Exhibit 10.1

 

EXECUTION VERSION

 

 

 

Amended and Restated Credit Agreement

 

 

between

 

 

Air T, Inc.

 

 

and

 

 

Minnesota Bank & Trust

 

 

dated as of

 

March 28, 2019

 

 

 

 

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TABLE OF CONTENTS

 

    Page      

Article I Definitions and Interpretation

1         Section 1.01 Definitions 1         Section 1.02 Interpretation 21    
    Article II The Commitments and Loans 21         Section 2.01 Term Loans 21  
      Section 2.02 Term Loans Not Revolving 22        

Section 2.03 Revolving Credit Commitment

22         Section 2.04 Procedures for Revolving Credit Borrowing 22        
Section 2.05 Termination or Reduction of Revolving Credit Commitment 23        

Section 2.06 Repayment of Loans; Evidence of Debt

23         Section 2.07 Optional Prepayments 24         Section 2.08 Mandatory
Prepayments 24        

Section 2.09 Application of Prepayments

25         Section 2.10 Interest 25        

Section 2.11 Revolving Credit Commitment Fee

25         Section 2.12 Letters of Credit 25         Article III Taxes, Etc. 27
        Section 3.01 Taxes 27         Section 3.02 Increased Costs; Capital
Adequacy Requirements 29         Article IV Conditions Precedent 30        
Section 4.01 Conditions Precedent to Initial Loans 30         Section 4.02
Conditions Precedent to Each Loan 31         Article V Representations and
Warranties 32         Section 5.01 Existence; Compliance With Laws 32        

Section 5.02 Power; Authorization; Enforceability

32  

 

 

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Section 5.03 No Contravention 33         Section 5.04 Financial Statements 33  
      Section 5.05 No Material Adverse Effect 33         Section 5.06 No
Litigation 33        

Section 5.07 No Default

33         Section 5.08 Ownership of Property; Liens 34         Section 5.09
Environmental Matters 34         Section 5.10 Insurance 35         Section 5.11
Material Contracts 35         Section 5.12 Intellectual Property 35        
Section 5.13 Taxes 36         Section 5.14 ERISA 36         Section 5.15 Margin
Regulations 36         Section 5.16 Investment Company Act 36         Section
5.17 Subsidiaries; Equity Interests 36         Section 5.18 Labor Matters 37    
   

Section 5.19 Accuracy of Information, Etc.

37         Section 5.20 Security Documents 37         Section 5.21 Solvency 38  
      Section 5.22 PATRIOT Act; OFAC and Other Regulations 38        

Article VI Affirmative Covenants

39         Section 6.01 Financial Statements 39         Section 6.02
Certificates; Other Information 40         Section 6.03 Notices 41        
Section 6.04 Maintenance of Existence; Compliance 42         Section 6.05
Performance of Material Contracts 42         Section 6.06 Maintenance of
Property; Insurance 42         Section 6.07 Inspection of Property; Books and
Records; Discussions 42         Section 6.08 Environmental Laws 43        
Section 6.09 Use of Proceeds 43  

 

 

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Section 6.10 Additional Collateral; etc 43         Section 6.11 Further
Assurances 43         Section 6.12 Deposit Accounts 44        

Article VII Negative Covenants

45         Section 7.01 Limitation on Debt 45         Section 7.02 Limitation on
Liens 46         Section 7.03 Mergers; Nature of Business 47         Section
7.04 Limitation on Investments 47         Section 7.05 Limitation on
Dispositions 48         Section 7.06 Limitation on Sales and Leasebacks 48      
  Section 7.07 Limitation on Restricted Payments; Transfers to Non-Loan Parties
49         Section 7.08 Limitation on Prepayments of Debt and Amendments of Debt
Instruments 49         Section 7.09 Limitation on Transactions With Affiliates
50         Section 7.10 Fiscal Year 50         Section 7.11 Limitation on
Restrictive Agreements 50         Section 7.12 Limitation on Amendments of
Material Contracts 50         Section 7.13 Financial Covenants 50        

Article VIII Events of Default and Remedies

51         Section 8.01 Events of Default 51         Section 8.02 Remedies Upon
Event of Default 53         Section 8.03 Prepayment Obligations 54        

Article IX Miscellaneous

54         Section 9.01 Notices 54         Section 9.02 Amendments and Waivers
56         Section 9.03 Expenses; Indemnity; Damage Waiver 56         Section
9.04 Successors and Assigns 58         Section 9.05 Survival 59         Section
9.06 Counterparts; Integration; Effectiveness 59         Section 9.07
Severability 60         Section 9.08 Right of Setoff 60  

 

 

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Section 9.09 Governing Law; Jurisdiction; Consent to Service of Process 61      
  Section 9.10 Waiver of Jury Trial 62         Section 9.11 Headings 62        
Section 9.12 Confidentiality 62         Section 9.13 USA PATRIOT Act 63        
Section 9.14 Intent of Amendment and Restatement; Termination of Worthington
Loan Agreement 63  

 

 

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AMENDED AND RESTATED Credit Agreement

 

 

This Amended and Restated Credit Agreement (this “Agreement”), dated as of March
28, 2019, is entered into between Air T, Inc., a Delaware corporation (together
with its successors and assigns, the “Borrower”), and Minnesota Bank & Trust, a
Minnesota state banking corporation (together with its successors and assigns,
the “Lender”).

 

RECITALS

 

 

A.       The Borrower and the Lender are the parties to that certain Credit
Agreement dated as of December 21, 2017 (such Credit Agreement, as amended to
date being, the “Original Credit Agreement”).

 

B.       The Borrower and the Lender desire to amend and restate the Original
Credit Agreement in its entirety.

 

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Borrower and the Lender hereby agree that
the Original Credit Agreement is amended and restated in its entirety to read as
follows:

 

Article I 
Definitions and Interpretation

 

Section 1.01 Definitions. As used in this Agreement, the following terms shall
have the meanings set forth below:

 

“Affiliate” as to any Person, means any other Person that, directly or
indirectly through one or more intermediaries, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, “control” of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting power
for the election of directors (or persons performing similar functions) of such
Person, or (b) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.

 

“Airco” means Airco, LLC, a North Carolina limited liability company.

 

“Anti-terrorism Law” means any Requirement of Law related to money laundering or
financing terrorism including the PATRIOT Act, The Currency and Foreign
Transactions Reporting Act (31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s),
1820(b) and 1951-1959) (also known as the “Bank Secrecy Act”), the Trading With
the Enemy Act (50 U.S.C. § 1 et seq.) and Executive Order 13224 (effective
September 24, 2001).

 

 

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“Asset Coverage Ratio” means, at any Measurement Date, the ratio, calculated on
a consolidated basis in accordance with GAAP for the Borrower and the other Loan
Parties, of: (a) the sum of (i) Total Assets minus (ii) Intangible Assets;
divided by (b) the sum of (i) the outstanding principal balance of the Loans;
plus (ii) Letter of Credit Obligations.

 

“Asset Sale” means any Disposition of Property or series of related Dispositions
of Property (excluding any such Disposition permitted by Section 7.05 that
yields gross proceeds to any Loan Party (valued at the principal amount thereof
in the case of non-cash proceeds consisting of notes or other debt securities
and valued at fair market value in the case of other non-cash proceeds) in
excess of $250,000.00.

 

“Banking Services” means each and any of the following bank services provided to
Borrower by Lender or any of its Affiliates: (a) commercial credit cards, (b)
stored value cards, and (c) treasury management services (including, without
limitation, controlled disbursement, automated clearinghouse transactions,
return items, overdrafts and interstate depository network services).

 

“Banking Services Liabilities” means any and all obligations of the Borrower,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor) in connection with Banking Services.

 

“Bankruptcy Code” means Title 11 of the United States Code, as amended from time
to time, or any similar federal or state law for the relief of debtors.

 

“Blocked Person” means any Person that (a) is publicly identified on the most
current list of “Specially Designated Nationals and Blocked Persons” published
by the Office of Foreign Assets Control of the US Department of the Treasury
(“OFAC”) or resides, is organized or chartered, or has a place of business in a
country or territory subject to OFAC sanctions or embargo programs, or (b) is
publicly identified as prohibited from doing business with the United States
under the International Emergency Economic Powers Act, the Trading With the
Enemy Act, or any other Requirement of Law.

 

“Board” means the Board of Governors of the Federal Reserve System of the United
States (or any successor thereto).

 

“Borrower” has the meaning set forth in the preamble.

 

“Borrowing Base” means, at any date of determination, the sum of: (a) 75% of
Eligible Accounts; plus (b) 50% of Eligible Inventory; provided, however, that
(x) the portion of the Borrowing Base attributable to Eligible Inventory shall
be limited to not more than 60% of the total Borrowing Base, and (y) the Lender
reserves the right, in its sole discretion, to adjust such borrowing base
percentages and components based on its periodic evaluation of the Collateral.
The amount of the Borrowing Base shall be determined periodically from the most
recent Borrowing Base Certificate and supporting reports delivered to the
Lender.

 

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“Borrowing Date” means any Business Day specified by the Borrower in a Borrowing
Notice as a date on which the Borrower requests the Lender to make a Loan
hereunder.

 

“Borrowing Notice” means any request for a borrowing of Loans hereunder by
Borrower, which may be submitted in writing or in electronic form.

 

“Business Day” means, a day other than a Saturday, Sunday or other day on which
commercial banks in Minneapolis, Minnesota are authorized or required by law to
close.

 

“Capital Expenditures” with respect to any Person, means the aggregate of all
expenditures by such Person for the acquisition or leasing (pursuant to a
capital lease) of fixed or capital assets, software or additions to Equipment
(including replacements, capitalized repairs and improvements) which are
required to be capitalized under GAAP on the balance sheet of such Person.

 

“Capital Lease Obligations” with respect to any Person, means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases under GAAP on the balance sheet of such Person
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

 

“Cash Collateralize” means to pledge and deposit with or deliver to the Lender,
(a) for the benefit of the Lender, as collateral for Letter of Credit
Obligations, cash or deposit account balances, in each case pursuant to
documentation in form and substance satisfactory to the Lender or (b) for the
benefit of the Lender during the continuance of an Event of Default, as
collateral for any Obligations that are due or may become due, cash or deposit
account balances, in each case pursuant to documentation in form and substance
satisfactory to the Lender. “Cash Collateral” shall have a meaning correlative
to the foregoing and shall include the proceeds of such cash collateral and
other credit support.

 

“Cash Equivalents” as to any Person, means (a) securities issued or directly and
fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than one
year from the date of acquisition by such Person, (b) time deposits and
certificates of deposit of any commercial bank having, or which is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States or any State thereof, having maturities of not more than one year
from the date of acquisition by such Person, (c) repurchase obligations with a
term of not more than 90 days for underlying securities of the types described
in clause (a) above entered into with any bank meeting the qualifications
specified in clause (b) above, (d) commercial paper issued by any issuer rated
at least A-1 by Standard & Poor’s Ratings Services, or at least P-1 by Moody’s
Investors Service, Inc. (or carrying an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally), and in each case
maturing not more than one year after the date of acquisition by such Person or
(e) investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (a) through (d) above.

 

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“Change in Law” means the occurrence after the date of this Agreement of (a) the
adoption or effectiveness of any law, rule, regulation, judicial ruling,
judgment or treaty, (b) any change in any law, rule, regulation or treaty or in
the administration, interpretation, implementation or application by any
Governmental Authority of any law, rule, regulation or treaty, or (c) the making
or issuance by any Governmental Authority of any request, rule, guideline or
directive, whether or not having the force of law; provided that,
notwithstanding anything herein to the contrary (x) the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010, as amended and all requests, rules,
guidelines or directives thereunder or issued in connection therewith and (y)
all requests, rules, guidelines or directives concerning capital adequacy
promulgated by the Lender for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities shall, in each case, be deemed to be a “Change
in Law,” regardless of the date enacted, adopted or issued.

 

“Change of Control” means (a) any Person or group of persons within the meaning
of §13(d)(3) of the Securities Exchange Act of 1934 (other than one or more
Continuing Directors or Affiliates of Continuing Directors) becomes the
beneficial owner, directly or indirectly, of 50% or more of the outstanding
Equity Interests of the Borrower, or (b) individuals who constitute the
Continuing Directors cease for any reason to constitute at least a majority of
the board of directors of the Borrower.

 

“Closing Date” means the date on which the conditions precedent set forth in
Section 4.01 are satisfied or waived.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Collateral” has the meaning for such term set forth in the Security Agreement.

 

“Commitment” means the Revolving Credit Commitment.

 

“Consigned Inventory Eligibility Requirements”: As set forth on Exhibit B to
this Agreement.

 

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“Continuing Directors” means the directors of the Borrower on the Closing Date,
and each other director, if in each case, such other director’s nomination for
election to the board of directors of the Borrower is recommended by at least a
66 2/3%/a majority of the Continuing Directors.

 

“Contractual Obligation” of any Person, means any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound,
other than the Obligations.

 

“Contrail” means Contrail Aviation Support, LLC, a North Carolina limited
liability company.

 

“CSA” means CSA Air, Inc., a North Carolina corporation.

 

“Debt” of any Person at any date, without duplication, means (a) all
indebtedness of such Person for borrowed money; (b) all obligations of such
Person for the deferred purchase price of property or services (other than (i)
trade payables and accrued expenses incurred in the ordinary course of business
and not past due for more than 61 days after the date on which each such trade
payable or account payable was created and (ii) any earn-out, purchase price
adjustment or similar obligation until such obligation appears in the
liabilities section of the balance sheet of such Person; (c) all obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments;
(d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property); (e)
all obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interests in such Person or any other
Person or any warrants, rights or options to acquire such Equity Interests,
valued, in the case of redeemable preferred interests, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends; (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under acceptance, letter of credit or similar
facilities in respect of obligations of the kind referred to in subsections (a)
through (e) of this definition; (g) all Guaranty Obligations of such Person in
respect of obligations of the kind referred to in subsections (a) through (f)
above; and (h) all obligations of the kind referred to in subsections (a)
through (g) above secured by (or which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation.

 

“Debtor Relief Law” means the Bankruptcy Code and all other liquidation,
bankruptcy, assignment for the benefit of creditors, conservatorship,
moratorium, receivership, insolvency, rearrangement, reorganization or similar
debtor relief laws of the US or other applicable jurisdictions in effect from
time to time.

 

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“Debt Service Coverage Ratio” means, at any Measurement Date, the ratio,
calculated on a consolidated basis for the Borrower and the other Loan Parties
for the Measurement Period ending on such Measurement Date, of: (a) the sum of
(i) EBITDA, minus (ii) dividends and other distributions paid in cash to
shareholders of the Borrower; divided by (b) the aggregate amount of scheduled
annual principal payments and interest expense on the Loans.

 

“Default” means any of the events specified in Section 8.01 which constitutes an
Event of Default or which, upon the giving of notice, the lapse of time, or both
pursuant to Section 8.01 would, unless cured or waived, become an Event of
Default.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (whether in one transaction or in a series of transactions, and
including any sale and leaseback transaction) of any property (including,
without limitation, any Equity Interests) by any Person (or the granting of any
option or other right to do any of the foregoing), including any sale,
assignment, transfer or other disposal, with or without recourse, of any notes
or accounts receivable or any rights and claims associated therewith.

 

“Dollars” means the lawful currency of the United States.

 

“Domestic Subsidiary” means a Subsidiary of the Borrower incorporated or
organized under the laws of the United States of America, any state thereof or
the District of Columbia.

 

“EBITDA” means, for any Measurement Period, the sum, calculated on a
consolidated basis in accordance with GAAP for the Borrower and the other Loan
Parties, of: (a) net income for such Measurement Period determined in accordance
with GAAP (but excluding therefrom all non-operating income (including, without
limitation, extra-ordinary, non-recurring or unusual gains) and all
non-operating losses (including, without limitation, extra-ordinary,
non-recurring or unusual losses)); plus (b) the sum of the following amounts
deducted in arriving at net income (but without duplication for any item): (i)
interest expense; (ii) depreciation, amortization and other non-cash charges;
and (iii) federal, state, and local income taxes.

 

“Eligible Accounts” means, at any date of determination, the United States
dollar value (net of deposits, finance charges and/or service charges) of only
such accounts of the Loan Parties arising from the rendering of services in the
ordinary course of business in which the Lender holds a first priority security
interest and as to which the Lender, in its reasonable business judgment, shall
from time to time determine to be collectible in a timely manner in the ordinary
course of business without dispute or set-off. Without limiting the Lender’s
right, in its reasonable business judgment, to consider any account not to be an
Eligible Account, and by way of example only of types of accounts that the
Lender will consider not to be Eligible Accounts, the Lender, notwithstanding
any earlier classification of eligibility, may consider any account not to be an
Eligible Account if:

 

(a)    any warranty is breached as to the account or the account debtor disputes
liability or makes any claim with respect to the account;

 

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(b)    the account is not paid by the account debtor within 120 days after the
date of the original invoice relating thereto; or (ii) the account is owed by
any account debtor who has not paid 10% or more of such account debtor’s
accounts within the relevant time period specified in subsection (b)(i) above;

 

(c)  a petition in bankruptcy or other application for relief under any
insolvency law is filed with respect to the account debtor owing the account, or
the account debtor owing the account assigns for the benefit of creditors,
becomes insolvent, fails, suspends, or goes out of business, or the Lender, in
its reasonable business judgment, shall become dissatisfied with the
creditworthiness of an account debtor owing an account;

 

(d)    the account arises from a sale to an account debtor that is outside the
United States unless the sale is on letter of credit, acceptance or other terms
acceptable to the Lender;

 

(e)    the account debtor is an Affiliate, supplier or creditor of a Loan Party;

 

(f)    the account debtor with respect thereto is the United States of America
or any department, agency or instrumentality thereof (a “Federal Governmental
Authority”), or any state, county or local governmental authority, or any
department, agency or instrumentality thereof, unless the relevant Loan Party
has assigned its right to payment of such account to the Lender pursuant to the
Assignment of Claims Act of 1940 as amended in the case of the a Federal
Governmental Authority, or pursuant to applicable state law, if any, in all
other instances, and such assignment has been accepted and acknowledged by the
appropriate government officers;

 

(g)    if the Lender, in its reasonable business judgment, has established a
credit limit for the account debtor with respect thereto, the aggregate dollar
amount of accounts due from such account debtor, including such account, exceeds
such credit limit;

 

(h)    such Account is evidenced by chattel paper or instruments unless the
original of such chattel paper or instruments is delivered to the Lender;

 

(i)     such account arises from a transaction for which surety or performance
bonds are posted; or

 

(j)     any account for a customer deposit.

 

The amount of Eligible Accounts shall be computed on a monthly basis from the
Borrowing Base Certificate and other information required to be delivered by the
Borrower to the Lender pursuant to Section 6.02.

 

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“Eligible Assignee” has the meaning set forth in Section 9.04.

