions for the mandatory
prepayment hereof upon certain conditions; and (iii) contains provisions for the
voluntary prepayment hereof, upon certain conditions.

 

Security Agreement. This Note is secured by, among other things, that certain
Security Agreement dated of even date herewith executed by the Borrowers in
favor of the Lender.

 

Waiver of Presentment and Demand for Payment; Etc. Borrowers and any endorsers
or guarantors hereof severally waive presentment and demand for payment, notice
of intent to accelerate maturity, protest or notice of protest and non-payment,
bringing of suit and diligence in taking any action to collect any sums owing
hereunder or in proceeding against any of the rights and properties securing
payment hereunder, and expressly agree that this Note, or any payment hereunder,
may be extended from time to time, and consent to the acceptance of further
security or the release of any security for this Note, all without in any way
affecting the liability of Borrowers and any endorsers or guarantors hereof. No
extension of time for the payment of this Note, or any installment thereof, made
by agreement by Lender with any person now or hereafter liable for the payment
of this Note, shall affect the original liability under this Note of the
undersigned, even if the undersigned is not a party to such agreement.

 

Event of Default. Any Event of Default (as defined in the Loan Agreement) shall
constitute an Event of Default under this Note. Upon the occurrence of an Event
of Default, in addition to any other rights or remedies Lender may have at law
or in equity or under the Loan Agreement or under any other Loan Document,
Lender may, at its option, without notice to Borrower, declare immediately due
and payable the entire unpaid principal sum hereof, together with all accrued
and unpaid interest thereon plus any other sums owing at the time of such Event
of Default pursuant to this Note, the Security Agreement or any other Loan
Document. The failure to exercise the foregoing or any other options shall not
constitute a waiver of the right to exercise the same or any other option at any
subsequent time in respect of the same event or any other event. The acceptance
by the holder of any payment hereunder which is less than payment in full of all
amounts due and payable at the time of such payment shall not constitute a
waiver of the right to exercise any of the foregoing options at that time or at
any subsequent time.

 

 

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TERM NOTE

Page 5

 

U.S. $3,400,000.00

Dated as of May __, 2018

 

 

Expense Reimbursement. Borrowers jointly and severally agree to pay all expenses
for the preparation of this Note, as set forth in the Credit Agreement,
including exhibits, and any amendments to this Note as may from time to time
hereafter be required, and the reasonable attorneys’ fees and legal expenses of
counsel for Lender from time to time incurred in connection with the preparation
and execution of this Note and any document relevant to this Note, any
amendments hereto or thereto, and the consideration of legal questions relevant
hereto and thereto. Borrowers jointly and severally agree to reimburse Lender
upon demand for all reasonable out-of-pocket expenses (including attorneys’ fees
and legal expenses) in connection with Lender’s enforcement of the obligations
of the Borrowers hereunder or under the Security Agreement or any other
collateral document, whether or not suit is commenced including, without
limitation, attorneys’ fees and legal expenses in connection with any appeal of
a lower court’s order or judgment. The obligations of the Borrowers under this
paragraph shall survive any termination of the Loan Agreement, this Note, the
Security Agreement, and any other Loan Document.

 

Successors and Assigns. This Note shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns except
that no Borrower may assign or transfer its rights hereunder without the prior
written consent of Lender, which consent may be withheld in Lender’s sole
discretion. In connection with the actual or prospective sale by the Lender of
any interest or participation in the loan obligation evidenced by this Note,
Borrowers hereby jointly and severally authorize the Lender to furnish any
information concerning the Borrowers or any of their affiliates, however
acquired, to any person or entity.

 

Usury. Borrowers and Lender agree that no payment of interest or other
consideration made or agreed to be made by Borrowers to Lender pursuant to this
Note shall, at any time, be in excess of the maximum rate of interest
permissible by law. In the event such payments of interest or other
consideration provided for in this Note shall result in an effective rate of
interest which, for any period of time, is in excess of the limit of the usury
or any other law applicable to the loan evidenced hereby, all sums in excess of
those lawfully collectible as interest for the period in question shall, without
further agreement or notice between or by any party hereto, be applied to the
unpaid principal balance and not to the payment of interest; if a surplus
remains after full payment of principal and lawful interest, the surplus shall
be remitted by Lender to Borrowers, and Borrowers hereby jointly and severally
agree to accept such remittance. This provision shall control every other
obligation of the Borrowers and Lender relating to this Note.

 

Business Purpose Loan. The Loan is a business loan. Borrowers hereby jointly and
severally represent that this loan is for commercial use and not for personal,
family or household purposes. The Borrowers jointly and severally agree that the
Loan evidenced by this Note is an exempted transaction under the Truth In
Lending Act, 15 U.S.C., §1601, et seq.

 

 

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TERM NOTE

Page 6

 

U.S. $3,400,000.00

Dated as of May __, 2018

 

 

Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING
EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

WAIVER OF DEFENSES. OTHER THAN CLAIMS BASED UPON THE FAILURE OF THE LENDER TO
ACT IN A COMMERCIALLY REASONABLE MANNER, EACH BORROWER WAIVES EVERY PRESENT AND
FUTURE DEFENSE (OTHER THAN THE DEFENSE OF PAYMENT IN FULL), CAUSE OF ACTION,
COUNTERCLAIM OR SETOFF WHICH SUCH BORROWER MAY NOW HAVE OR HEREAFTER MAY HAVE TO
ANY ACTION BY THE LENDER IN ENFORCING THIS NOTE OR ANY OF THE LOAN DOCUMENTS.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER GRANTING ANY FINANCIAL
ACCOMMODATION TO THE BORROWERS.

 

Waiver of Right to Jury Trial; Venue. EACH BORROWER WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY ACTION RELATING TO OR ARISING FROM THIS NOTE. AT THE
OPTION OF LENDER, THIS NOTE MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN HENNEPIN OR RAMSEY
COUNTY, MINNESOTA. EACH BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY
SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT PROPER OR
CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS NOTE, LENDER, AT ITS OPTION, SHALL BE ENTITLED TO
HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE
DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO
HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

 

 

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TERM NOTE

Page 7

 

U.S. $3,400,000.00

 

 

 

IN WITNESS WHEREOF, the Borrowers have jointly and severally caused this Term
Note to be signed by their duly authorized officers in favor of MINNESOTA BANK &
TRUST and to be dated as of the date set forth above.

 

 

 

Worthington Acquisition, LLC

 

By:                                                        

Name:  Nicholas J. Swenson

Its:        President

 

 

Worthington Aviation, LLC

 

By:                                                       

Name:  Nicholas J. Swenson

Its:        Chief Executive Officer

 

 

Worthington MRO, LLC

 

By:                                                      

Name:  Nicholas J. Swenson

Its:        Chief Executive Officer