 

“Eligible Inventory” shall mean the book United States dollar value of the Loan
Parties’ raw materials and finished goods inventory, in which only the Lender
holds a first priority security interest and as to which the Lender, in its
reasonable business judgment, shall elect from time to time to constitute
Eligible Inventory. Without limiting the Lender’s right, in its reasonable
business judgment, to consider any inventory not to be Eligible Inventory, and
by way of example only of types of inventory that the Lender will consider not
to be Eligible Inventory, the Lender, notwithstanding any earlier classification
of eligibility, may consider any inventory not to be Eligible Inventory if:
(a) such inventory is discontinued inventory; (b) such inventory (i) is not
either located on premises owned, leased or rented by Borrower or stored with a
bailee or warehouseman (other than a processor), (ii) is stored at any of the
Primary Inventory Locations, unless a fully-executed landlord waiver has been
delivered to the Lender in form reasonably satisfactory to the Lender, or (iii)
is stored with a bailee or warehouseman unless an fully-executed bailee letter
has been received by the Lender with respect thereto in form reasonably
satisfactory to the Lender, (c) such inventory is consigned to a Loan Party, or
(d) such inventory is consigned by a Loan Party, unless such Loan Party has
complied with all of the Consigned Inventory Eligibility Requirements. The value
of Eligible Inventory shall be the lower of the cost or market value of the
Eligible Inventory computed in accordance with GAAP.

 

“Environmental Action” means any action, suit, demand, demand letter, claim,
notice of violation or non-compliance, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any permit issued under any
Environmental Law, or any Hazardous Material, or arising from alleged injury or
threat to health, safety or the environment including (a) by any Governmental
Authority for enforcement, clean-up, removal, response, remedial or other
actions or damages and (b) any Governmental Authority or third party for
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief.

 

“Environmental Law” means any and all Federal, state, foreign, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) as now or may at any time hereafter be in effect, and any
binding judicial or administrative interpretation thereof, including any binding
judicial or administrative order, consent decree or judgment, regulating,
relating to or imposing liability or standards of conduct concerning protection
of the environment or, to the extent relating to exposure to substances that are
harmful or detrimental to the environment, or human health or safety.

 

“Equipment” has the meaning for such term set forth in the Security Agreement.

 

“Equity Interests” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership (or profit) interests in a Person (other than a
corporation), securities convertible into or exchangeable for shares of capital
stock of (or other ownership or profit interests in) such Person, and any and
all warrants, rights or options to purchase any of the foregoing, whether voting
or nonvoting, and whether or not such shares, warrants, options, rights or other
interests are authorized or otherwise existing on any date of determination.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

“ERISA Affiliate” means an entity, whether or not incorporated, that is under
common control with the Borrower within the meaning of §4001 of ERISA or is part
of a group that includes the Borrower and that is treated as a single employer
under §414 of the Code.

 

“Eurodollar Rate Loan” means a Loan that accrues interest at the LIBOR Rate, as
specified in the Note evidencing such Loan.

 

“Excess Capital” means, as of any date of determination, calculated on a
consolidated basis for the Borrower and the other Loan Parties, the aggregate
amount by which the Loan Parties’ actual Tangible Assets exceeds the amount of
Tangible Assets necessary to show proforma compliance with all financial
covenants calculated as of such date, where the analysis supporting such
proforma analysis is performed based on the consolidated balance sheet for the
Borrower and the other Loan Parties then most-recently delivered to the Lender
pursuant to Section 6.01(a) or (b).

 

“Excess Capital Certificate” means, a certificate in form and substance
acceptable to the Lender and executed by a Responsible Officer of the Borrower,
providing a detailed calculation of Excess Capital as of the date of a proposed
Other Investment pursuant to Section 7.04(f) or of a Restricted Payment pursuant
to Section 7.07.

 

“Excluded Foreign Subsidiary” means any Subsidiary that is not organized and
existing under the laws of the United States or any state or commonwealth
thereof or under the laws of the District of Columbia, and in respect of which
either (a) the pledge of all the Equity Interests of such Subsidiary as
Collateral or (b) a guarantee by such Subsidiary of the Obligations, would, in
the good faith judgment of the Borrower, result in the adverse tax consequences
to the Borrower.

 

“Event of Default” has the meaning set forth in Section 8.01.

 

“Excluded Taxes” means any of the following Taxes, imposed on or with respect to
the Lender (a) Taxes imposed on or measured by net income (however denominated),
and franchise Taxes, (b) any branch profits Taxes imposed by the United States
or any similar Tax imposed by any other jurisdiction.

 

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“Fed Ex Contract” means that certain Aircraft Dry Lease and Services Agreement
dated as of June 1, 2015, by and between Federal Express Corporation and
Mountain Air Cargo, Inc.

 

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

“GAS” means Global Aviation Services, LLC, a North Carolina limited liability
company.

 

“GGS” means Global Ground Support, LLC, a North Carolina limited liability
company.

 

“Governmental Authority” means the government of any nation or any political
subdivision thereof, whether at the national, state, territorial, provincial,
municipal or any other level, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of, or pertaining to, government.

 

“Guarantor(s)” means, individually or collectively, as the case may be, each of
the Loan Parties (other than the Borrower) that are listed on Schedule A to this
Agreement, together with each other Subsidiary of the Borrower that becomes a
Loan Party by executing a joinder to the Guaranty, and their respective
successors and assigns.

 

“Guaranty” means, the Amended and Restated Guaranty dated as of even date
herewith, executed by the Guarantors, in favor of the Lender, as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time to the extent permitted under the Loan Documents.

 

“Guaranty Obligation” as to any Person, means any (a) obligation, contingent or
otherwise, of such Person guaranteeing or having the effect of guaranteeing any
Debt or other obligation payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or other
obligation, (ii) to purchase or lease property, securities or services for the
purpose of assuring the obligee in respect of such Debt or other obligation of
the payment or performance of such Debt or other obligation, (iii) to maintain
working capital, equity capital, net worth or solvency or liquidity or any level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Debt or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such Debt or
other obligation of the payment or performance thereof or to protect such
obligee against loss in respect thereof (in whole or in part), or (b) Lien on
any assets of such Person securing any Debt or other obligation of any other
Person, whether or not such Debt or other obligation is assumed by such Person
(or any right, contingent or otherwise, of any holder of such Debt to obtain any
such Lien). The amount of any Guaranty Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the related primary
obligation, or portion thereof, in respect of which such Guaranty Obligation is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith.

 

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“Hazardous Materials” means (a) any gasoline, petroleum or petroleum products or
by-products, radioactive materials, friable asbestos or asbestos-containing
materials, urea-formaldehyde insulation, polychlorinated biphenyls and radon
gas, and (b) any other chemicals, materials or substances designated, classified
or regulated as hazardous or toxic or as a pollutant or contaminant under any
Environmental Law.

 

“Heartland” means Heartland Financial USA, Inc., a Delaware corporation.

 

“Hedge Agreement” means any agreement between Borrower and Lender or any
affiliate of Lender (a “Hedge Provider”) now existing or hereafter entered into,
which provides for and interest rate swap, cap, floor, collar, or any similar
transaction or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Borrower’s exposure to fluctuations in
interest rates.

 

“Hedge Obligations” means the liabilities, Debt, and obligations of the
Borrower, if any, to the Hedge Provider under any Hedge Agreement.

 

“Indemnification Agreement” means that certain Environment and ADA
Indemnification Agreement dated as of even date herewith duly executed by the
Loan Parties with regards to the North Carolina Real Property.

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by any Loan Party under any Loan Document, and
(b) to the extent not otherwise described in (a), Other Taxes.

 

“Insolvency” with respect to any Multiemployer Plan, means such Plan is
insolvent within the meaning of §4245 of ERISA.

 

“Intangible Assets” means, at any date of determination, the sum, calculated on
a consolidated basis in accordance with GAAP for the Borrower and the other Loan
Parties, of (i) goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, covenants not to compete, training costs and
other similar intangibles; (ii) deferred charges or unamortized debt discount
and expense other than deferred income taxes; (iii) Investments which are not
readily marketable but only to the extent that the aggregate book value of such
Investments exceeds the Non-Marketable Securities Cap; (iv) any write-up in the
book value of any assets resulting from a reevaluation thereof subsequent to the
date of the Borrower’s consolidated annual financial statement described in
Section 5.04(a); (v) accounts receivable, notes receivable or other receivables
or amounts owed by officers, shareholders or Affiliates; and (vii) any asset
acquired subsequent to the date of this Agreement which the Lender, in its
reasonable business judgment, determines to be an intangible asset.

 

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“Intellectual Property” means any and all intellectual property, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, all rights therein, and all rights
to sue at law or in equity for any past, present, or future infringement,
violation, misuse, misappropriation or other impairment thereof, whether arising
under United States, multinational or foreign laws or otherwise, including the
right to receive injunctive relief and all proceeds and damages therefrom.

 

“Investment(s)” has the meaning set forth in Section 7.04.

 

“Jet Yard” means Jet Yard, LLC, an Arizona limited liability company.

 

“Lender” has the meaning set forth in the preamble.

 

“Letter(s) of Credit”: As provided in Section 2.12(a).

 

“Letter of Credit Application”: As provided in Section 2.12(c)

 

“Letter of Credit Commission”: As provided in Section 2.12(e)(i).

 

“Letter of Credit Commitment” shall mean, at any date, the maximum amount of
Letter of Credit Obligations which may from time to time be outstanding
hereunder, being initially $3,000,000.00 and, as the context may require, the
agreement of the Lender to issue the Letters of Credit for the account of the
Borrower on behalf of itself and on behalf of the other Loan Parties.

 

“Letter of Credit Commitment Termination Date”: The earlier of: (a) the
Revolving Credit Termination Date; or (b) the date upon which the obligation of
the Lender to issue Letters of Credit is terminated pursuant to Section 2.12(b).

 

“Letter of Credit Obligations”: At any date, the sum of: (a) the aggregate
amount available to be drawn on the Letters of Credit on such date; plus (b) the
aggregate amount owed by the Borrower to the Lender on such date as a result of
draws on the Letters of Credit for which the Borrower has not reimbursed the
Lender.

 

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“Liabilities” means, at any Measurement Date, the aggregate amount of
liabilities appearing on the Borrower’s consolidated balance sheet at such date
prepared in accordance with GAAP.

 

“Lien” means any mortgage, pledge, hypothecation, assignment (as security),
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest, or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever having substantially
the same economic effect as any of the foregoing (including any conditional sale
or other title retention agreement and any capital lease).

 

“Loan” means any Revolving Credit Loan or any Term Loan, as the context may
require, and “Loans” means either Revolving Credit Loans or Term Loans, as the
context may require.

 

“Loan Documents” means, collectively, this Agreement, the Security Agreement,
the Guaranty, the Revolving Credit Note, the Term Notes, the North Carolina
Assignment, the North Carolina Deed of Trust, each Hedge Agreement and all other
agreements, documents, certificates and instruments executed and delivered to
the Lender by any Loan Party in connection therewith.

 

“Loan Parties” means the Borrower, the Guarantors and each other Subsidiary of
the Borrower that is now, or at any time hereafter becomes, party to the
Guaranty and the Security Agreement. The term “Loan Party” shall expressly
exclude the Excluded Foreign Subsidiaries, Contrail and Delphax Solutions, Inc.
For avoidance of doubt, the initial Loan Parties are listed on Schedule A to
this Agreement.

 

“Loan Year” means the 12-month period commencing on the date of this Agreement
(or the anniversary date thereof in any subsequent year) and ending on the day
preceding the immediately following anniversary date of this Agreement.

 

“MAC” means Mountain Air Cargo, Inc., a North Carolina corporation.

 

“Margin Stock” has the meaning specified in Regulation U of the Board as in
effect from time to time.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, properties, liabilities (actual or contingent), operations, condition
(financial or otherwise) or prospects of the Borrower, individually, or the
Borrower and its Subsidiaries taken as a whole (provided that for purposes of
this clause (a) an event shall deemed to be “material” if it involves, or could
be expected to involve, at least $5,000,000), (b) the validity or enforceability
of any Loan Document, (c) the perfection or priority of any Lien purported to be
created by any Loan Document, (d) the rights or remedies of the Lender under any
Loan Document or (e) the ability of any Loan Party to perform any of its payment
obligations under any Loan Document to which it is a party.

 

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“Material Contracts” with respect to any Person, means each contract to which
such Person is a party involving aggregate consideration payable by or to such
Person equal to at least $5,000,000 annually or otherwise material to the
business, condition (financial or otherwise), operations, performance,
properties or prospects of such Person. The Fed Ex Contract shall, in any event,
be a Material Contract for purposes of this Agreement.

 

“Maturity Date”: The earlier of: (a) the date on which the Loans become due and
payable under Section 8.02 upon the occurrence of an Event of Default; or (b)
(i) the Revolving Credit Termination Date for the Revolving Credit Loans; or
(ii) January 1, 2028 for Term Loan A, Term Loan B and Term Loan D.

 

“Measurement Date” means the last day of each fiscal year of the Borrower,
commencing with the fiscal year ending March 31, 2018.

 

“Measurement Period” means the period of twelve (12) consecutive fiscal months
ending on a Measurement Date.

 

“Multiemployer Plan” means a Plan which is a multiemployer plan as defined in §
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate makes or is
obligated to make contributions.

 

“Net Cash Proceeds” means (a) in connection with any Asset Sale or any Recovery
Event, the proceeds thereof in the form of cash and Cash Equivalents in an
amount for any Asset Sale or Recovery Event in excess of $250,000 and in the
aggregate for all Asset Sales and Recovery Events in any fiscal year in excess
of $2,000,000 (including any such proceeds actually received from deferred
payments of principal pursuant to a note, a receivable or otherwise), net of
attorneys’ fees, accountants’ fees, investment banking fees, amounts required to
be reserved for indemnification, adjustment of purchase price or similar
obligations pursuant to the agreements governing such Asset Sale, amounts
required to be applied to the repayment of Debt secured by a Lien expressly
permitted hereunder on any asset that is the subject of such Asset Sale or
Recovery Event (other than any Lien pursuant to a Loan Document) and other
customary fees and expenses actually incurred in connection therewith and net of
taxes paid or reasonably estimated to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements) and (b) in connection with any issuance or sale of Equity
Interests or any incurrence of Debt, the cash proceeds received from such
issuance or incurrence, net of attorneys’ fees, investment banking fees,
accountants’ fees, underwriting discounts and commissions and other customary
fees and expenses actually incurred in connection therewith.

 

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“Non-Marketable Securities Cap” means, initially $500,000, as such amount may be
increased from time-to-time with the Lender’s written consent following receipt
of a request from the Borrower accompanied by such supporting materials as
Lender may require.

 

“North Carolina Assignment of Rents” means that certain Assignment of Leases and
Rents document dated as of February 15, 2018, executed by the Borrower in favor
of the Lender with regards to the North Carolina Real Property and recorded on
February 21, 2018 in the records of the Register of Deeds, Lincoln County, North
Carolina, as Document Number 574366.

 

“North Carolina Deed of Trust” means that certain Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement document
dated as of February 15, 2018, executed by the Borrower for the benefit of the
Lender with regards to the North Carolina Real Property and recorded on February
21, 2018 in the records of the Register of Deeds, Lincoln County, North
Carolina, as Document Number 574365.

 

“North Carolina Real Property” means the real property described in the North
Carolina Deed of Trust.

 

“Note(s)” means, individually or collectively, as the case may be, the Revolving
Credit Note and the Term Notes.

 

“Obligations” means all Loans, Letter of Credit Obligations, advances, debts,
liabilities, obligations, Banking Services Liabilities, covenants and duties,
owing by any Loan Party to the Lender or any Hedge Provider of any kind or
nature, present or future, which arise under this Agreement, any other Loan
Document or any Hedge Agreement or by operation of law, whether or not evidenced
by any note, guaranty or other instrument, whether or not for the payment of
money, whether arising by reason of an extension of credit, opening, guarantying
or confirming of a letter of credit, guaranty, indemnification or in any other
manner, whether joint, several, or joint and several, direct or indirect
(including those acquired by assignment or purchases), absolute or contingent,
due or to become due, and however acquired. The term includes, without
limitation, all amounts owed by the Borrower to the Lender at such date as a
result of draws on letters of credit paid by the Lender for which the Borrower
has not reimbursed the Lender, all principal, interest, fees, charges, expenses,
attorneys’ fees, and any other sum chargeable to any Loan Party under this
Agreement or any other Loan Document or any Hedge Agreement.

 

“Original Credit Agreement”: As defined in the Recitals.

 

“Other Investments”: As defined in Section 7.04.

 

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“Other Taxes” means any and all present or future stamp, court, recording,
filing, intangible, documentary or similar Taxes or any other excise or property
Taxes, charges or similar levies arising from any payment made hereunder or
under any other Loan Document or from the execution, delivery or enforcement or
registration of, or performance under, or from the receipt or perfection of a
security interest under or otherwise with respect to this Agreement or any other
Loan Document (other than Excluded Taxes imposed with respect to an assignment).

 

“Participant” has the meaning set forth in Section 9.04(c).

 

“Participant Register” has the meaning set forth in Section 9.04(c).

 

“PATRIOT Act” has the meaning set forth in Section 9.13.

 

“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (or any successor thereto).

 

“Person” means any individual, corporation, limited liability company, trust,
joint venture, association, company, limited or general partnership,
unincorporated organization, Governmental Authority or other entity.

 

“Plan” at any one time, means any “employee benefit plan” that is covered by
ERISA and in respect of which the Borrower or an ERISA Affiliate is (or, if such
plan were terminated at such time, would under §4062 or §4069 of ERISA be deemed
to be) an “employer” as defined in §3(5) of ERISA.

 

“Primary Inventory Locations” means, initially, (a) the real property commonly
known as 540 E. 56 Highway, Olathe, Kansas 66061-4640 that is leased by Global
Ground Support, LLC from R.W.B.C., L.L.C., a Missouri limited liability company,
(b) the real property commonly known as 1851 and 1853 S. Eisenhower Court,
Wichita, Kansas 67209, that is leased by Airco, LLC from Martin Potash, and (c)
the real property commonly known as 2340 John Mewborne Road Kinston, North
Carolina 28504 that is leased by Mountain Air Cargo, Inc., from Global Transpark
Corporation, a North Carolina limited liability company.

 

“Projections” has the meaning set forth in Section 6.02.

 

“Properties” has the meaning set forth in Section 5.09(a).

 

“Recovery Event” means any settlement of or payment to any Loan Party in respect
of any property or casualty insurance claim or any condemnation proceeding
relating to any asset of any Loan Party.

 

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“Related Parties” with respect to any Person, means such Person’s Affiliates and
the directors, officers, employees, partners, agents, trustees, administrators,
managers, advisors and representatives of it and its Affiliates.

 

“Reorganization” with respect to any Multiemployer Plan, means that such plan is
in reorganization within the meaning of §4241 of ERISA.

 

“Reportable Event” means any of the events set forth in §4043© of ERISA, other
than those events as to which the thirty day notice period is waived.

 

“Requirement of Law” as to any Person, means the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, and
any law (including common law), statute, ordinance, treaty, rule, regulation,
order, decree, judgment, writ, injunction, settlement agreement, requirement or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

 

“Responsible Officer” with respect to any Person, means the chief executive
officer, president or chief financial officer of such Person, except that with
respect to financial matters, the Responsible Officer shall be the chief
financial officer or treasurer of such Person.

 

“Restricted Payments” has the meaning set forth in Section 7.07.

 

“Revolving Credit Commitment” means the obligation of the Lender to make
Revolving Credit Loans in an aggregate principal amount not to exceed
$17,000,000, as the same may be changed from time to time pursuant to the terms
hereof.

 

“Revolving Credit Commitment Fee” has the meaning set forth in Section 2.11.

 

“Revolving Credit Commitment Period”  means the period from and including the
Closing Date to the Revolving Credit Termination Date.

 

“Revolving Credit Loans” means any revolving credit loan made by the Lender
under Section 2.04.

 

“Revolving Credit Note” means the promissory note of the Borrower described in
Section 2.06(a), substantially in the form of Exhibit A, as such promissory note
may be amended, modified or supplemented from time to time, and such term shall
include any substitutions for, or renewals of, such promissory note.

 

“Revolving Credit Termination Date” means the earliest to occur of (a) November
30, 2019, (b) the date the Revolving Credit Commitment is reduced to zero
pursuant to Section 2.05, and (c) the termination of the Revolving Credit
Commitment pursuant to Section 8.02.

 

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“SAIC” means Space Age Insurance Company, a Utah corporation.

 

“SEC” means the Securities and Exchange Commission (or successors thereto or an
analogous Governmental Authority).

 

“Security Agreement” means the Amended and Restated Security Agreement made by
the Borrower and the other Loan Parties in favor of the Lender, dated as of even
date herewith, as the same may be amended, amended and restated, supplemented or
otherwise modified from time to time to the extent permitted under the Loan
Documents.

 

“Single Employer Plan” means any Plan that is covered by Title IV of ERISA,
other than a Multiemployer Plan.

 

“Solvent” with respect to any Person as of any date of determination, means that
on such date (a) the present fair salable value of the property and assets of
such Person exceeds the debts and liabilities, including contingent liabilities,
of such Person, (b) the present fair salable value of the property and assets of
such Person is greater than the amount that will be required to pay the probable
liability of such Person on its debts and other liabilities, including
contingent liabilities, as such debts and other liabilities become absolute and
matured, (c) such Person does not intend to incur, or believe (nor should it
reasonably believe) that it will incur, debts and liabilities, including
contingent liabilities, beyond its ability to pay such debts and liabilities as
they become absolute and matured, and (d) such Person does not have unreasonably
small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted. The amount of
contingent liabilities at any time shall be computed as the amount that, in the
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.

 

“Stratus” means Stratus Aero Partners, LLC, a Delaware limited liability
company.

 

“Subordination Agreement” means each subordination agreement now or hereafter
executed by a creditor of the Borrower in favor of the Lender.

 

“Subordinated Debt” means, all Debt of the Borrower which is contractually
subordinated in right of payment to the Obligations pursuant to a Subordination
Agreement on a form acceptable to the Lender in its reasonable discretion.

 

“Subsidiary” as to any Person, means any corporation, partnership, limited
liability company, joint venture, trust or estate of or in which more than 50%
of (a) the issued and outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class of such corporation may
have voting power upon the happening of a contingency), (b) the interest in the
capital or profits of such partnership, limited liability company, or joint
venture or (c) the beneficial interest in such trust or estate is at the time
directly or indirectly owned or controlled through one or more intermediaries,
or both, by such Person. Unless otherwise qualified, all references to a
“Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower.

 

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“Tangible Assets” means, at any date of determination, the sum, calculated on a
consolidated basis in accordance with GAAP for the Borrower and the other Loan
Parties, of (a) Total Assets minus (b) Intangible Assets.

 

“Taxes” means any and all present or future income, stamp or other taxes,
levies, imposts, duties, deductions, charges, fees or withholdings imposed,
levied, withheld or assessed by any Governmental Authority, together with any
interest, additions to tax or penalties imposed thereon and with respect
thereto.

 

“Term Loan(s)”: means Term Loan A, Term Loan B and Term Loan D.

 

“Term Loan A”: means the Loan in the original principal amount of $10,000,000.00
made by Lender to Borrower under the Original Credit Agreement, evidenced by
Term Note A.

 

“Term Loan B”: means the Loan in the original principal amount of $5,000,000.00
made by Lender to Borrower under the Original Credit Agreement, evidenced by
Term Note B.

 

“Term Loan D”: means the Loan in the original principal amount of $1,680,000.00
made by Lender to Borrower under the Original Credit Agreement, evidenced by
Term Note D.

 

“Term Note A”: means that certain Term Note A dated December 21, 2017, in the
original principal amount of $10,000,000, made by the Borrower payable to the
order of the Lender, as such promissory note may be amended, modified or
supplemented from time to time, and such term shall include any substitutions
for, or renewals of, such promissory note.

 

“Term Note B”: means that certain Term Note B dated December 21, 2017, in the
original principal amount of $5,000,000, made by the Borrower payable to the
order of the Lender, made by the Borrower payable to the order of the Lender, as
such promissory note may be amended, modified or supplemented from time to time,
and such term shall include any substitutions for, or renewals of, such
promissory note.

 

“Term Note D”: means that certain Term Note D dated February 15, 2018, in the
original principal amount of $1,680,000, made by the Borrower payable to the
order of the Lender, as such promissory note may be amended, modified or
supplemented from time to time, and such term shall include any substitutions
for, or renewals of, such promissory note.

 

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“Term Note(s)”: means the Term Note A, the Term Note B and the Term Note D.

 

“Total Assets”: At any date of determination, the aggregate amount of assets
appearing on the consolidated balance sheet of the Borrower and the other Loan
Parties at such date prepared in accordance with GAAP.

 

“Total Usage”: At any date of determination, the sum of (a) the aggregate
outstanding principal amount of the Revolving Credit Loans; plus (b) the Letter
of Credit Obligations.

 

“Worthington Acquisition”: Worthington Acquisition, LLC, a North Carolina
limited liability company.

 

“Worthington Aviation”: Worthington Aviation, LLC, a North Carolina limited
liability company.

 

“Worthington Entities”: Worthington Acqusition, Worthington Aviation and
Worthington MRO.

 

“Worthington Loan Agreement”: That certain Loan Agreement dated as of May 11,
2018, by and among the Lender, Worthington Acquisition, Worthington Aviation and
Worthington MRO.

 

“Worthington Loans”: The “Revolving Credit Loans” and the “Term Loan” made by
the Lender to the Worthington Borrowers pursuant to the Worthington Loan
Agreement.

 

“Worthington MRO”: Worthington MRO, LLC, a North Carolina limited liability
company.

 

“Uniform Commercial Code” means the Uniform Commercial Code as in effect in the
state of Minnesota from time to time.

 

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Section 1.02 Interpretation With reference to this Agreement and each other Loan
Document, unless otherwise specified herein or in such other Loan Document:

 

(a)      The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise
(i) any definition of or reference to any agreement, instrument or other
document shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein or in any other Loan Document), (ii) any reference herein to
any Person shall be construed to include such Person’s successors and assigns,
(iii) the words “herein,” “hereof” and “hereunder,” and words of similar import
when used in any Loan Document, shall be construed to refer to such Loan
Document in its entirety and not to any particular provision thereof, (iv) all
references in a Loan Document to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in which such references appear, (v) any
reference to any law shall include all statutory and regulatory provisions
consolidating, amending replacing or interpreting such law and any reference to
any law or regulation shall, unless otherwise specified, refer to such law or
regulation as amended, modified or supplemented from time to time, and (vi) the
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

 

(b)      In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

 

(c)      Any reference herein or in any other Loan Document to the satisfaction,
repayment, or payment in full of the Obligations shall mean the repayment in
Dollars in full in cash or immediately available funds (and in the case of any
other contingent Obligations, providing Cash Collateral or other collateral as
may be requested by the Lender) of all of the Obligations other than (i)
unasserted contingent indemnification Obligations, and (ii) any Hedge
Obligations relating to Hedge Agreements that, at such time, are allowed by the
applicable Hedge Provider to remain outstanding without being required to be
repaid.

 

(d)      All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
as in effect from time to time, and applied on a consistent basis in a manner
consistent with that used in preparing the Borrower’s audited financial
statements, except as otherwise specifically prescribed herein.

 

Article II 
The Commitments and Loans

 

Section 2.01   Term Loans.

 

On an after the Closing Date, each of the “Term Loan A”, “Term Loan B” and “Term
Loan D” outstanding under the Original Credit Agreement shall be deemed to be
Term Loans outstanding under and governed by this Agreement.

 

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Section 2.02     Term Loans not Revolving.          

 

Amounts borrowed under the Term Loans and repaid or prepaid may not be
reborrowed.

 

Section 2.03    Revolving Credit Commitment.

 

(a)      Subject to the terms and conditions of this Agreement, the Lender
agrees to make Revolving Credit Loans to the Borrower and to issue Letters of
Credit for the account of the Borrower from time to time during the Revolving
Credit Commitment Period in an aggregate principal amount at any one time
outstanding not exceeding the lesser of (i) the amount of the Revolving Credit
Commitment or (ii) the Borrowing Base. During the Revolving Credit Commitment
Period the Borrower may use the Revolving Credit Commitment by borrowing,
prepaying the Revolving Credit Loans in whole or in part, and re-borrowing, and
requesting the issuance of Letters of Credit all in accordance with the terms
and conditions hereof. On the Closing Date, (a) the entire aggregate outstanding
principal balance of Revolving Credit Loans under the Original Credit Agreement
shall be deemed to be Revolving Credit Loans under this Agreement, (b) all
Letter of Credit Obligations under the Original Credit Agreement shall be deemed
to be Letter of Credit Obligations under this Agreement, and (c) the entire
aggregate outstanding principal balance of the Worthington Loans shall be
refinanced with Revolving Credit Loans pursuant to this Agreement.

 

(b)      The Borrower shall repay all outstanding Revolving Credit Loans on the
Revolving Credit Termination Date.

 

Section 2.04    Procedures for Revolving Credit Borrowing. The Borrower shall
either (a) submit a draw request to the Lender in writing or telephonically; or
(b) use the Lender’s electronic banking systems to request each proposed
borrowing in accordance with the requirements of such systems as may be in
effect from time to time. Each such notice shall be effective upon receipt by
the Lender, shall be irrevocable, and shall specify the date and amount of
borrowing requested. At the request of the Lender, a telephonic request must be
confirmed in writing by the Borrower within three (3) Business Days after such
request So long as (a) all conditions precedent set forth in Article IV with
respect to such borrowing have been satisfied, and (b) with respect to a request
for a Revolving Credit Loan, the Total Usage at such time does not exceed the
lesser of (i) the amount of the Revolving Credit Commitment or (ii) the
Borrowing Base, in each case after giving effect to such Revolving Credit Loan,
the Lender shall provide immediately available funds to the Borrower in the
amount of such requested borrowing on the requested borrowing date by depositing
such funds into depository account number                       *, maintained by
the Borrower with the Lender. Each borrowing shall be on a Business Day.

 

* This bank account information has been omitted pursuant to the Securities
Exchange Commission rules and federal securities laws because it is personally
identifiable information.

 

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Section 2.05    Termination or Reduction of Revolving Credit Commitment.

 

(a)     Upon not less than three Business Days’ notice to the Lender, the
Borrower shall have the right to terminate the Revolving Credit Commitment or,
from time to time, to reduce the aggregate amount of the Revolving Credit
Commitment; provided, that no such termination or reduction of Revolving Credit
Commitment shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans made on the effective date thereof,
the Total Usage would exceed the Revolving Credit Commitment. Any such partial
reduction shall be in an amount equal to $500,000, or a whole multiple thereof,
and shall reduce permanently the Revolving Credit Commitment then in effect.

 

Section 2.06    Repayment of Loans; Evidence of Debt.

 

(a)      Revolving Note. The Revolving Credit Loans made by the Lender shall be
evidenced by a Revolving Credit Note in the initial amount of the Revolving
Credit Commitment. The Revolving Credit Loans and the Revolving Credit Note
shall mature and be payable at Maturity of the Revolving Credit Loans. The
Lender shall enter in its records the amount of each of its Revolving Credit
Loans, the rate of interest borne on such Revolving Credit Loans, and the
payments of the Revolving Credit Loans received by the Lender, and such records
shall be conclusive evidence of the subject matter thereof, absent manifest
error.

 

(b)      Term Note A. The Term Loan A made by the Bank shall be evidenced by the
Term Note A. Term Loan A shall mature and be payable in accordance with the
provisions of Term Note A. The Bank shall enter in its records the amount of
Term Loan A, the rate of interest borne on Term Loan A and the payments of Term
Loan A received by the Lender, and such records shall be conclusive evidence of
the subject matter thereof, absent manifest error.

 

(c)      Term Note B. The Term Loan B made by the Bank shall be evidenced by the
Term Note B. Term Loan B shall mature and be payable in accordance with the
provisions of Term Note B. The Bank shall enter in its records the amount of
Term Loan B, the rate of interest borne on Term Loan B and the payments of Term
Loan B received by the Lender, and such records shall be conclusive evidence of
the subject matter thereof, absent manifest error.

 

(d)      Term Note D. The Term Loan D made by the Bank shall be evidenced by the
Term Note D. Term Loan D shall mature and be payable in accordance with the
provisions of Term Note D. The Bank shall enter in its records the amount of
Term Loan D, the rate of interest borne on Term Loan D and the payments of Term
Loan D received by the Lender, and such records shall be conclusive evidence of
the subject matter thereof, absent manifest error.

 

(e)     The Borrower hereby unconditionally promises to pay to the Lender in
full in cash, to the extent not previously paid, then-unpaid principal amount of
each Loan on its Maturity Date.

 

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(f)       The Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower to the Lender
resulting from each Loan, including the amounts of principal and interest
payable and paid to the Lender from time to time under this Agreement.

 

Section 2.07   Optional Prepayments.

 

(a)       Voluntary.

 

(i)       Revolving Credit Loans. The Borrower shall have the right, by giving
written notice to the Lender by not later than 3:00 p.m. (Minneapolis time) on
the Business Day of such payment, to voluntarily prepay the Revolving Credit
Loans in whole or in part at any time without premium or penalty.

 

(ii)      Term Loans. The Borrower shall have the right, by giving written
notice to the Lender by not later than 3:00 p.m. (Minneapolis time) on the
Business Day of such payment, to voluntarily prepay each Term Loan in whole or
in part at any time, subject to the contemporaneous payment of any premium or
fees set forth in the Term Note evidencing such Term Loan.

 

Section 2.08   Mandatory Prepayments.

 

(a)      Revolving Credit Loans. If, at any time, theTotal Usage exceeds the
lesser of the Revolving Credit Commitment or the Borrowing Base, then the
Borrower shall immediately prepay the Revolving Credit Loans and Cash
Collateralize the Letter of Credit Obligations by the amount of such excess
together with interest on the amount prepaid. Any prepayment required by this
subsection shall be applied first to prepay the Revolving Loans, and the
remainder of such prepayment, if any, shall be deposited in an interest-bearing
account maintained at the Bank for application to the Borrower’s reimbursement
obligations under Section 2.12(d) as payments are made on the Letters of Credit,
with the balance, if any, to be applied to the other Obligations.

 

(b)      Term Loans. Upon the sale or other disposition (including, without
limitation the loss or destruction of such item of equipment due to accident,
fire or other cause) of any item of:

 

(i)       Equipment owned by a Loan Party, the Borrower shall make mandatory
prepayments of the Loans to the extent of any Net Cash Proceeds received. Such
Net Cash Proceeds shall be applied as follows: first to the then outstanding
principal balance of the Revolving Credit Loans, second to Term Loan B, until
such Loan is paid in full, and third to Term Loan C, until such Loan is paid in
full; or

 

(ii)      Real Property owned by a Loan Party, the Borrower shall make mandatory
prepayments of the Term Loan D to the extent of any Net Cash Proceeds received.

 

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Each such prepayment shall be accompanied by payment of accrued interest on the
amount prepaid any prepayment premium described in the Note evidencing such
Loan.

 

Section 2.09      Application of Prepayments.

 

(a)       Any partial prepayment of a Term Loan shall be applied to installments
due on such Term Loan in the inverse order of their maturities.

 

Section 2.10      Interest.    

 

(a)      Term Loans. The Borrower agrees to pay interest on the outstanding
principal amount of each Term Loan from the date of such Term Loan until such
Term Loan is paid at the rates and at the times specified in the Term Note
evidencing such Term Loan.

 

(b)      Revolving Credit Loans. The Borrower agrees to pay interest on the
outstanding principal amount of the Revolving Credit Loans at the rates and at
the times specified in the Revolving Credit Note.

 

Section 2.11     Revolving Credit Commitment Fee. The Borrower shall pay to the
Lender a fee (the “Revolving Credit Commitment Fee”) in an amount determined by
applying a rate of 0.11 % per annum to the average daily excess of the Revolving
Credit Commitment over the outstanding principal balance of the Revolving Credit
Loans. Such Revolving Credit Commitment Fee shall be payable to the Lender in
arrears on the last day of each calendar month, commencing March 31, 2019, and
on the Revolving Credit Termination Date.

 

Section 2.12     Letters of Credit.   

 

(a)      Letter of Credit Commitment. Subject to the terms and conditions
hereinafter set forth, the Lender agrees to issue stand-by letters of credit
(the “Letters of Credit”) from time to time on terms reasonably acceptable to
the Lender on any Business Day during the period from the date hereof and ending
on the Revolving Credit Termination Date; provided, however, that the Lender
shall not be required to issue any Letter of Credit if, after giving effect to
such issuance: (i) the Total Usage would exceed the lesser of: (A) the Revolving
Credit Commitment or (B) the Borrowing Base; or (ii) the Letter of Credit
Obligations would exceed the Letter of Credit Commitment.

 

(b)      Termination. The obligation of the Lender to issue any Letter of Credit
shall terminate (i) immediately and without further action upon the occurrence
of an Event of Default of the nature referred to in Section 8.01(f); or
immediately when any Event of Default (other than of the nature specified in
Section 8.01(f)) shall have occurred and be continuing and the Lender either
shall have demanded payment of the Revolving Note or shall so elect by giving
notice to the Borrower for purposes of this Section.

 

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(c)       Manner of Issuance of Letters of Credit. Letters of Credit shall be
issued for the account of the Borrower, on behalf of itself and on behalf of the
other Loan Parties, within two Business Days after receipt of notice from the
Borrower to the Lender specifying the date of the requested issuance, the face
amount of the requested Letter of Credit, and the expiry date of the requested
Letter of Credit; provided that such notice and the required accompanying
documentation is received before 12:00 noon (Minneapolis time); any notice
received after 12:00 noon (Minneapolis time) on any Business Day shall be deemed
to have been received on the immediately following Business Day. In no event
shall any Letter of Credit have an expiry date later than the scheduled
Revolving Credit Termination Date or a maturity of greater than one year. Each
request for a Letter of Credit shall be accompanied by an appropriately
completed and duly executed application for a Letter of Credit in form
acceptable to the Lender (a “Letter of Credit Application”).

 

(d)      Reimbursement on Demand. The Borrower agrees to pay to the Lender on
demand at the Lender’s address shown on the signature page hereof: (i) the
amount of each draft or other request for payment drawn under any Letter of
Credit (whether drawn before or on its stated expiry date), and (ii) interest on
all amounts referred to in clause (i) above from the date of such draw until
payment in full at a fluctuating rate per annum at all times equal to the
Default Rate; provided, however, that so long as the conditions precedent set
forth in Section 2.04 and Article IV are satisfied as of the date of any draw
under the Letter of Credit, the Lender will make a Revolving Credit Loan in
accordance with Section 2.04 to pay any draw under a Letter of Credit.

 

(e)       Letter of Credit Fees.

 

(i)      The Borrower agrees to pay to the Lender a commission (the “Letter of
Credit Commission”) upon the undrawn face amount of the Letters of Credit
outstanding from time to time. The Letter of Credit Commission shall be computed
at a per annum rate equal to one percent (1.0%). The Letter of Credit Commission
with respect to each Letter of Credit is payable in advance on the date of
issuance of such Letter of Credit.

 

(ii)     The Borrower agrees to pay to the Lender all reasonable and customary
charges, fees and expenses which the Lender may assess in connection with the
issuance, extension, amendment or payment of any Letter of Credit in accordance
with the schedule therefor then in effect, and any and all reasonable
out-of-pocket expenses which the Lender may pay or incur in connection
therewith.

 

(f)     Obligations Absolute. The Obligations of the Borrower under this Section
2.12 shall be unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including,
without limitation, the following circumstances: (i) any lack of validity or
enforceability of any Letter of Credit or any other agreement or instrument
relating thereto (collectively, the “Related Documents”); (ii) any amendment or
waiver of, or any consent to departure from, all or any of the Related
Documents; (iii) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Lender or any other Person, whether in
connection with any Related Document, the transactions contemplated therein, or
any unrelated transaction, except as set forth in clause (v) below; (iv) any
draft, statement or any other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect, except as set forth
in clause (v) below; (v) payment by the Lender under any Letter of Credit
against presentation of a draft or certificate which does not comply with the
terms of such Letter of Credit, except in the case of payment resulting from the
gross negligence or willful misconduct of the Lender; or (vi) any other
circumstance or event whatsoever, whether or not similar to any of the
foregoing, except in the case of payment resulting from the gross negligence or
willful misconduct of the Lender.

 

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(g)      Conflicts. The rights of the Lender against the Borrower hereunder
shall be in addition to all rights under (and shall control over any conflict
under) any Letter of Credit Application.

 

(h)      Cash Collateral. If at any time (a) an Event of Default exists, (b) the
Letter of Credit Commitment Termination Date has occurred, or (c) the Letter of
Credit Commitment Date is scheduled to occur within 20 Business Days, then
Borrower shall, at Lender’s request, Cash Collateralize all outstanding Letters
of Credit. If Borrower fails to provide any Cash Collateral as required
hereunder, Lender may advance, as Revolving Credit Loans, the amount of Cash
Collateral required.

 

Article III 
Taxes, Etc.

 

Section 3.01    Taxes.

 

(a)      Any and all payments by or on account of any obligation of the Borrower
hereunder or under any other Loan Document shall be made free and clear of and
without deduction or withholding for any Taxes except as required by applicable
law. If the Borrower is required by applicable law to deduct or withhold any
Taxes from such payments, then:

 

(i)      if such Tax is an Indemnified Tax, the amount payable by the Borrower
shall be increased so that after all such required deductions or withholdings
are made (including deductions or withholdings applicable to additional amounts
payable under this Section), the Lender receives an amount equal to the amount
it would have received had no such deduction or withholding been made, and

 

(ii)     the Borrower shall make such deductions or withholdings and timely pay
the full amount deducted or withheld to the relevant Governmental Authority in
accordance with applicable law.

 

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(b)      Without limiting the provisions of Section 3.01(a) above, the Borrower
shall timely pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

 

(c)      The Borrower shall indemnify the Lender, within ten days after demand
therefor, for the full amount of any Indemnified Taxes (including Indemnified
Taxes imposed on or attributable to amounts payable under this Section) paid or
payable by the Lender, on or with respect to an amount payable by the Borrower
under or in respect of this Agreement or under any other Loan Document, together
with any reasonable expenses arising in connection therewith and with respect
thereto, whether or not such Indemnified Taxes were correctly or legally imposed
or asserted by the relevant Governmental Authority. A certificate from the
Lender as to the amount of such payment or liability delivered to the Borrower
shall be conclusive absent manifest error.

 

(d)      As soon as practicable after any payment of Taxes by the Borrower to a
Governmental Authority pursuant to this Section 3.01, the Borrower shall deliver
to the Lender the original or certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the relevant return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Lender.

 

(e)      If the Lender determines, in its sole discretion exercised in good
faith, that it has received a refund of any Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section, it shall pay over such refund (or
the amount of any credit in lieu of refund) to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section with respect to the Taxes giving rise to such refund or
credit in lieu of refund), net of all out-of-pocket expenses of the Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund or credit in lieu of refund); provided
that, the Borrower, upon the request of the Lender, agrees to repay the amount
paid over to the Borrower (plus any interest, penalties or other charges imposed
by the relevant Governmental Authority) to the Lender in the event the Lender is
required to repay such refund or credit in lieu of refund to such Governmental
Authority. Notwithstanding anything to the contrary in this paragraph (e), in no
event will the Lender be required to pay any amount to the Borrower pursuant to
this paragraph if the payment of such amount would place the Lender in a less
favorable net after-Tax position than it would have been in if the Tax subject
to indemnification had not been deducted, withheld or otherwise imposed and the
indemnification payments or additional amounts with respect to such Tax had
never been paid. Nothing in this paragraph (e) shall be construed to require the
Lender to make available its tax returns or any other information relating to
its taxes that it deems confidential to the Borrower or any other Person.

 

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Section 3.02    Increased Costs; Capital Adequacy Requirements.

 

(a)      If any Change in Law shall:

 

(i)        impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
the Lender;

 

(ii)       subject the Lender to any Taxes (other than Indemnified Taxes) on its
loans, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto; or

 

(iii)      impose on the Lender or the London interbank market any other
condition, cost or expense (other than Taxes) affecting this Agreement or
Eurodollar Rate Loans made by the Lender;

 

and the result of any of the foregoing shall be to increase the cost to the
Lender of making, converting to, continuing or maintaining any Eurodollar Rate
Loan or of maintaining its obligation to make any such Loan, or to reduce the
amount of any sum received or receivable by the Lender hereunder (whether of
principal, interest or any other amount) then, upon request of the Lender, the
Borrower will pay to the Lender such additional amount or amounts as will
compensate the Lender for such additional costs incurred or reduction suffered.

 

(b)      If the Lender determines that any Change in Law affecting the Lender,
or Heartland (if any), regarding capital or liquidity requirements, has or would
have the effect of reducing the rate of return on the Lender’s capital or on the
capital of Heartland, if any, as a consequence of this Agreement, the Revolving
Credit Commitment, the Term Loan Commitment or the Loans, to a level below that
which the Lender or Heartland could have achieved but for such Change in Law
(taking into consideration the Lender’s policies and the policies of Heartland
with respect to capital adequacy), then from time to time the Borrower will pay
to the Lender such additional amount or amounts as will compensate the Lender or
Heartland for any such reduction suffered.

 

(c)      A certificate from the Lender setting forth the amount or amounts
necessary to compensate it or its holding company, as specified in paragraph (a)
or (b) of this Section and delivered to the Borrower, shall be conclusive absent
manifest error. The Borrower shall pay the Lender the amount shown as due on any
such certificate within 10 days after receipt thereof.

 

(d)     Failure or delay on the part of the Lender to demand compensation
pursuant to this Section shall not constitute a waiver of the Lender’s right to
demand such compensation; provided that, the Borrower shall not be required to
compensate the Lender pursuant to this Section for any increased costs incurred
or reductions suffered more than 270 days prior to the date that the Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of the Lender’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 270 day period referred to above shall be
extended to include the period of such retroactive effect).

 

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Article IV 
Conditions Precedent

 

Section 4.01    Conditions Precedent to Initial Loans. The obligation of the
Lender to make the initial Revolving Credit Loans or of the Lender to issue any
Letter of Credit requested to be made by it hereunder is subject to the
satisfaction or the waiver by the Lender of the following conditions precedent:

 

(a)      The Lender shall have received:

 

(i)        this Agreement, the Revolving Credit Note, the Security Agreement and
the Guaranty, each duly executed and delivered by an authorized officer of the
Borrower and each of the other Loan Parties party thereto;

 

(ii)      results of a recent lien search in each of the jurisdictions where the
Loan Parties are organized and the assets of the Loan Parties are located, and
such searches reveal no Liens on any of the assets of the Loan Parties, except
for Liens permitted under this Agreement or discharged on or prior to the
Closing Date pursuant to documentation satisfactory to the Lender;

 

(iii)      an opinion of counsel to the Loan Parties, in form and substance
acceptable to the Lender; and

 

(iv)      payment, in immediately available funds of a non-refundable
origination fee in the amount of $20,000, together with reimbursement for all
expenses for which invoices have been presented (including the fees and expenses
of Lender’s legal counsel), on or before the Closing Date.

 

(b)      There shall have occurred no Material Adverse Effect since March 31,
2018.

 

(c)      The Lender shall have received, in form and substance satisfactory to
it, a certificate of each Loan Party, certified by a secretary or assistant
secretary of such Loan Party, dated the Closing Date, including:

 

(i)        a certificate of incorporation, of each Loan Party that is a
corporation, certified by the Secretary of State of the state of its
incorporation;

 

(ii)       by-laws for each Loan Party that is a corporation as in effect on the
date on which the resolutions referred to below were adopted;

 

(iii)      a certification of formation, of each Loan Party that is a limited
liability company, certified by the Secretary of State of the state of its
organization;

 

(iv)      limited liability agreement for each Loan Party that is a limited
liability company as in effect on the date on which the resolutions referred to
below were adopted;

 

(v)       resolutions of the board of directors of each Loan Party approving the
transaction and each Loan Document to which it is or is to be a party;

 

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(vi)      a certification that the names and signatures of the officers of each
Loan Party authorized to sign each Loan Document to which it is or is to be a
party and other documents to be delivered hereunder and thereunder are true and
correct;

 

(vii)     evidence of good standing for each Loan Party from the State of its
organization and each other state where it is qualified to do business.

 

(d)      The Lender shall have received an opinion of counsel to the Loan
Parties, in form and substance acceptable to the Lender:

 

(e)      The Lender shall have received satisfactory evidence that each document
(including any Uniform Commercial Code financing statement and appropriate
filings with the United States Patent and Trademark Office or United States
Copyright Office) required by the Loan Documents or any Requirement of Law or
reasonably requested by the Lender to be filed, registered or recorded in order
to create in favor of the Lender a perfected first priority Lien on the
Collateral described therein, prior and superior in right to any other Person
shall have been properly filed (or provided to the Lender) or executed and
delivered in each jurisdiction.

 

(f)       The Lender or its agent shall have completed its survey of the
business, operations and assets of the Borrower, and such survey shall provide
the Lender with results and information which, in the Lender’s determination,
are satisfactory to the Lender.

 

(g)      The Lender shall have received a Borrowing Base Certificate as of a
date satisfactory to the Lender certified by a Responsible Officer of the
Borrower.

 

(h)      The Lender shall have received evidence of insurance coverage in form,
scope and substance satisfactory to the Lender and otherwise in compliance with
the terms of Section 5.10 and Section 6.06 of this Agreement.

 

Section 4.02    Conditions Precedent to Each Loan. The obligation of the Lender
to make each Loan or to issue each Letter of Credit requested to be made by it
hereunder (including, without limitation, its initial extension of credit), is
subject to the satisfaction or the waiver by the Lender of the following
conditions precedent:

 

(a)      Each of the representations and warranties made by any Loan Party in or
pursuant to the Loan Documents shall be true and correct on and as of such date
as if made on and as of such date.

 

(b)      No Default or Event of Default shall have occurred and be continuing on
such date or after giving effect to the Loans requested to be made on such date.

 

Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower, as of the date such Loan is made, that the conditions
contained in Article IV have been satisfied.

 

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Article V 
Representations and Warranties

 

To induce the Lender to enter into this Agreement and to make the Loans and to
issue Letters of Credit hereunder, the Borrower hereby represents and warrants
to the Lender that:

 

Section 5.01    Existence; Compliance With Laws. Each Loan Party (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, (b) is duly qualified as a foreign corporation or
other organization and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification except to the extent that the failure to
qualify in such jurisdiction could not reasonably be expected to have a Material
Adverse Effect, and (c) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

Section 5.02    Power; Authorization; Enforceability.

 

(a)      Each Loan Party has the power and authority, and the legal right, to
own or lease and operate its property, and to carry on its business as now
conducted and as proposed to be conducted, and to execute, deliver and perform
the Loan Documents to which it is a party and, in the case of the Borrower, to
obtain Loans hereunder. Each Loan Party has taken all necessary organizational
action to authorize the execution, delivery and performance of the Loan
Documents to which it is a party and, in the case of the Borrower, to authorize
the borrowing of Loans on the terms and conditions contained herein. No consent
or authorization of, filing with, notice to or other act by, or in respect of,
any Governmental Authority or any other Person is required in connection with
the extensions of credit hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement or any of the Loan Documents, which
consents, authorizations, filings and notices have been obtained or made and are
in full force and effect, and (ii) the filings referred to in Section 4.01(e).
Each Loan Document has been duly executed and delivered by each Loan Party
thereto.

 

(b)     This Agreement constitutes, and each other Loan Document when delivered
hereunder will constitute, a legal, valid and binding obligation of each Loan
Party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

 

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Section 5.03    No Contravention. The execution, delivery and performance of
this Agreement and the other Loan Documents, the borrowing of Loans hereunder
and the use of the proceeds thereof will not violate any Requirement of Law or
any Contractual Obligation of any Loan Party and will not result in, or require,
the creation or imposition of any Lien on any of their respective properties or
assets pursuant to any Requirement of Law or any such Contractual Obligation
(other than the Liens created by the Loan Documents). No Requirement of Law or
Contractual Obligation applicable to any Loan Party could reasonably be expected
to have a Material Adverse Effect.

 

Section 5.04    Financial Statements.

 

(a)      The consolidated balance sheets of the Borrower and its Subsidiaries as
at March 31, 2018, and the related consolidated statements of income and of cash
flows for the fiscal year ended on such date, audited by BDO USA, LLP, present
fairly the consolidated financial condition of the Borrower and its Subsidiaries
as at such date, and the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended, in accordance with GAAP.

 

(b)     The unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as at December 31, 2018, and the related unaudited consolidated
statements of income and of cash flows for the year-to-date period ended on such
date, duly certified by a Responsible Officer of the Borrower, present fairly
the consolidated financial condition of the Borrower and its Subsidiaries as at
such date, and the consolidated results of their operations and their
consolidated cash flows for year-to-date period then ended, in accordance with
GAAP (subject to normal year-end audit adjustments and the absence of
footnotes).

 

Section 5.05    No Material Adverse Effect. Since March 31, 2018, no development
or event has occurred that has had or could reasonably be expected to have a
Material Adverse Effect.

 

Section 5.06    No Litigation. Other than as disclosed on Schedule 5.06, no
action, suit, litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or threatened by or against any
Loan Party or against any of its property or assets (a) with respect to any of
the Loan Documents or any of the transactions contemplated hereby or thereby, or
(b) that could reasonably be expected to have a Material Adverse Effect.

 

Section 5.07    No Default. No Default or Event of Default has occurred and is
continuing and no default has occurred and is continuing under or with respect
to any Contractual Obligation of the Borrower or any of its Subsidiaries that
could reasonably be expected to have a Material Adverse Effect.

 

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Section 5.08    Ownership of Property; Liens.

 

(a)      Each Loan Party has fee simple title to, or a valid leasehold interest
in, all its real property, and good title to, or a valid leasehold interest in,
all its other property, and none of such property is subject to any Lien except
as permitted by Section 7.02.

 

(b)      Part A of Schedule 5.08 sets forth a complete and accurate list as of
the date hereof of all Liens on the real property of any Loan Party, showing as
of the date hereof the lienholder thereof and the real property of such Loan
Party subject thereto.

 

(c)      Part B of Schedule 5.08 sets forth a complete and accurate list as of
the date hereof of all real property owned by any Loan Party or any of its
Subsidiaries, showing as of the date hereof, the street address, county or other
relevant jurisdiction, state, record owner and book value thereof.

 

(d)      Part C of Schedule 5.08 sets forth a complete and accurate list as of
the date hereof of all leases of real property under which any Loan Party is the
lessee, showing as of the date hereof, the street address, county or other
relevant jurisdiction, state, lessor, lessee, expiration date and annual rental
cost thereof.

 

(e)      Part D of Schedule 5.08 sets forth a complete and accurate list as of
the date hereof of all leases of real property under which any Loan Party is the
lessor, showing as of the date hereof, the street address, county or other
relevant jurisdiction, state, lessor, lessee, expiration date and annual rental
income thereof.

 

Section 5.09    Environmental Matters. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect:

 

(a)      none of the facilities or properties currently or formerly owned,
leased or operated by any Loan Party (the “Properties”) contain or previously
contained, any Hazardous Materials in amounts or concentrations or under
circumstances that constitute or constituted a violation of, or could result in
liability under, any Environmental Law;

 

(b)      no Loan Party has received any notice of actual or alleged violation,
non-compliance or liability regarding compliance with Environmental Laws or
other environmental matters or with respect to any of the Properties or the
business operated by any Loan Party, nor is there any reason to believe that any
such notice will be received or is being threatened;

 

(c)      the Properties and all operations at the Properties are and formerly
have been in compliance with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by any
Loan Party;

 

(d)      Hazardous Materials have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location that could result in
liability under, any Environmental Law; no Hazardous Materials have been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could result in liability under, any
applicable Environmental Law; and there has been no release or threat of release
of Hazardous Materials at or from the Properties, or arising from or related to
the operations of any Loan Party in connection with the Properties or the
business operated by any Loan Party, in violation of or in amounts or in a
manner that could result in liability under Environmental Laws;

 

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(e)      no administrative or governmental action or judicial proceeding is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which any Loan Party is or will be a party with respect to
the Properties or the business operated by any Loan Party, nor are there any
decrees or orders or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Properties or the business
operated by any Loan Party; and

 

(f)       no Loan Party has assumed any liability of any other Person under
Environmental Laws.

 

Section 5.10    Insurance. The properties of the Loan Parties are insured with
financially sound and reputable insurance companies which are not Affiliates of
the Borrower, in such amounts, with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the applicable Loan Party operates.
Schedule 5.10 sets forth a description of all insurance maintained by or on
behalf of the Loan Parties as of the Closing Date. Each insurance policy listed
on Schedule 5.10 is in full force and effect and all premiums in respect thereof
that are due and payable have been paid.

 

Section 5.11    Material Contracts. Schedule 5.11 sets forth all Material
Contracts to which any Loan Party is a party or is bound as of the Closing Date.
The Borrower has delivered true, correct and complete copies of such Material
Contracts to the Lender on or before the Closing Date. The Loan Parties are not
in breach or in default in any material respect of or under any Material
Contract and have not received any notice of the intention of any other party
thereto to terminate any Material Contract.

 

Section 5.12    Intellectual Property. Each Loan Party owns, or is licensed to
use, all Intellectual Property necessary for the conduct of its business as
currently conducted or proposed to be conducted. No material claim has been
asserted and is pending by any Person challenging the use, validity or
effectiveness of any Intellectual Property, nor is the Borrower aware of any
valid basis for any such claim. The use of Intellectual Property by each Loan
Party does not materially infringe on the rights of any Person. Schedule 5.12
attached hereto is a complete list of all intellectual property that is owned
by, or licensed to, Borrower or any of its Subsidiaries.

 

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Section 5.13    Taxes. Each Loan Party has filed all Federal, state and other
tax returns that are required to be filed and has paid all taxes shown thereon
to be due, together with applicable interest and penalties, and all other taxes,
fees or other charges imposed on it or any of its property by any Governmental
Authority (except those that are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the relevant Loan Party). No tax Lien
has been filed, and, to the knowledge of the Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge. No Loan Party is a
party to any tax sharing agreement.

 

Section 5.14    ERISA. Each Plan is in compliance with ERISA, the Code and any
Requirement of Law; neither a Reportable Event nor an “accumulated funding
deficiency” (within the meaning of §412 or §430 of the Code or §302 of ERISA)
has occurred (or is reasonably likely to occur) with respect to any Plan. No
Single Employer Plan has terminated, and no Lien has been incurred in favor of
the PBGC or a Plan. Based on the assumptions used to fund each Single Employer
Plan, the present value of all accrued benefits under each such Plan did not
materially exceed the value of the assets of such Plan allocable to such accrued
benefit as of the last annual valuation date prior to the date on which this
representation is made. Neither any Loan Party nor any ERISA Affiliate has
incurred or is reasonably expected to incur any Withdrawal Liability that could
reasonably be expected to result in a material liability under ERISA, in
connection with any Multiemployer Plan. No such Multiemployer Plan is (or is
reasonably expected to be) terminated, in Reorganization, or insolvent (within
the meaning of §4245 of ERISA).

 

Section 5.15    Margin Regulations. The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying Margin Stock, and
no proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock.

 

Section 5.16    Investment Company Act. No Loan Party is or is required to be
registered as an “investment company” under the Investment Company Act of 1940,
as amended.

 

Section 5.17    Subsidiaries; Equity Interests.

 

(a)      Except as disclosed to the Lender by the Borrower in writing from time
to time after the Closing Date:

 

(i)       Part A of Schedule 5.17 sets forth the name, address of principal
place of business, jurisdiction of formation and US taxpayer identification
number (or in the case of a non-US Subsidiary that does not have a US taxpayer
identification number, its unique identification number issued to it by its
jurisdiction of formation) of each Subsidiary and, as to each such Subsidiary,
the percentage of each class of Equity Interest owned by any Loan Party;

 

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(ii)      there are no outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments (other than stock options granted to
employees or directors and directors’ qualifying shares) relating to any Equity
Interest of the Borrower or any Subsidiary, except as created by the Loan
Documents.

 

(b)     All of the outstanding Equity Interests in each Subsidiary have been
validly issued, are fully paid and non-assessable and are owned by a Loan Party
in the amounts specified on Part B of Schedule 5.17 free and clear of all Liens
except those created under the Loan Documents. All of the outstanding Equity
Interests in the Borrower have been validly issued, are fully paid and
non-assessable and are owned by the Persons and in the amounts specified on Part
C of Schedule 5.17 free and clear of all Liens except those created under the
Loan Documents.

 

(c)      No Loan Party has any equity investments in any other corporation or
entity other than those disclosed on Part D of Schedule 5.17.

 

Section 5.18    Labor Matters. Except as, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect (a) there are no strikes, lockouts
or other labor disputes pending or, to the knowledge of the Borrower, threatened
against any Loan Party, (b) hours worked by and wages paid to employees of each
Loan Party have not violated the Fair Labor Standards Act or any other
applicable Requirement of Law, and (c) all payments due in respect of employee
health and welfare insurance from any Loan Party have been paid or properly
accrued on the books of the relevant Loan Party.

 

Section 5.19    Accuracy of Information, Etc. The Borrower has disclosed to the
Lender all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. No statement or information contained in this
Agreement, any other Loan Document, or any other document, certificate or
statement furnished by or on behalf of the Borrower to the Lender, for use in
connection with the transactions contemplated by this Agreement or the other
Loan Documents, contained any untrue statement of a material fact or omitted to
state a material fact necessary to make the statement contained herein or
therein not misleading. The Projections included in such materials are based
upon good faith estimates and assumptions believed by the Borrower to be
reasonable at the time made; it being recognized by the Lender that such
Projections as to future events are not to be viewed as fact and that actual
results during the period or periods covered by the Projections may differ from
such projected results and such differences may be material.

 

Section 5.20    Security Documents.

 

(a)     The Security Agreement creates in favor of the Lender a legal, valid,
continuing and enforceable security interest in the Collateral, the
enforceability of which is subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law. The financing statements, releases and other
filings are in appropriate form and have been or will be filed in the offices of
the Secretary of State in which each Loan Party is organized. Upon such filings
and/or the obtaining of “control” (as defined in the Uniform Commercial Code),
the Lender will have a perfected Lien on, and security interest in, to and under
all right, title and interest of the grantors thereunder in all Collateral that
may be perfected by filing, recording or registering a financing statement or
analogous document (including without limitation the proceeds of such Collateral
subject to the limitations relating to such proceeds in the Uniform Commercial
Code) or by obtaining control, under the Uniform Commercial Code (in effect on
the date this representation is made) in each case prior and superior in right
to any other Person, except for Liens permitted under Section 7.02.

 

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Section 5.21     Solvency. The Borrower and each of the Loan Parties is, and
after giving effect to the incurrence of all Debt and obligations incurred in
connection herewith will be, Solvent.

 

Section 5.22     PATRIOT Act; OFAC and Other Regulations.

 

(a)      No Loan Party, any of its Subsidiaries or any of the Affiliates or
respective officers, directors, brokers or agents of such Loan Party, Subsidiary
or Affiliate:

 

(i)        has violated any Anti-terrorism Laws; or

 

(ii)      has engaged in any transaction, investment, undertaking or activity
that conceals the identity, source or destination of the proceeds from any
category of prohibited offenses designated by the Organization for Economic
Co-operation and Development’s Financial Action Task Force on Money Laundering.

 

(b)      No Loan Party, any of its Subsidiaries or any of the Affiliates or
respective officers, directors, brokers or agents of such Loan Party, Subsidiary
or Affiliate that is acting or benefiting in any capacity in connection with the
Loans is a Blocked Person.

 

(c)      No Loan Party, any of its Subsidiaries or any of the Affiliates or
respective officers, directors, brokers or agents of such Loan Party, Subsidiary
or Affiliate acting or benefiting in any capacity in connection with the Loans:

 

(i)       conducts any business or engages in making or receiving any
contribution of goods, services or money to or for the benefit of any Blocked
Person;

 

(ii)      deals in, or otherwise engages in any transaction related to, any
property or interests in property blocked pursuant to any Anti-terrorism Law; or

 

(iii)     engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in any Anti-terrorism Law.

 

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Article VI 
Affirmative Covenants

 

So long as the Lender has any Revolving Credit Commitment hereunder, or any
Loans, Letter of Credit Obligations or any other amounts payable to the Lender
hereunder or under any other Loan Document have not been indefeasibly paid in
full, the Borrower shall, and shall cause each cause each other Loan Party to
(except that, in the case of the covenants set forth in Section 6.01, Section
6.02, and Section 6.03, the Borrower shall furnish all applicable materials to
the Lender):

 

Section 6.01    Financial Statements. Furnish to the Lender:

 

(a)      As soon as available, but in any event within 120 days after the end of
each fiscal year of the Borrower, a copy of the annual audit report of the
Borrower and its Subsidiaries for such year including a copy of the audited
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such year and the related audited consolidated statements of income and of cash
flows for such year, setting forth in each case in comparative form the figures
for the previous year, together with an opinion as to such audit report of
Deloitte, LLP or other independent certified public accountants of nationally
recognized standing which does not contain a “going concern” or similar
qualification or exception, or qualification arising out of the scope of the
audit, together with related consolidating financial statements and a
certificate of such accounting firm to the Lender stating that in the course of
the regular audit of the business of the Borrower and its Subsidiaries, which
audit was conducted by such accounting firm in accordance with generally
accepted auditing standards, such accounting firm has obtained no knowledge that
a Default or Event of Default has occurred and is continuing, or if, in the
opinion of such accounting firm, a Default has occurred and is continuing, a
statement as to the nature thereof; provided that, in the event of any change in
generally accepted accounting principles used in the preparation of such
financial statements, the Borrower shall also provide a reconciliation of such
financial statements to GAAP, and

 

(b)      As soon as available and in any event within 45 days after the end of
each fiscal quarter of each fiscal year, a copy of the unaudited financial
statements of the Borrower prepared in conformity with GAAP (except for the
omission of footnotes and prior period comparative data required by GAAP and for
variations from GAAP which in the aggregate are not material) consisting of a
consolidated balance sheet as of the close of such month and related
consolidated statements of operations and retained earnings and cash flow for
such month and from the beginning of such fiscal year to the end of such month
and comparative figures for the corresponding portion of the preceding fiscal
year together with related consolidating financial statements and the other
monthly reports required by the Lender, in each case certified by a Responsible
Officer of the Borrower.

 

All such financial statements shall be complete and correct and shall be
prepared in reasonable detail and in accordance with GAAP applied (except as
approved by such accountants or Responsible Officer, as the case may be, and
disclosed in reasonable detail therein) consistently throughout the periods
reflected therein and with prior periods.

 

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Section 6.02    Certificates; Other Information. The Borrower shall furnish the
following to the Lender:

 

(a)      As soon as available, but in any event within one hundred twenty (120)
days after the end of each fiscal year of the Borrower, forecasts prepared by
the management of the Borrower, in form satisfactory to the Lender, of projected
consolidated balance sheets, income statements, statements of cash flows,
projected changes in financial position and a description of the underlying
assumptions applicable thereto, and as soon as available, significant revisions,
if any, of such forecast with respect to such fiscal year (the “Projections”),
which Projections shall in each case be accompanied by a certificate of the
Borrower’s chief financial officer, treasurer or controller stating that such
Projections are based on reasonable estimates, information and assumptions and
that such individual has no reason to believe that such Projections are
incorrect or misleading in any material respect;

 

(b)     As soon as available, and in any event within 120 days after the end of
each fiscal year of the Borrower, a compliance certificate (the “Compliance
Certificate”) in the form of Exhibit D, signed by a Responsible Officer of the
Borrower (i) containing all information and calculations necessary for
determining compliance by the Loan Parties with the provisions of this Agreement
as of the last day of such fiscal year of the Borrower and (ii) stating that
each Loan Party during such period has observed and performed all of the
covenants and other agreements, and satisfied every condition contained in this
Agreement and the other Loan Documents to which it is a party to be observed,
performed or satisfied by it, and that such officer has not obtained any
knowledge of any Default or Event of Default except as specified in such
certificate; and

 

(c)     As soon as available, and in any event within 15 Business Days after the
end of each month of each fiscal year, a borrowing base certificate (the
“Borrowing Base Certificate”) in the form provided by the Lender attached hereto
showing the Borrowing Base as of the last Business Day of the previous month,
accompanied by a detailed accounts receivable aging, a detailed inventory
report, a detailed accounts payable aging and other supporting reports as may be
required by the Lender and the Borrowing Base Certificate and such supporting
reports shall be in a form acceptable to the Lender and certified as accurate by
a Responsible Officer of the Borrower;

 

(d)      Promptly, and in any event within 30 days thereafter, to the extent not
previously disclosed to the Lender, a description of any change in the
jurisdiction of organization of any Loan Party;

 

(e)      Promptly after the same are sent, copies of all proxy statements,
financial statements and reports that any Loan Party sends to any of its
securities holders, and copies of all reports and registration statements that
any Loan Party files with the SEC or any national securities exchange;

 

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(f)      Promptly upon receipt of the same, copies of all notices, requests and
other documents received by any Loan Party under or pursuant to any Material
Contract or instrument, indenture, loan agreement regarding or related to any
breach or default by any party thereto or any other event that could materially
impair the value of the interests or the rights of any Loan Party or otherwise
have a Material Adverse Effect and copies of the foregoing and such information
and reports regarding Material Contracts and such instruments, indentures, loan
agreements as the Lender may reasonably request from time to time; and

 

(g)      Such other information respecting the business, condition (financial or
otherwise), operations, performance, properties or prospects of any Loan Party
as the Lender may from time to time request.

 

Section 6.03    Notices. Promptly and in any event within five days give notice
to the Lender of:

 

(a)      The occurrence of any Default or Event of Default;

 

(b)      Any (i) default or event of default under any Material Contract of any
Loan Party or (ii) litigation, investigation or proceeding that may exist at any
time between any Loan Party and any Governmental Authority;

 

(c)      Any litigation or proceeding against any Loan Party (i) in which the
amount involved is at least $500,000 and not covered in full by insurance, (ii)
in which injunctive or similar relief is sought, or (iii) which relates to any
Loan Document;

 

(d)      The following events, as soon as possible and in any event within five
(5) days after the Borrower or any of its ERISA Affiliates knows or has reason
to know thereof:

 

(i)        the occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or any Multiemployer Plan; or

 

(ii)       the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any ERISA Affiliate or any Multiemployer Plan with
respect to the withdrawal from, or the termination, Reorganization or Insolvency
of, any Plan;

 

(e)       The occurrence of any Environmental Action against or of any
noncompliance by any Loan Party with any Environmental Law or relevant permit;
and

 

(f)       Any development or event that has had or could reasonably be expected
to have a Material Adverse Effect.

 

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of
an executive officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the relevant Loan Party proposes to
take with respect thereto.

 

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Section 6.04    Maintenance of Existence; Compliance.

 

(a)      (i) Preserve, renew and maintain in full force and effect its corporate
or organizational existence and (ii) take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct
of its business, except, in each case, as otherwise permitted under this
Agreement.

 

(b)      Comply with all Contractual Obligations and Requirements of Law except
to the extent that failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

Section 6.05    Performance of Material Contracts. Perform and observe all the
terms and provisions of each Material Contract to be performed or observed by
it, maintain each Material Contract in full force and effect, enforce each such
Material Contract in accordance with its terms, take all such action to such end
as may be from time to time requested by the Lender and, upon request of the
Lender, make to each other party to each Material Contract such demands and
requests for information and reports or for action as any Loan Party or any of
its Subsidiaries is entitled to make under such Material Contract.

 

Section 6.06    Maintenance of Property; Insurance.

 

(a)      Maintain and preserve all of its property useful and necessary in its
business in good working order and condition, ordinary wear and tear excepted.

 

(b)      Maintain insurance with respect to its property and business (including
without limitation, property, casualty and business interruption insurance) with
financially sound and reputable insurance companies that are not Affiliates of
the Borrower, in such amounts and covering such risks as are usually insured
against by similar companies engaged in the same or a similar business. Each
policy of liability insurance shall name the Lender as an additional insured and
each policy of real property insurance shall name the Lender as mortgagee loss
payee and each policy insuring any other Collateral shall name the Lender as
lender loss payee.

 

Section 6.07    Inspection of Property; Books and Records; Discussions.

 

(a)      Keep proper books of records and accounts, in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions and assets in relation to its business and
activities.

 

(b)      Permit the Lender and its representatives to (i) discuss Borrower’s
business operations, properties and financial and other condition with its
officers and employees and its independent public accountants and (ii) upon
reasonable notice to visit the Borrower’s offices and inspect and make abstracts
from any of its books and records including, without limitation, permitting the
Lender to examine any Collateral securing the Loans and reimburse the Lender for
all examination fees and expenses incurred in connection with such examinations
at its then current rate for such services and for its out-of-pocket expenses
incurred in connection therewith; provided, however that the Lender agrees that,
so long as no Default or Event of Default has occurred and is continuing, the
Borrower’s obligations to reimburse the Lender for its examinations shall be
limited to no more than one examination per any Loan Year plus its out-of-pocket
expenses incurred in connection therewith.

 

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Section 6.08    Environmental Laws.

 

(a)      Obtain, comply and maintain in all material respects, and ensure the
same in all material respects by all tenants and subtenants, if any, with all
applicable Environmental Laws, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws.

 

(b)     Conduct and complete all investigations, studies, sampling and testing,
and all remedial, removal and other actions necessary to remove and clean up all
Hazardous Materials from any of its properties required under Environmental Laws
and promptly comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding Environmental Laws.

 

Section 6.09    Use of Proceeds. Use the proceeds of the Loans (a) to finance
the acquisition of assets by the Borrower and the Domestic Subsidiaries in the
ordinary course of business, including the purchase of inventory and equipment,
(b) to finance Capital Expenditures of the Borrower and of its Domestic
Subsidiaries, and (c) for general corporate purposes of the Borrower, in each
case to the extent not prohibited under any Requirement of Law or the Loan
Documents.

 

Section 6.10    Additional Collateral; etc.

 

(a)      With respect to any property acquired after the Closing Date by any
Loan Party that is intended to be subject to a Lien created by any Loan
Document, other than any property subject to a Lien expressly permitted by this
Agreement, as to which the Lender, does not have a perfected Lien, promptly, and
in any event within 30 days of acquiring such property:

 

(i)       execute and deliver to the Lender such supplements or amendments to
the Security Agreement or such other documents as the Lender deems necessary or
advisable to grant to the Lender a security interest in such property; and

 

(ii)      take all actions necessary or advisable to grant to the Lender a
perfected first priority security interest in such property, including the
filing of UCC-1 financing statements in such jurisdictions as may be required by
the Security Agreement or by law or as may be requested by the Lender; and

 

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(iii)     execute and deliver to the Lender such supplements or amendments to
any Loan Document as the Lender deems necessary or advisable to grant to the
Lender a perfected first priority security interest in the Equity Interests of
such new Subsidiary that are owned by any Loan Party;

 

(iv)     deliver to the Lender the certificates representing such Equity
Interests, together with undated stock powers, in blank, executed by a duly
authorized officer of the relevant Loan Party;

 

(v)      deliver to the Lender originals of any promissory notes evidencing
intercompany loans provided by a Loan Party to any Person that is not a Loan
Party, indorsed in blank by a duly authorized officer of the relevant Loan
Party; and

 

(vi)     cause such new Subsidiary that the Borrower would like to become a Loan
Party (an “Additional Loan Party”) to: (A) execute and deliver joinders to the
Guaranty the Security Agreement, each in the form provided by the Lender (B)
take all actions necessary or desirable to grant to the Lender a perfected first
priority security interest in the Collateral owned by such new Subsidiary,
including the filing of UCC-1 financing statements in such jurisdictions as may
be required by such security agreement or by law or as may be requested by the
Lender; and (C) execute and deliver a secretary’s certificate of such new Loan
Party, with charter documents, by-laws and appropriate resolutions attached.

 

Section 6.11 Further Assurances. Promptly upon the request of the Lender:

 

(a)      Correct any material defect or error that may be discovered in any Loan
Document or in the execution, acknowledgement, filing or recordation thereof;
and

 

(b)    Do, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register any and all such further acts, deeds, conveyances,
pledge agreements, mortgages, deeds of trust, trust deeds, assignments,
financing statements and continuations thereof, termination statements, notices
of assignments, transfers, certificates, assurances and other instruments as the
Lender, may require from time to time in order to:

 

(i)       carry out more effectively the purposes of the Loan Documents;

 

(ii)      to the fullest extent permitted by applicable law, subject any Loan
Party’s properties, assets, rights or interests to the Liens now or hereafter
intended to be covered by the Security Agreement and the other Loan Documents;

 

(iii)     perfect and maintain the validity, effectiveness and priority of the
Liens intended to be created under the Security Agreement and the other Loan
Documents;

 

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(iv)     each Loan Party (including, without limitation, each Additional Loan
Party) will execute and deliver, or cause to be executed and delivered, to the
Lender such documents, agreements and instruments (including, without
limitation, account control agreements, landlord waivers and bailee agreements),
and will take or cause to be taken such further actions (including the filing
and recording of financing statements, fixture filings, and other documents and
such other actions or deliveries, as applicable), which may be required by law
or which the Lender may, from time to time, reasonably request to carry out the
terms and conditions of this Agreement and the other Loan Documents and to
ensure perfection and priority of the Liens created or intended to be created by
the Security Agreement, all in form and substance reasonably satisfactory to the
Lender and all at the expense of the Borrower; and

 

(v)      assure, convey, grant, assign, transfer, preserve, protect and confirm
more effectively to the Lender, the rights granted or now or hereafter intended
to be granted to the Lender under any Loan Document or under any other
instruments executed in connection with any Loan Document to which any Loan
Party is or is to be a party.

 

Section 6.12  Deposit Accounts. In order to facilitate the Lender’s maintenance
and monitoring of its security interests in the Collateral, Borrower shall
maintain, and cause each of the other Loan Parties to maintain, all of its
operating accounts, deposit accounts and securities accounts with the Lender or
an Affiliate of the Lender; provided, however, as a matter of convenience, each
Loan Party may maintain up to $75,000 in deposits in demand deposit accounts at
other commercial banking institutions in locales where the Lender or an
Affiliate of Lender does not maintain a banking branch; provided further that
the Borrower shall use its commercially reasonable best efforts to cause such
other banking institutions to execute control agreements in favor of the Lender
on forms acceptable to Lender with regards to such deposit accounts.

 

Article VII 
Negative Covenants

 

So long as the Lender has any Revolving Credit Commitment hereunder, or any
Loans, Letter of Credit Obligations, or any other amounts payable to the Lender
hereunder or under any other Loan Document have not been indefeasibly paid in
full, the Borrower shall not, and shall not permit any other Loan Party to, do
any of the following without the prior written consent of the Lender:

 

Section 7.01 Limitation on Debt. Create, incur, assume, permit to exist or
otherwise become liable with respect to any Debt, except:

 

(a)      Debt of any Loan Party existing or arising under this Agreement and any
other Loan Document;

 

(b)      Debt of:

 

(i)       the Borrower owed to any other Loan Party; and

 

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(ii)      any Loan Party owed to the Borrower or any other Loan Party;

 

(c)     Debt incurred to finance the acquisition of fixed or capital assets
(including Capital Lease Obligations) secured by a Lien permitted under Section
7.02(f); provided that, (i) such Debt is incurred simultaneously with such
acquisition; (ii) such Debt when incurred shall not exceed the purchase price of
the asset financed and (iii) the aggregate principal amount of Debt permitted by
this Section 7.01(b), shall not exceed $5,000,000 in the aggregate at any time
outstanding;

 

(d)      Debt existing on the date hereof and listed on Schedule 7.1(d);

 

(e)      Subordinated Debt; and

 

(f)       Other unsecured Debt of the Borrower or any other Loan Parties in an
aggregate principal amount not to exceed $5,000,000 at any time.

 

Section 7.02 Limitation on Liens. Create, incur, assume or permit to exist any
Lien on any property or assets (including Equity Interests of any of its
Subsidiaries) now owned or hereafter acquired by it or on any income or rights
in respect of any thereof, except:

 

(a)      Liens created pursuant to or arising under any Loan Document;

 

(b)      Liens imposed by law for taxes, assessments or governmental charges not
yet due or which are being contested in good faith and by appropriate
proceedings diligently conducted if adequate reserves with respect thereto are
maintained in accordance with GAAP on the books of the applicable Person;

 

(c)      Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other similar Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 30 days or that are
being contested in good faith and by appropriate proceedings diligently
conducted;

 

(d)     Pledges and deposits and other Liens (i) made in the ordinary course of
business in compliance with workers’ compensation, unemployment insurance and
other social security laws or regulations, and (ii) securing liability for
reimbursement or indemnification obligations of (including obligations in
respect of letters of credit or bank guarantees for the benefit of) insurance
carriers providing property, casualty or liability insurance to the Borrower or
another Loan Party;

 

(e)     Liens (including deposits) to secure the performance of bids, tenders,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of like nature, in each case in the
ordinary course of business;

 

(f)      Easements, zoning restrictions, rights-of-way, minor defects or
irregularities in title and similar encumbrances on real property imposed by law
or arising in the ordinary course of business which, in the aggregate, are not
material in amount and which do not materially detract from the value of the
affected property or interfere materially with the ordinary conduct of business
of the Borrower or any of its Subsidiaries;

 

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(g)      Liens on fixed or capital assets acquired by the Borrower or any other
Loan Party after the date hereof; provided that (i) such security interests
secure Debt permitted by Section 7.01(b), (ii) such Liens and the Debt secured
thereby are incurred simultaneously with such acquisition, (iii) such Liens
shall not apply to any other property or assets of the Borrower or any other
Loan Party, and (iv) the amount of Debt initially secured thereby is not more
than 100% of the purchase price of such fixed or capital asset;

 

(h)      Liens on the personal property of any Loan Party disclosed on Schedule
7.02 and

 

(i)       Judgment or other similar Liens in connection with legal proceedings
in an aggregate principal amount net of amounts for which insurance providers
have delivered written acknowledgements of coverage up to $500,000 in the
aggregate, which, whether immediately or with the passage of time (i) do not
give rise to an Event of Default under Section 8.01(g) and (ii) are being
contested in good faith by appropriate proceedings diligently conducted.

 

Section 7.03 Mergers; Nature of Business.

 

(a)      Merge into or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or liquidate or dissolve, except
that, if at the time thereof and immediately after giving effect thereto no
Event of Default shall have occurred and be continuing (i) any Subsidiary of the
Borrower that is a Loan Party may merge into the Borrower in a transaction in
which the Borrower is the surviving corporation, (ii) any Loan Party (other than
the Borrower) may merge into any other Loan Party in a transaction in which the
surviving entity is a Loan Party, and (iii) any Subsidiary that is not a Loan
Party may liquidate or dissolve if the Borrower determines in good faith that
such liquidation or dissolution is in the best interests of the Borrower and is
not materially disadvantageous to the Lender.

 

(b)     Engage in any business other than (i) businesses of the type conducted
by the Borrower and its Subsidiaries on the date hereof, and (ii) any other
businesses, except for: (x) business of the types listed on Schedule 7.03 to
this Agreement or (y) that are substantially similar to any type of business
listed on Schedule 7.03.

 

Section 7.04 Limitation on Investments. Make any advance, loan, extension of
credit (by way of guaranty or otherwise) or capital contribution to, or
purchase, hold or acquire any Equity Interests, bonds, notes, debentures or
other debt securities of, or any assets constituting a business unit of, or make
any other investment in, any Person (all of the foregoing, “Investments”),
except:

 

(a)      Investments in Cash Equivalents;

 

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(b)      Loans and advances to officers, directors, or employees of any Loan
Party in the ordinary course of business (including for travel, entertainment
and relocation expenses) in an aggregate amount not to exceed $500,000 at any
time outstanding;

 

(c)      Intercompany Investments by any Loan Party in the Borrower or any
Person that, prior to such Investment, is a Loan Party;

 

(d)      Extensions of trade credit in the ordinary course of business
(including any instrument evidencing the same and any instrument, security or
other asset acquired through bona fide collection efforts with respect to the
same);

 

(e)      Investments in marketable securities traded on national exchanges and
other securities that carry a Standard & Poor’s rating of BBB- or a Moody’s
rating of Baa3 or better; and

 

(f)      Only so long as no Default or Event of Default has occurred and is
continuing either before or following the making of any such Investment, the
Borrower may make other Investments that would not otherwise be permitted by
this Section 7.04 (“Other Investments”), provided, that (a) Borrower shall
provide Lender with a schedule of each Other Investment with a value (valued at
cost) in excess of $100,000 attached to each Borrowing Base Certificate
delivered pursuant to Section 6.02(c); and (b) if at any time the aggregate
amount (valued at cost) of Other Investments made by the Borrower and the other
Loan Parties on a consolidated basis on or after the Closing Date exceeds
$5,000,000, the amount of any additional Other Investments permitted pursuant to
this Section 7.04(f) in excess of $5,000,000 shall be limited to the amount of
Excess Capital as calculated on a pro forma basis as set forth on an Excess
Capital Certificate delivered to the Lender prior to the making of any such
Other Investment.

 

Section 7.05 Limitation on Dispositions. Dispose of any of its property, whether
now owned or hereafter acquired, or issue or sell any Equity Interests to any
Person, except:

 

(a)      The sale or Disposition of machinery and equipment no longer used or
useful in the business of any Loan Party;

 

(b)      The Disposition of obsolete or worn-out property of a Loan Party in the
ordinary course of its business;

 

(c)      The sale or lease of inventory for fair value in the ordinary course of
business of a Loan Party; and

 

(d)      The sale of securities of the types described in Section 7.04(e) for
fair value in the ordinary course of business of a Loan Party.

 

Section 7.06 Limitation on Sales and Leasebacks. Enter into any arrangement with
any Person whereby such Loan Party shall sell or otherwise transfer any property
owned by such Loan Party to (a) such Person and thereafter rent or lease such
Property from such Person or (b) any other Person to whom funds have been or are
to be advanced by such Person on the security of such Property or rental
obligations of such Loan Party.

 

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Section 7.07 Limitation on Restricted Payments; Transfers to non-Loan Parties.

 

(a)      Declare or pay any dividend on, or make any payment on account of, or
set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Equity Interests
of the Borrower or any of its Subsidiaries, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any of its Subsidiaries (collectively, “Restricted Payments”), provided, that:

 

(i)       a Subsidiary of the Borrower may make a Restricted Payment to the
Borrower;

 

(ii)      The Borrower may declare and pay dividends and make other
distributions and payments with respect to its Equity Interests if payable
solely in its Equity Interests; and

 

(iii)    Only so long as no Default or Event of Default has occurred and is
continuing either before or following the making thereof, the Borrower may make
Restricted Payments that would not otherwise be permitted by this Section 7.07,
provided that such Restricted Payments shall be limited to the amount of Excess
Capital as calculated on a pro forma basis as set forth on an Excess Capital
Certificate delivered to the Lender prior to the making of any such Restricted
Payment.

 

(b)      Transfer any asset of a Loan Party to an Affiliate that is not a Loan
Party.

 

Section 7.08 Limitation on Prepayments of Debt and Amendments of Debt
Instruments.

 

(a)      Make or offer to make any optional or voluntary payment or prepayment
on or redemption, defeasance or purchase of any (whether principal or interest)
Subordinated Debt; or

 

(b)      Amend, modify, waive or otherwise change, or consent or agree to any
amendment, modification, waiver or other change to any Subordinated Debt, other
than any amendment, modification, waiver or other change which (i) would extend
the maturity or reduce the amount of any payment of principal thereof or reduce
the rate or extend any date for payment of interest thereon; and (ii) does not
involve the payment of a consent fee.

 

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Section 7.09 Limitation on Transactions With Affiliates. Enter into or be a
party to any transaction including any purchase, sale, lease or exchange of
property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate unless such transaction is:

 

(a)      Otherwise permitted by the terms of this Agreement; or

 

(b)      In the ordinary course of business of the Borrower or the relevant
Subsidiary, as the case may be, and on fair and reasonable terms no less
favorable to the Borrower or the relevant Subsidiary, as the case may be, than
those that would have been obtained in a comparable transaction on an arm’s
length basis from an unrelated Person.

 

Section 7.10 Fiscal Year. Change the end of the Borrower’s fiscal year to a date
other than March 31.

 

Section 7.11 Limitation on Restrictive Agreements. Enter into or permit to exist
or become effective any consensual encumbrance or restriction on the ability of
any Subsidiary of the Borrower to:

 

(a)      Make Restricted Payments in respect of any Equity Interests of such
Subsidiary held by, or pay any Debt owed to, the Borrower or any other
Subsidiary of the Borrower;

 

(b)      Make loans or advances to, or Investments in, the Borrower or any other
Subsidiary of the Borrower; and

 

(c)     Transfer any of its assets to the Borrower or any other Subsidiary of
the Borrower, except for such encumbrances or restrictions (i) existing under
the Loan Documents, and (ii) with respect to a Subsidiary imposed pursuant to an
agreement that has been entered into in connection with the Disposition of all
or substantially all of the Equity Interests or assets of such Subsidiary.

 

Section 7.12 Limitation on Amendments of Material Contracts. Amend, supplement
or otherwise modify (pursuant to a waiver or otherwise):

 

(a)      Its articles of incorporation, certificate of designation, operating
agreement, bylaws or other organizational document; or

 

(b)      The terms and conditions of any Material Contract;

 

in each case, in any respect materially adverse to the interests of the Lender,
without the Lender’s prior written consent.

 

Section 7.13 Financial Covenants. Permit, as of any Measurement Date:

 

(a)      the Debt Service Coverage Ratio for the Measurement Period ending on
such Measurement Date to be less than or equal to 1.25 to 1.0; or

 

(b)      the Asset Coverage Ratio to be less than 1.50 to 1.00.

 

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Article VIII 
Events of Default and Remedies

 

Section 8.01 Events of Default. Each of the following events or conditions shall
constitute an “Event of Default” (whether it shall be voluntary or involuntary
or come about or be effected by any Requirement of Law or otherwise):

 

(a)      the Borrower fails to pay, (i) whether at stated maturity, by
acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise, (A) any principal of any Loan or any interest thereon when due, or
(B) any Letter of Credit Obligation, or (ii) any fee or other amount payable
hereunder or under any other Loan Document when due and such failure remains
unremedied for a period of five (5) days;

 

(b)      any representation, warranty, certification or other statement of fact
made or deemed made by or on behalf of any Loan Party herein or in any other
Loan Document or any amendment or modification hereof or thereof or waiver
hereunder or thereunder or in any certificate, document, report, financial
statement or other document furnished by or on behalf of any Loan Party under or
in connection with this Agreement or any other Loan Document, proves to have
been false or misleading in any material respect on or as of the date made or
deemed made;

 

(c)      any Loan Party fails to perform or observe any covenant, term,
condition or agreement contained in Section 6.03, Section 6.04(a), Section 6.09,
Section 6.11, or Article VII;

 

(d)     any Loan Party fails to perform or observe any other covenant, term,
condition or agreement contained in this Agreement or any other Loan Document
(other than as provided in subsections (a) through (c) of this Section 8.01, and
such failure continues unremedied for a period of thirty (30) days after written
notice to the Borrower from the Lender;

 

(e)      Any Loan Party:

 

(i)       fails to pay any principal or interest in respect of any Debt in
excess of $1,000,000 (including any Guaranty Obligation, but excluding any Debt
outstanding under this Agreement) when due and such failure continues after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt;

 

(ii)      fails to perform or observe any other covenant, term, condition or
agreement relating to any such Debt or contained in any instrument or agreement
evidencing or relating thereto, or any other event occurs or condition exists,
the effect of which failure or other event or condition is to cause, or to
permit the holder or beneficiary of such Debt (or a trustee or agent on behalf
of such holder or beneficiary) to cause, with the giving of notice, if required,
such Debt to become due prior to its stated maturity (or, in the case of any
such Debt constituting a Guaranty Obligation, to become payable); or any such
Debt is declared to be due and payable, or required to be prepaid or redeemed
(other than by a regularly scheduled required prepayment or redemption or as a
mandatory prepayment), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof;

 

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provided that, a default, event or condition described in clause (i) or (ii) of
this subsection (e) shall not at any time constitute an Event of Default unless,
at such time, one or more defaults, events or conditions of the type described
in clauses (i) and (ii) of this subsection (e) has occurred and is continuing
with respect to Debt the outstanding principal amount of which exceeds in the
aggregate $1,000,000.

 

(f)       Any Loan Party:

 

(i)       commences any case, proceeding or other action under any existing or
future Debtor Relief Law, seeking (A) to have an order for relief entered with
respect to it, or (B) to adjudicate it as bankrupt or insolvent, or (C)
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (D) appointment
of a receiver, trustee, custodian, conservator or other similar official for it
or for all or any substantial part of its assets, or (y) makes a general
assignment for the benefit of its creditors;

 

(ii)      there is commenced against any Loan Party in a court of competent
jurisdiction any case, proceeding or other action of a nature referred to in
clause (i) above which (x) results in the entry of an order for relief or any
such adjudication or appointment or (y) remains undismissed, undischarged,
unstayed or unbonded for thirty (30) days;

 

(iii)     there is commenced against any Loan Party any case, proceeding or
other action seeking issuance of a warrant of attachment, execution or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which has not been vacated, discharged,
stayed or bonded pending appeal within (30) days from the entry thereof;

 

(iv)     any Loan Party is generally not, or is unable to, or admits in writing
its inability to, pay its debts as they become due; or

 

(v)      any Loan Party takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii) or (iii) above.

 

(vi)     (A) any Person shall engage in any “prohibited transaction” (as defined
in §406 of ERISA or §4975 of the Code) involving any Plan; (B) any failure to
satisfy the minimum funding standard (within the meaning of Sections §412 or
§430 of the Code or §302 of ERISA) shall exist with respect to any Plan, or any
Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or
any ERISA Affiliate; (C) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of trustee is
likely to result in the termination of such Plan for purposes of Title IV of
ERISA; (D) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA; or (F) the Borrower or any ERISA Affiliate shall incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan.

 

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(g)     one or more final and non-appealable judgments or decrees is entered
against any Loan Party by a court of competent jurisdiction involving, in the
aggregate, a liability (not paid or fully covered by insurance from an insurer
that is rated at least “A” by A.M. Best Company as to which the relevant
insurance company has been notified and has not denied coverage) in an amount in
excess of $50,000 and all such judgments or decrees have not been vacated,
discharged, stayed or bonded pending appeal within thirty (30) days from the
entry thereof;

 

(h)     the Security Agreement or the North Carolina Deed of Trust ceases for
any reason to be valid, binding and in full force and effect or any Lien created
by the Security Agreement or the North Carolina Deed of Trust ceases to be
enforceable and of the same effect and priority purported to be created thereby,
other than as expressly permitted hereunder or thereunder;

 

(i)       any provision of any Loan Document ceases for any reason to be valid,
binding and in full force and effect, other than as expressly permitted
hereunder or thereunder;

 

(ii)      any Loan Party contests in any manner the validity or enforceability
of any provision of any Loan Document;

 

(iii)     any Loan Party denies that it has any or further liability or
obligation under any provision of any Loan Document (other than as a result of
repayment in full of the Obligations and termination of the Revolving Credit
Commitment and the Term Loan Commitment) or purports to revoke, terminate or
rescind any provision of any Loan Document;

 

(i)       any Change of Control occurs;

 

(j)       the Fed Ex Contract is terminated for any reason; or

 

(k)      there occurs in, the reasonable judgment of the Lender, a Material
Adverse Effect.

 

Section 8.02 Remedies Upon Event of Default. If any Event of Default occurs and
is continuing, then:

 

(a)      if such event is an Event of Default specified in Section 8.01(f) above
with respect to the Borrower, the Commitments shall automatically and
immediately terminate and the Loans (with accrued interest thereon) and all
other amounts owing under this Agreement and the other Loan Documents shall
immediately become due and payable;

 

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(b)      if such event is an Event of Default (other than an Event of Default
under Section 8.01(f)), any or all of the following actions may be taken:

 

(i)        the Lender may, by notice to the Borrower, declare the Commitments to
be terminated forthwith, whereupon the Commitments shall immediately terminate;

 

(ii)       the Lender may, by notice to the Borrower, declare the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement and
the other Loan Documents to be due and payable forthwith, whereupon the same
shall immediately become due and payable;

 

(iii)      the Lender may require that the Borrower Cash Collateralize the
Letter of Credit Obligations or any other Loan Obligations that are contingent
or not yet due and payable, in each case, in an amount determined by the Lender
in accordance with this Agreement; and

 

(iv)     the Lender may exercise all rights and remedies available to it under
the Security Agreement, the Guaranty, the North Carolina Assignment, the North
Carolina Deed of Trust and each other Loan Document.

 

Section 8.03 Prepayment Obligations. The Borrower agrees that if the Obligations
become immediately due and payable in full at a time when one or more Letters of
Credit are outstanding, the Borrower shall thereupon automatically be obligated
to pay the Lender, in addition to all other amounts owing under this Agreement,
the aggregate face amount of all Letters of Credit then outstanding. The
foregoing obligation to pay in advance for amounts which the Lender may later
have to pay pursuant to the Letters of Credit is and shall at all times
constitute a part of the “Obligations”. Amounts paid by the Borrower pursuant to
this Section shall be made directly to an interest-bearing collateral account
maintained at the Lender for application to the Borrower’s reimbursement
obligations under Section 2.12(d) as payments are made on the Letters of Credit,
with the balance, if any, to be applied to the other Obligations.

 

Article IX 
Miscellaneous

 

Section 9.01 Notices.

 

(a)     Except in the case of notices and other communications expressly
permitted to be given by telephone (or by e-mail as provided in paragraph (b)
below), all notices and other communications provided for herein shall be made
in writing and mailed by certified or registered mail, delivered by hand or
overnight courier service, or sent by facsimile as follows:

 

(i)       If to the Borrower or any other Loan Party, to it at:

 

Air T, Inc.

5930 Balsom Ridge Road

Denver, North Carolina 28037

Attention: Candice L. Otey

 

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with a copy to (which shall not constitute notice or service of process):

 

Winthrop & Weinstine, P.A.

225 S. 6th Street

Minneapolis, MN 55402

Attention: David E. Moran, Esq.

 

 

(ii)      If to the Lender, to it at

 

Minnesota Bank & Trust

9800 Bren Road East, Suite 200

Minnetonka, MN 55343

Attention: Mr. Eric P. Gundersen, SVP

 

with a copy to (which shall not constitute notice or service of process):

 

Fabyanske, Westra, Hart & Thomson, P.A.

333 South Seventh Street, Suite 2600

Minneapolis, MN 55402

Attention: Frederick H. Ladner, Esq.

Fax Number: 612-359-7602

 

Notices mailed by certified or registered mail or sent by hand or overnight
courier service shall be deemed to have been given when received. Notices sent
by facsimile during the recipient’s normal business hours shall be deemed to
have been given when sent (and if sent after normal business hours shall be
deemed to have been given at the opening of the recipient’s business on the next
Business Day).

 

(b)     Notices and other communications to the Lender hereunder may be
delivered or furnished by electronic communications (including e-mail and
internet or intranet websites) pursuant to procedures approved by the Lender.
The Lender or the Borrower (on behalf of the Loan Parties) may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that,
approval of such procedures may be limited to particular notices or
communications.

 

(c)      Unless the Lender specifies otherwise:

 

(i)       notices and other communications sent by e-mail shall be deemed
received upon the sender’s receipt of an acknowledgment from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgment), and

 

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(ii)     notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at
its e-mail address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor;

 

provided that, if such notice, e-mail or other communication is not sent during
the recipient’s normal business hours, such notice, e-mail or communication
shall be deemed to have been sent at the recipient’s opening of business on the
next Business Day.

 

(d) Either party hereto may change its address or facsimile number for notices
and other communications hereunder by notice to the other party.

 

Section 9.02 Amendments and Waivers.

 

(a)      No failure to exercise and no delay in exercising, on the part of the
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall in any event be effective unless
the same shall comply with paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making of
a Loan shall not be construed as a waiver of any Default, regardless of whether
the Lender may have had notice or knowledge of such Default at the time.

 

(b)      Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except (i) in the case of
this Agreement, pursuant to an agreement or agreements in writing entered into
by the Borrower and the Lender, or (ii) in the case of any other Loan Document,
pursuant to an agreement or agreements in writing entered into by the Lender and
the Loan Party or Loan Parties that are parties thereto.

 

Section 9.03 Expenses; Indemnity; Damage Waiver.

 

(a)      The Borrower agrees to pay:

 

(i)      all reasonable out-of-pocket expenses incurred by the Lender and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Lender, in connection with the preparation, negotiation, execution,
delivery and administration of the Loan Documents and any amendments, waivers or
other modifications of the provisions of any Loan Document (whether or not the
transactions contemplated by the Loan Documents are consummated) and;

 

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(ii)      all out-of-pocket expenses incurred by the Lender, including the fees,
charges and disbursements of any counsel for the Lender, in connection with the
enforcement or protection of its rights (i) in connection with the Loan
Documents, including its rights under this Section 9.03, or (ii) in connection
with the Loans issued under this Agreement, including all such out-of-pocket
expenses incurred in connection with any restructuring, workout or negotiations
in respect of the Loan Documents or such Loans.

 

(b)     The Borrower agrees to indemnify and hold harmless the Lender and each
of its Related Parties (each, an “Indemnified Party”) from and against, any and
all claims, damages, losses, liabilities and related expenses (including the
reasonable fees, charges and expenses of any counsel for any Indemnified Party,
incurred by any Indemnified Party or asserted against any Indemnified Party by
any Person (including the Borrower or any other Loan Party) other than such
Indemnified Party and its Related Parties arising out of, in connection with, or
by reason of:

 

(i)       the execution or delivery of any Loan Document or any agreement or
instrument contemplated in any Loan Document, the performance by the parties
thereto of their respective obligations under any Loan Document or the
consummation of the transactions contemplated by the Loan Documents;

 

(ii)      any Loan or the actual or proposed use of the proceeds therefrom;

 

(iii)     any actual or alleged presence or release of Hazardous Materials on or
from any property currently or formerly owned or operated by the Borrower or any
of its Subsidiaries, or any Environmental Liability related to the Borrower or
any of its Subsidiaries in any way; or

 

(iv)     any actual or prospective claim, investigation, litigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by a third party or by the Borrower or any
other Loan Party, and regardless of whether any Indemnified Party is a party
thereto; provided that, such indemnity shall not be available to any Indemnified
Party to the extent that such claims, damages, losses, liabilities or related
expenses (A) are determined by a court of competent jurisdiction by final and
non-appealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnified Party or (B) result from a claim brought by the
Borrower or any other Loan Party against any Indemnified Party for breach in bad
faith of such Indemnified Party’s obligations under any Loan Document, if a
court of competent jurisdiction has rendered a final and non-appealable judgment
in favor of the Borrower or such Loan Party on such claim. This Section 9.03
shall only apply to Taxes that represent losses, claims, damages or similar
charges arising from a non-Tax claim.

 

(c)      The Borrower agrees, to the fullest extent permitted by applicable law,
not to assert, and hereby waives, any claim against any Indemnified Party, on
any theory of liability, for special, indirect, consequential or punitive
damages (including, without limitation, any loss of profits or anticipated
savings), as opposed to actual or direct damages, resulting from this Agreement
or any other Loan Document or arising out of such Indemnified Party’s activities
in connection herewith or therewith (whether before or after the Closing Date).

 

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(d)      All amounts due under Section 9.03 shall be payable promptly after
demand is made for payment by the Lender.

 

(e)      The Borrower agrees that neither it nor any of its Subsidiaries will
settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding in respect of which indemnification or
contribution could be sought under Section 9.03 (whether or not any Indemnified
Party is an actual or potential party to such claim, action or proceeding)
without the prior written consent of the applicable Indemnified Party, unless
such settlement, compromise or consent includes an unconditional release of such
Indemnified Party from all liability arising out of such claim, action or
proceeding.

 

Section 9.04 Successors and Assigns.

 

(a)      The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Related Parties of the Lender) any
legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)      The Lender may, at any time, without the consent of the Borrower,
assign to one or more Eligible Assignees (as defined below) all or a portion of
its rights and obligations under this Agreement (including all or a portion of
the Commitments and the Loans at the time owing to it); provided, however, that
Lender shall not, without Borrower’s prior written consent (which consent shall
not be unreasonably withheld or delayed), make any such assignment to a Person
described in clauses (ii) or (iii) of the definition of “Eligible Assignee” at
any time when there is no outstanding Default or Event of Default. For purposes
of this Agreement, “Eligible Assignee” means any Person other than a natural
Person that is (i) an Affiliate of the Lender (which term shall, in any event,
include Heartland and Subsidiaries of Heartland), (ii) a commercial bank,
insurance company, investment or mutual fund or other Person that is an
“accredited investor” (as defined in Regulation D under the Securities Act) or
(iii) a corporate entity that possesses financial sophistication and standing
similar to that of the Lender. Subject to notification of an assignment, the
assignee shall be a party hereto and, to the extent of the interest assigned,
have the rights and obligations of the Lender under this Agreement, and the
Lender shall, to the extent of the interest assigned, be released from its
obligations under this Agreement (and, in the case of an assignment covering all
of the Lender’s rights and obligations under this Agreement, the Lender shall
cease to be a party hereto but shall continue to be entitled to the benefits of
Section 3.01, Section 3.02 and Section 9.03. The Borrower hereby agrees to
execute any amendment and/or any other document that may be necessary to
effectuate such an assignment, including an amendment to this Agreement to
provide for multiple lenders and an administrative agent to act on behalf of
such lenders. Any assignment or transfer by the Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by the Lender of a participation in
such rights and obligations in accordance with paragraph (c) of this Section.

 

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(c)      The Lender may, at any time, without the consent of the Borrower, sell
participations to one or more banks or other entities (each, a “Participant”) in
all or a portion of the Lender’s rights and obligations under this Agreement
(including all or a portion of the Commitments and the Loans owing to it);
provided, that so long as no Default or Event of Default is outstanding at the
time of any such sale, Lender agrees that it will not sell a participation to
any Person that is not an Affiliate of Lender (which term shall, in any event,
include Heartland and Subsidiaries of Heartland) without Borrower’s prior
written consent, which consent shall not be unreasonably withheld or delayed.

 

Section 9.05 Survival. All covenants, agreements, representations and warranties
made by the Loan Parties in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the Lender may
have notice or knowledge of any Event of Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of, or any accrued interest on,
any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid and so long as the Revolving Credit Commitment has not
expired or terminated. The provisions of Section 3.01, Section 3.02 and Article
IX shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Commitments or the termination of
this Agreement or any provision hereof.

 

Section 9.06 Counterparts; Integration; Effectiveness.

 

(a)     This Agreement and any amendments, waivers, consents or supplements
hereto may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to fees
payable to the Lender constitute the entire contract among the parties with
respect to the subject matter hereof and supersede all previous agreements and
understandings, oral or written, with respect to the subject matter hereof.
Except as provided in Section 4.01, this Agreement shall become effective when
it shall have been executed by the Lender and when the Lender shall have
received a counterpart hereof executed by the Borrower. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile or in electronic
(“pdf” or “tif”) format shall be effective as delivery of a manually executed
counterpart of this Agreement. This Agreement and each other Loan Document has
been reviewed by all parties hereto and incorporate the requirements of such
parties. Each party waives the rule of construction that any ambiguities are to
be resolved against the party drafting the same and agrees such rules will not
be employed in the interpretation of this Agreement or any other Loan Document.

 

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(b)     The words “execution,” “signed,” “signature,” and words of similar
import in any Loan Document shall be deemed to include electronic or digital
signatures or the keeping of records in electronic form, each of which shall be
of the same effect, validity and enforceability as manually executed signatures
or a paper-based recordkeeping system, as the case may be, to the extent and as
provided for under applicable law, including the Electronic Signatures in Global
and National Commerce Act of 2000 (15 USC § 7001 et seq.), the Electronic
Signatures and Records Act of 1999 (NY State Technology Law §§ 301-309), or any
other similar state laws based on the Uniform Electronic Transactions Act.

 

Section 9.07 Severability. If any term or provision of any Loan Document is
invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision
thereof or invalidate or render unenforceable such term or provision in any
other jurisdiction. Upon such determination that any term or other provision is
invalid, illegal or unenforceable, the parties hereto shall negotiate in good
faith to modify the applicable Loan Document so as to effect the original intent
of the parties as closely as possible in a mutually acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.

 

Section 9.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, and without
prior notice to the Borrower, any such notice being expressly waived by the
Borrower, to set off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final, in whatever currency) at any time
held and other obligations (in whatever currency) at any time owing by the
Lender or Affiliate to or for the credit or the account of the Borrower or any
Loan Party against any and all of the obligations of the Borrower or such Loan
Party now or hereafter existing under the Loan Documents to the Lender or its
Affiliates, whether direct or indirect, absolute or contingent, matured or
unmatured, and irrespective of whether or not the Lender or any Affiliate shall
have made any demand under the Loan Documents and although such obligations of
such Loan Party are owed to a branch, office or Affiliate of the Lender
different from the branch, office or Affiliate holding such deposit or obligated
on such indebtedness. The Lender agrees to notify the Borrower promptly after
any such set off and appropriation and application; provided that the failure to
give such notice shall not affect the validity of such set off and appropriation
and application.

 

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Section 9.09 Governing Law; Jurisdiction; Consent to Service of Process.

 

(a)      This Agreement and the other Loan Documents and any claim, controversy,
dispute or cause of action (whether in contract or tort or otherwise) based
upon, arising out of or relating to this Agreement or any other Loan Document
(except, as to any other Loan Document, as expressly set forth therein) and the
transactions contemplated hereby and thereby shall be governed by, and construed
in accordance with, the laws of the State of Minnesota, without regard to
conflicts of laws principles thereof.

 

(b)    AT THE OPTION OF THE LENDER, THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS TO WHICH THE BORROWER IS A PARTY MAY BE ENFORCED IN ANY FEDERAL COURT
OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE
BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY
ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER
COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
AGREEMENT, THE 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.

 

(c)     Each Loan Party irrevocably and unconditionally waives, to the fullest
extent permitted by applicable law, any objection that it may now or hereafter
have to the laying of venue of any action or proceeding arising out of or
relating to this Agreement or any other Loan Document in any such court referred
to in subsection (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

 

(d)     Each Loan Party irrevocably consents to the service of process in the
manner provided for notices in Section 9.01 and agrees that nothing herein will
affect the right of any party hereto to serve process in any other manner
permitted by applicable law.

 

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Section 9.10 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY. EACH PARTY HERETO
(A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO
ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 9.11 Headings. The headings in this Agreement are for reference only and
shall not affect the interpretation of this Agreement.

 

Section 9.12 Confidentiality.

 

(a)     The Lender agrees to maintain the confidentiality of all non-public
information received from the Borrower or any other Loan Party relating to the
Borrower or its Subsidiaries or their respective businesses; provided that, in
the case of information received from the Borrower or any Loan Party after the
date hereof, such information is clearly identified at the time of delivery as
being confidential information (the “Information”), except that Information may
be disclosed:

 

(i)        to its Affiliates and its Related Parties in connection with the
administration of this Agreement and the preservation, exercise or enforcement
of the rights of the Lender under this Agreement, or to manage its and its
Affiliates’ banking relationships with the Borrower and its Subsidiaries (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential);

 

(ii)       to the extent required or requested by any regulatory authority
purporting to have jurisdiction over such Person or its Related Parties
(including any self-regulatory authority);

 

(iii)      to the extent required by any Requirement of Law or regulations or by
any subpoena, court order or similar legal process;

 

(iv)      in connection with the exercise of any remedies hereunder or under any
other Loan Document or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of its rights hereunder or
thereunder;

 

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(v)      to (x) any actual or potential assignee, transferee or participant in
connection with the assignment or transfer by the Lender of any Loans or any
participations therein or (y) any actual or prospective party (or its Related
Parties) to any swap, derivative or other transaction under which payments are
to be made by reference to the Borrower or any other Loan Party or any
Subsidiary or any of their respective obligations, this Agreement or payments
hereunder;

 

(vi)      with the consent of the Borrower; or

 

(vii)    to the extent such Information (x) becomes publicly available other
than as a result of a breach of this Section or (y) is available to the Lender
on a non-confidential basis prior to disclosure by the Borrower or any of its
Subsidiaries, or (z) becomes available to the Lender or any of its Affiliates on
a non-confidential basis from a source other than the Borrower or any other Loan
Party.

 

(b)     Any Person required to maintain the confidentiality of Information as
provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

 

Section 9.13 USA PATRIOT Act. The Lender hereby notifies each Loan Party that
pursuant to the requirements of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the
“PATRIOT Act”), it is required to obtain, verify, and record information that
identifies each Loan Party, which information includes the name and address of
each Loan Party and other information that will allow the Lender to identify
such Loan Party in accordance with the PATRIOT Act, and the Borrower agrees to
provide, or cause the other Loan Parties to provide, such information from time
to time to the Lender.

 

Section 9.14 Intent of Amendment and Restatement; Termination of Worthington
Loan Agreement. This Agreement amends and restates the Original Credit Agreement
in its entirety. The execution, delivery and effectiveness of this Agreement
shall not operate as a waiver of any of the Bank’s rights, powers or remedies
under the Original Credit Agreement or any other Loan Document, nor constitute a
waiver of any provision of the Original Credit Agreement or any such Loan
Document other than as set forth herein. This Agreement amends and restates the
Original Credit Agreement in its entirety and supersedes all prior agreements
and understandings relating to the subject matter hereof. On the Closing Date,
the Original Agreement shall be completely amended and restated by this
Agreement, and each reference in each Loan Document to:

 

(a)      the “Credit Agreement,” “Loan Agreement,” “therein,” “thereof,”
“thereby,” or words of like import referring to the Original Agreement shall
mean and be a reference to this Agreement; and

 

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(b)      to “the Revolving Credit Note,” “thereunder,” “thereof,” “therein” or
words of like import referring to the Revolving Credit Note shall mean and be a
reference to the Amended and Restated Revolving Credit Note executed and
delivered by the Borrowers pursuant to this Agreement.

 

Effective on the Closing Date, following the refinancing of the Worthington
Loans with proceeds of Revolving Credit Loans, all commitments on the part of
the Lender to extend credit to the Worthington Entities pursuant to the
Worthington Loan Agreement shall automatically terminate.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.

 

 

 

Air T, Inc., a Delaware corporation

     

By:                                                      

Name: Brett Reynolds

Title: Chief Financial Officer

 

 

Minnesota Bank & Trust, a Minnesota state

banking corporation

     

By                                                

Name: Eric P. Gundersen

Title: Senior Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Amended and Restated Credit Agreement Signature Page]

 

 

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EXHIBITS TO CREDIT AGREEMENT

 

 

 

 

EXHIBITS

 

EXHIBIT A

FORM OF REVOLVING CREDIT NOTE

   

EXHIBIT B

CONSIGNED INVENTORY ELIGIBILITY REQUIREMENTS

   

EXHIBIT C

FORM OF BORROWING BASE CERTIFICATE

   

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

 

 

SCHEDULES

 

SCHEDULE A

LOAN PARTIES ON THE CLOSING DATE

   

SCHEDULE 5.06

LITIGATION

   

SCHEDULE 5.08

REAL PROPERTY

   

SCHEDULE 5.10

INSURANCE

   

SCHEDULE 5.11

MATERIAL CONTRACTS

   

SCHEDULE 5.12

INTELLECTUAL PROPERTY

   

SCHEDULE 5.17

SUBSIDIARIES; EQUITY INTERESTS

   

SCHEDULE 7.01

EXISTING DEBT

   

SCHEDULE 7.02

EXISTING LIENS

   

SCHEDULE 7.03

Prohibited Lines of Business

 

 

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EXHIBIT A

FORM OF REVOLVING CREDIT NOTE

 

[see attached]

 

 

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AMENDED AND RESTATED REVOLVING CREDIT NOTE

 

 

U.S. $17,000,000.00 Dated as of March 28, 2019   Minnetonka, Minnesota

 

 

 

FOR VALUE RECEIVED, on the Revolving Credit Termination Date (as defined in the
Credit Agreement hereinafter defined) the undersigned, AIR T, INC., a Delaware
corporation (the “Borrower”), promises to pay to the order of Minnesota Bank &
Trust, a Minnesota state banking corporation (the “Lender”), the principal sum
of SEVENTEEN MILLION AND NO/100THS DOLLARS (U.S. $17,000,000.00) or, if less,
the aggregate unpaid principal amount of all Revolving Credit Loans (as
hereinafter defined) made by the Lender to the Borrower pursuant to the Credit
Agreement.

 

Interest. The Borrower 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 annual rate of interest equal to the greater of (a) 4.00% or (b) the
sum of (i) the Prime Rate (hereinafter defined), as in effect on the date hereof
and as the same may adjust from time to time, minus (ii) 1.00%. Interest accrued
during each calendar month shall be due and payable on the first day of the
following calendar month, with the first such interest payment due on April 1,
2019. Interest shall also be payable at maturity and interest accrued after
maturity shall be payable on demand. The term “Prime Rate” shall mean the prime
rate published in the money rates section of the Wall Street Journal, floating,
and changing with each change of such published rate, or if the Wall Street
Journal ceases to publish such rate, as published in the Federal Reserve Board’s
Statistical Release H. 15. If the Prime Rate becomes unavailable during the term
of this loan, Lender may designate a substitute index after notifying Borrower.
Lender will tell Borrower the current Index rate upon Borrower’s request.
Borrower understands that Lender may make loans based on other rates as well.
Interest on the unpaid principal balance of this Note will be calculated as
described in the “INTEREST CALCULATION METHOD” paragraph. NOTICE: under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.

 

Payments. Both principal and interest are payable in lawful money of the United
States of America to the Lender at 9800 Bren Road East, Suite 200, Minnetonka,
MN 55343 (or other location specified by the Lender) in immediately available
funds. By its execution of this Note, the Borrower authorizes the Lender to
charge from time to time against any of Borrower’s depository accounts
maintained with the Lender any such payments when due and the Lender will use
its reasonable efforts to notify the 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 Borrower
hereunder shall become due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.

 

 

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Prepayment; Minimum Interest Charge. In any event, even upon full prepayment of
this Note, Borrower understands that Lender is entitled to a minimum interest
charge of $10.00. Other than Borrower’s obligations to pay any minimum interest
charge, Borrower may pay without penalty all or a portion of the amount earlier
than it is due. Early payments will not, unless agreed to by Lender in writing,
relieve Borrower of Borrower’s obligation to continue to make payments of
accrued unpaid interest. Rather, early payment will reduce the principal balance
due. Borrower agrees not to send Lender payments marked “paid in full”, “without
recourse”, or similar language. If Borrower sends such a payment, Lender may
accept it without losing any of Lender’s rights under this Note, and Borrower
will remain 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, 9800 Bren Road East, Suite 200, Minnetonka, MN 55343.

 

Late Charge. If a payment due hereunder is not made within seven days after the
date when due, Borrower shall 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.

 

Credit Agreement. This Note is the Revolving Credit Note referred to in, and is
entitled to the benefits of, the Amended and Restated Credit Agreement dated as
of March 28, 2019 (as amended, modified, supplemented or restated from time to
time being the “Credit Agreement”; capitalized terms not otherwise defined
herein being used herein as therein defined) between the Borrower and the
Lender. The Credit Agreement, among other things, (i) provides for the making of
Revolving Credit Loans (the “Revolving Credit Loans”) by the Lender to the
Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the dollar amount first above mentioned, the indebtedness of the
Borrower resulting from each such Revolving Credit Loan being evidenced by this
Note; (ii) 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; and (iii) contains provisions for the
mandatory prepayment hereof upon certain conditions.

 

 

--------------------------------------------------------------------------------

 

 

Security Agreement. This Note is secured by, among other things, that certain
Amended and Restated Security Agreement dated as of March 28, 2019, executed by
the Borrower and certain of its Subsidiaries in favor of the Lender.

 

Waiver of Presentment and Demand for Payment; Etc. Borrower 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 Borrower 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 Credit 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 Credit 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.

 

Expense Reimbursement. Borrower agrees 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. Borrower agrees 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 Borrower 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
Borrower under this paragraph shall survive any termination of the Credit
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 Borrower may not 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,
Borrower hereby authorizes the Lender to furnish any information concerning the
Borrower or any of its affiliates, however acquired, to any Person or entity.

 

Usury. Borrower and Lender agree that no payment of interest or other
consideration made or agreed to be made by Borrower 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 Borrower, and Borrower hereby agrees to accept such
remittance. This provision shall control every other obligation of the Borrower
and Lender relating to this Note.

 

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

 

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, THE BORROWER WAIVES EVERY PRESENT AND
FUTURE DEFENSE (OTHER THAN THE DEFENSE OF PAYMENT IN FULL), CAUSE OF ACTION,
COUNTERCLAIM OR SETOFF WHICH THE 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 BORROWER.

 

Waiver of Right to Jury Trial; Venue. 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. 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.

 

 

--------------------------------------------------------------------------------

 

 

Amendment and Restatement. This Note is being executed and delivered in
restatement of, but not in payment of, that certain Revolving Credit Note dated
November 12, 2018, made by the Borrower payable to the order of the Lender in
the original principal amount of $13,000,000.00; provided, however, that
interest accrued on such replaced note through the date hereof shall be due and
payable on April 1, 2019.

 

 

IN WITNESS WHEREOF, the Borrower has caused this Amended and Restated Revolving
Credit Note to be signed by its duly authorized officer in favor of Minnesota
Bank & Trust and to be dated as of the date set forth above.

 

 

 

AIR T, INC., a Delaware corporation 

 

 

 

 

 

 

By:

 

 

 

Name: 

Brett Reynolds 

 

 

Its: 

Chief Financial Officer 

 

 

 

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EXHIBIT B

CONSIGNED INVENTORY ELIGIBILITY

REQUIREMENTS

 

 

 

 

 

1.

The consigning Loan Party must have provided Lender with recent UCC lien
searches from the State in which a consignee (“Consignee”) is organized, showing
that such Loan Party has filed UCC1 financing statements naming such Loan Party
as secured party and such Consignee as Debtor covering such consigned Inventory
and disclosing any UCC filings in favor of such Consignee’s secured creditors in
such jurisdictions.

 

2.

Such Loan Party must have provided Lender with copies of authenticated
notifications sent by such Loan Party with respect to its delivery of the
consigned Inventory to such Consignee’s secured creditors. Such notifications
must have been sent on or before the date of delivery by such Loan Party of such
consigned Inventory to such Consignee.

 

 

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EXHIBIT C

 

FORM OF BORROWING BASE CERTIFICATE

 

[see attached]

 

 

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Borrowing Base Certificate

 

Minnesota Bank & Trust

9800 Bren Road East, Suite 200

Minnetonka, MN 55343

Attention: Mr. Eric P. Gundersen, SVP

 

Computed as of: _______________________       Report Number:                   
               

          

 

The undersigned is the Borrower under that certain Amended and Restated Credit
Agreement, dated as of March __, 2019 (such Amended and Restated Credit
Agreement, as amended to date and as it may be further amended, modified,
supplemented or restated from time to time being the “Credit Agreement”;
capitalized terms not otherwise defined herein being used as therein defined)
between AIR T, INC. (the “Borrower”) and MINNESOTA BANK & TRUST (the “Lender”).

 

The Borrower hereby reaffirms all representations and warranties to the Credit
Agreement and certifies and warrants that the Borrower and the other Loan
Parties hold, subject to the security interest of the Lender under the
Agreement, and the other Loan Documents, the following Collateral computed on a
consolidated basis as of _____________ __, 201_.

 

A.     ACCOUNTS RECEIVABLE

1.    Accounts Receivable Balance as of period ending above

 

$                                 

2.    Less: Ineligible Accounts

   

a.  Receivables over 120 days past invoice date

$                                 

 

b.  10% redline rule

$                                 

 

c.  Insolvent

$                                 

 

d.  Foreign

$                                 

 

e.  Affiliated

$                                 

 

f.  Contras

$                                 

 

g.  U.S. Government

$                                 

 

h.  Bonded

$                                 

 

i.   State, county, municipality

$                                 

 

j.   Customer deposits

$                                 

 

k.  Excess of concentration limit for account debtor

$                                 

 

l.   Other miscellaneous

$                                 

 

3.    TOTAL Ineligibles

 

($                              )

4.    Total Eligible Accounts (Line A.1 – Line A.3)

 

$                                 

5.    Eligible Accounts Loan Value at 75% of Line A.4.

 

$                                 

 

 

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 B. INVENTORY Report dated                                                      
                   (see attached)

 

1.    Raw Materials and Finished Goods Inventory

 

$                                 

2.    Less:

   

a.  Discontinued

$                                                

 

b.  Stored at a location w/out appropriate landlord/bailee/warehouseman’s waiver

$                                 

 

c.  Consigned to a Loan Party

   

d.  Inventory consigned by a Loan Party that does not comply with all Consigned
Inventory Requirements

$                                 

 

3.    Total Ineligibles

 

$                                 

4.    Total Eligible Inventory

(Line B.1-Line B.3)

 

 

$                                 

5.    Eligible Inventory Loan Value @ 50% of Line B.41

 

$                                 

     

C.          Borrowing Base: 

1.   (Line A.4 + Line B.5)

 

 

$                                 

     

D.           Availability/Amount to be Repaid:

   

1.    Total Usage (Outstanding principal balance of Revolving Loans + Letter of
Credit Obligations)

$                                 

 

2.    Revolving Credit Commitment ($13,000,000 – outstanding principal balance
of Term Loan C)

$                                 

 

3.    Borrowing Base (Line C.1.)

   

4A.  Availability (Amount by which the lesser of [Line D.1 and Line D.3] exceeds
Line D.1)

 

$                                 

4B.  Amount to be repaid (Amount by which Line D.1 exceeds the lesser of [Line
D.1 and Line D.3] exceeds Line D.1)

 

$                                 

 

--------------------------------------------------------------------------------

1 Not to exceed sixty percent (60%) of the total Borrowing Base

 

 

--------------------------------------------------------------------------------

 

 

The Borrower further certifies and warrants that no Event of Default is existing
as of the date hereof and, to the best knowledge and belief of the officer of
the Borrower executing this Borrowing Base Certificate, there has not been
(except as may otherwise indicated below) any change to the information set
forth above since the computation date specified above which would materially
reduce the amounts shown if such amounts were computed as of the date of this
Borrowing Base Certificate and all of the information provided on: (a) the
Inventory report attached as Schedule A to this Borrowing Base Certificate and
(b) the Other Investments report attached as Schedule B to this Borrower Base
Certificate, is true and correct as of the date hereof.

 

 

AIR T, INC.

 

By                                                          Title:              
                                           Date:                                
                        

      

 

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EXHIBIT D

 

FORM OF COMPLIANCE CERTIFICATE

 

[see attached]

 

 

--------------------------------------------------------------------------------

 

 

COMPLIANCE CERTIFICATE

 

 

Minnesota Bank & Trust          

9800 Bren Road East, Suite 200

Minnetonka, MN 55343

 

Attention: Mr. Eric P. Gundersen, sVP

 

The undersigned is the Borrower under that certain Amended and Restated Credit
Agreement, dated as of March __, 2019 (as the same may be amended, modified or
supplemented from time to time, herein called the “Agreement;” capitalized terms
not otherwise defined herein being used as therein defined) between AIR T, Inc.,
a Delaware corporation (the “Borrower”), and MINNESOTA BANK & TRUST (the
“Lender”).

 

Pursuant to Section 6.02(b) of the Agreement, the undersigned certifies to the
Lender as follows:

 

The consolidated financial statements of the Borrower and its Subsidiaries
attached hereto for the period ending ______________, 201__ (the “Financial
Statements”) have been prepared in accordance with GAAP (except, in the case of
the interim unaudited financial statements, for the absence of footnotes and
subject to customary year end adjustments).

 

1.  The representations and warranties contained in Article V of the Credit
Agreement are true and correct as of the date hereof as though made on that date
except to the extent that such representations and warranties expressly relate
to an earlier date and except that the representations and warranties set forth
in Section 5.04 of the Credit Agreement to the financial statements of the
Borrower shall be deemed a reference to the audited and unaudited consolidated
financial statements of the Borrower and its Subsidiaries, then most recently
delivered to the Lender pursuant to Section 6.01(a) or (b) of the Credit
Agreement, as the case may be.

 

2.  As of _________, 201__, (the “Measurement Date”) no Default or Event of
Default has occurred and is continuing [except (describe here any Default or
Event of Default and the action which the undersigned proposes to take with
respect thereto.)].

 

 

--------------------------------------------------------------------------------

 

 

 

3.  Section 7.13(a). As of the Measurement Date, the minimum required Debt
Service Coverage Ratio for the Measurement Period ending on the Measurement Date
was 1.25 to 1.00 and the actual Debt Service Coverage Ratio was ___ to 1.00, as
calculated in accordance with the Credit Agreement as set forth on the
spreadsheet attached hereto as Schedule I and incorporated herein by reference.

 

4.  Section 7.13(b). As of the Measurement Date, the minimum permitted Asset
Coverage Ratio was 1.50 to 1.00 and the Borrower’s actual Leverage Ratio was ___
to 1.00, as calculated in accordance with the Credit Agreement as set forth on
the spreadsheet attached hereto as Schedule I and incorporated herein by
reference.

 

 

AIR T, Inc.

 

By                                                          Title:              
                                           Date:                                
                        

 

 

--------------------------------------------------------------------------------

 

 

Schedule I to Compliance Certificate

 

Covenant Calculations

 

[see attached]

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE A

LOAN PARTIES ON THE CLOSING DATE

 

 

Loan Party Name

State of Incorporation/Organization

   

Airco, LLC

North Carolina

Air T, Inc.

Delaware

Air T Global Leasing, LLC

North Carolina

Airco Services, LLC

North Carolina

CSA Air, Inc.

North Carolina

Global Aviation Partners LLC

Delaware

Global Aviation Services, LLC

North Carolina

Global Ground Support, LLC

North Carolina

Jet Yard, LLC

Arizona

Mountain Air Cargo, Inc.

North Carolina

Stratus Aero Partners LLC

Delaware

Space Age Insurance Company

Utah

Worthington Acquisition, LLC

North Carolina

Worthington Aviation, LLC

North Carolina

Worthington MRO, LLC

North Carolina

 

 

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SCHEDULE 5.06

LITIGATION

 

 

 

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SCHEDULE 5.08

REAL PROPERTY

 

 

 

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SCHEDULE 5.10

INSURANCE

 

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE 5.11

MATERIAL CONTRACTS

 

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE 5.12

INTELLECTUAL PROPERTY

 

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE 5.17

SUBSIDIARIES; EQUITY INTERESTS

 

 

 

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SCHEDULE 7.01

EXISTING DEBT

 

 

 

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SCHEDULE 7.02

EXISTING LIENS

 

 

 

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SCHEDULE 7.03

 

Prohibited Lines of Business

 

 

1.

Adult entertainment

2.

Drug-related paraphernalia or any establishments selling drug-related
paraphernalia

3.

Gambling

4.

Pawn shops

5.

Liquor Stores, bars, nightclubs, microbreweries, or any other use where the
primary source of revenue is alcohol sales

6.

“Second hand” stores whose principal business is selling used merchandise,
thrift shops, salvation army type stores, “goodwill” type stores, and similar
businesses;

7.

Any pool hall, bingo parlor, amusement park, arcade or gambling establishment;

8.

Tattoo or/and piercing stores, except as ear piercing may be an ancillary
service offered at a salon;

9.

Tobacco and alcoholic beverages, including the manufacture or distribution or
any establishments where such items are sold

10.

Deep discount retail or grocery stores

11.

Car sales or car lots

12.

Marinas, new or used boat dealers

13.

Payday lending

14.

Manufactured/Mobile home and Recreational Vehicle dealers